Crowdfunding a bespoke car: Elemental explains how it raised capital for its road-legal track car, the Rp1
Having received much acclaim for its development car at the Goodwood Festival of Speed last year, Elemental Automotive Group was ready to find the funding to scale. Established in 2012, its team, all seasoned F1 and super car engineers and designers, have built a super-lightweight road-legal track car, the Rp1. Yesterday, the firm listed on equity crowdfunding platform Syndicate Room, offering 25.99 per cent fully EIS compliant equity in the business, in exchange for £600,000 investment. I asked co-founder Jeremy Curnow about Elemental’s motivations and crowdfunding experience so far.
Why equity crowdfunding?
Having secured nearly 60 per cent of our funding from industry, motorsport and word of mouth contacts, we believed that Syndicate Room offered us a platform to communicate with a larger number of financially astute investors, all under one roof. Would-be investors get access to a funding drive that would otherwise have been conducted much less publicly, and have the opportunity to engage with a charismatic project.
What information has Syndicate Room elicited from you, to help would-be investors?
The information they required before they would agree to host our fundraising was fairly exhaustive. They have seen all of our financial planning and forecast documents, business plans and market analysis. They visited our premises, saw the car, interviewed the team and even interviewed our lead investor. I am sure that having a lead investor attached to each fundraise allows investors to have a much greater confidence in the viability of the company and credibility of its valuation.
Do you feel satisfied that investors have enough information about the level of risk they’re taking?
We believe that the Rp1 sports car is at the forefront of contemporary car design, and is set to make waves in the market. On the balance of information, if a would-be-investor is happy to also subscribe to that position, then they will appreciate that the level of risk is less in terms of whether they will lose their investment and more about what exactly their return will be. In practice, the risk is that this could be from 50 per cent to 500 per cent.
What is your growth plan for the next three to five years?
It will take up to three years for the company to become established within this market, but we are projected to break even in year one and see growth of up to 100 per cent between years three and five, as we introduce new models, achieve European small series type approval, and subsequently expand our exports into Europe, China, the Middle East and the US.