Arc Boats has announced another big investment, a Series B Funding round led by existing investors, with the proceeds going at least in part to building a 150,000 square foot (14k sq m) production facility just outside of Los Angeles in Torrance, California.
Since its founding in February of 2021, Arc has attracted the backing of some of Silicon Valley’s biggest and most influential investors, firms like Andreesen Horowitz, Abstract Ventures and Lowercarbon Capital.
Previous to this latest investment, Arc completed a successful $30M Series A round in November of 2021 led by Eclipse VC and Greg Reichow – who had been Tesla’s executive leader of global manufacturing, factory/automation engineering, supply chain, and product excellence.
Investment funds led by celebrities Will Smith, Kevin Durant and Sean ‘Diddy’ Combs also added Arc electric boats to their portfolios.
Menlo Ventures joins investment team
All of these companies (and other initial investors) are participating in this $70M round, joined by Menlo Ventures with enthusiastic endorsement by long-time partner and boating enthusiast Shawn Caralon.
This round is especially significant because Series B rounds are about taking businesses to the next level, past the development stage. From Investopedia: Companies that have gone through seed and Series A funding rounds have proven to investors that they are prepared for success on a larger scale. Series B funding is used to grow the company so that it can meet these levels of demand.
Hence the announcement of the new factory and company founder Mitch Lee saying on the Arc Boats website that they are hiring across all departments.
Arc electric boats and SpaceX rockets
Arc was started by Mitch and university friend Ryan Cook. They went on to work at Boeing together, then Lee moved on to other tech ventures while Cook spent 7 years as lead mechanical engineer at SpaceX on the first stage of the Falcon 9 launch vehicle.
Mitch grew up waterskiing and wakeboarding and was always put off by the noise and fumes associated with riding along behind a gas powered boat. Both friends shared a concern for the environment, so building a high powered watersport boat seemed a natural, especially considering the SpaceX experience.
They put together a team (including other SpaceX alumni), and as Mitch says in a Plugboats Podcast from late 2021 “I can’t tell you the number of times we were standing around a whiteboard and somebody said ‘This is just like what we did on the rocket!’. When you think of it, the hull of a boat is pretty similar to the nose of a rocket, and they both need large, strong lightweight structures that can be produced in bulk.”
New ways of thinking about electric boats
Not surprisingly, the teams’ experiences and expertise led to many new ways of thinking about putting a boat together. One of the most important is the integration of battery and hull.
The company says that building their own battery packs lets them design the packs and the hull so that the two work together seamlessly. This structural integration gives them complete control over the battery’s exact size, geometry, position, and performance characteristics.
“It also allows us to pack in significantly more battery capacity without increasing the weight of the boat. As Robert Binkowski, lead vehicle engineer, explains, “We can design the boat we want, instead of designing around the limitations of someone else’s packs.”
Another fresh look is developing the kinds of software capabilities commonplace in the EV world that allow for Over The Air (OA) updates not just to software, but to the functionality of the boat itself.
The engineers are leveraging Arc’s powerful onboard computer and built-in data plan to add new capabilities to the boat’s controls — and deliver those updates wirelessly to customers , wherever they may be.
These innovations were incorporated into the company’s first model – the Arc One – which is specifically designed and built as a high power, high speed tow/wake boat for a somewhat specialized market.
The goal now is to take that learning and apply it to the broader water sports market, which means offering a line of different sized boats with different capabilities. This was the plan from the beginning, and the new investment and production facility are key to achieving Arc’s vision of electrifying the the massive $13+ billion water sports market.