Private planes - the ultimate crowdfunding product?

Published 09 December 2015

Posted by Stephen Holmes

Article tagged with: aerospace, crowdfunding, planes, cobalt, xti

The Cobalt Co50 Valkyrie - yours from $595,000… with conditions

Given the huge variety of crowdfunding sites and schemes, there’s a whole sliding scale of potential investment levels.

At one end is the $5 ‘shoutout and T-shirt’ option, at the other there’s the likes of XTI Aircraft, which is sitting on a huge pot of ‘non-binding reserved shares’ for its concept vertical takeoff aircraft.

Since June 2015, the US Securities and Exchange Commission passed approval on the final Regulation A+ rules under Title IV of the JOBS Act - meaning companies like XTI can raise up to $50m in equity from both accredited and unaccredited investors, giving rise to investment into previously untenable projects like luxury air travel.

A more private way to get in on the jet market is simply to cough up big money and buy a pre-release unit. $595,000 will get you one of private aircraft company Cobalt’s ‘experimental’ planes, although it can’t be flown just yet as it is still awaiting a FAA airworthiness certificate.

Above this level is the $699,000 ‘special price’ for the first 50 customers slapping down a $15k deposit on the The Valkyrie, billed as one of the fastest piston aircraft on the market, and designed to be the safest.

At the moment, both the Valkyrie and the XTI are little more than a collection of shiny renders, verbose forward-looking statements and prototype craft, so what would make a consumer part with their cash?

XTI Aircraft has opened an equity crowdfunding campaign that it refers to as the ‘first fundraising effort of its kind in aviation history’

Both companies have experts in the boardroom (XTI boasts former presidents of Sikorsky and Cessna, Cobalt is headed by a former Altran engineer), proven designers and engineers working for them, and a wealth of technology at their disposal.

All are looking to benefit from faster design processes, low volume prototyping, composites, and smart components. Over five years in the making, Cobalt’s Valkyrie looks to use new technologies to enable better designs, such as reducing expensive cockpit parts and weight by using a Garmin G3X Touch glass cockpit, with its opening price knocking a large chunk off that of a standard small aircraft.

The tilt rotor XTI TriFan 600 (so it can operate without need of a runway) is expected to have the all important proof of concept ready within the next three years, and given that the final products are expected to sell from $10-to-$12-million each, such investment could lead to big profits.

Yet with hardware start-ups proving the biggest gamble for seasoned investors, is such crowdfunding a sign of failure to attract big business? The flip side to this is that the method is enough to gain enough capital to reach prototyping and airworthy accreditation stages earlier before big money is willing to commit - democratising the entire investment structure, and producing better products fast.

Only time will tell for both start-ups, but I know what’s on my dream Christmas list this year…

 

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