After more than three years in business, Ryno Motors has nearly finished its third and final design for a one-wheel motorcycle that’s worthy of RoboCop. It’s a sleek and sporty machine that, most importantly, stays upright and drives with ease.
Now the Vancouver start-up faces a new, more daunting challenge: funding.
“We’re stuck right now,” said founder Chris Hoffmann, a mechanical engineer with 15 years of experience in the automobile industry. “Investors love the idea but they don’t know who the market is.”
As Clark County’s economic development officials and business leaders turn to small business creation as one solution to high unemployment, Ryno’s story illustrates just how difficult that strategy will be. Finding the funds to turn innovation into solid businesses is one of the largest hurdles to job creation through small business.
Ryno faces a classic catch-22 for early-stage start-up companies, said Byron McCann, managing partner of Ascent Partners Group, a Seattle angel investment firm. Founders need funding to reach the next stage but their concept isn’t developed enough to make investors comfortable with the level of risk involved.
“A little bit clearer definition of the applications of the Ryno will help him raise money,” said McCann, who is also a co-chair of the Northwest Energy Angels and an advisor to Ryno Motors. “My sense is investors would say, ‘if you can show me you can take it one step further in ridability, then I think I’d be willing to believe there’s enough of a market that you can build a company around it.”
Though Hoffmann hasn’t yet been successful in securing outside funding for his business, he’s taken all the right steps to make that outcome much more likely, McCann said.
Hoffmann has so far invested about $25,000 of his own money engineering and building the prototype motorcycles with a mishmash of abundant, cheap parts scrounged from the robotics industry. That focus on systems integration, instead of designing his own specialized components, was the key to keeping his initial production costs low, he said.
His first prototype, for example, was slapped together with spare parts in a wooden casing for about $3,500. That’s pennies compared to the millions investors spent developing the Segway 10 years ago, Hoffmann said.
Hoffmann has since brought in two partners to help him tailor the design to his largest target market: police departments. The newest prototype is an expansion on the original with more advanced software programming and features, such as full suspension and a battery with double the charging capacity.
Police departments make an ideal customer base because they already train officers to use motorcycles, Hoffmann said. Ryno’s machine also represents an improvement for patrol officers, who like the added ability to dismount quickly from the unicycle in pursuit of an offender.
The Vancouver Police Department recently got a sneak peak of Ryno’s second prototype and immediately saw its potential to improve their patrols in city parks and downtown, said Sargeant Patrick Johns, traffic team supervisor for Vancouver Police. Johns was impressed by the motorcycle’s versatility in terms of its speed, maneuverability and range, which offer advantages over traditional pedal-powered bikes.
The officers haven’t yet ridden the machine, however, and more tests would be needed before a purchase decision could be made, Johns said.
“We’re eagerly awaiting his final product to take it and test it out,” Johns said.
An emotional ride
Ryno’s challenge will be to prove the concept to investors by drumming up interest and orders when the company has only built one bike. Hoffmann figures he needs to raise about $50,000 to build five to six more bikes, which he plans to loan out for demonstrations.
With a few orders in hand, he’ll need another $500,000 to $1.5 million to ramp up production, depending on how fast the business will scale up.
“We’re still looking for an uber-rich gearhead investor” to take a chance on the company, Hoffmann said.
In the meantime, he’ll keep tinkering with the motorcycle, optimizing its cost and features.
Looking for funding can be a wild, emotional ride that saps an entrepreneur’s creative energy and attention, Hoffmann said. If he focuses too much on attracting investors, Hoffmann is worried that the passion for his invention, the lifeblood of his business, is likely to suffer.
He’ll keep growing the business the way he always has.
“Forget the angel investors,” Hoffmann tells his team, “let’s just build some bikes.”
That bootstrapping strategy is likely to pay off in the long run, McCann said, because attracting angel funding isn’t just about the product or service a company develops, but about the relationships they build with potential investors.
Hoffman has demonstrated resourcefulness and persistence by radically improving each of his three prototypes within three years, McCann said. By staying in continual contact and communicating that progress to potential investors Hoffmann is building trust, he said.
“The chances for landing serious funding are quite good if they have the prototype three in their hands and if they can do some more validation of their primary market segment,” McCann said. “Then I think investors will feel convinced that the primary market will help sustain the business.”