Yacht startup: is it possible to enter the industry?

Changing course for the yachting industry

In 2024, yachting startups have gone from rapid growth and a plethora of ideas to what the yachting industry is best known for – a smart and cautious approach. The most noticeable change has been a decline in investment in tech startups. Yes, you heard that right: despite the boom in tech development in the maritime and yachting industries, funding and venture capital investments are down compared to the pandemic era.

Today, investors have become more cautious in their investments, and this applies not only to startups. Due to the protracted economic crisis, which is becoming increasingly noticeable in Europe, investors are reluctant to spend money on too “revolutionary” products that may not “take off”.

The METSTRADE exhibition is one of many places where startups are not only discussed, but also announced on a regular basis.

This has had a direct impact on the percentage of startups that eventually managed to move beyond the “concept.” Today, it is no longer enough to have “burning eyes and a crazy revolutionary idea” to get money for your project. In addition, startups that have already entered the market with their products are also suffering. Investors are increasingly insistent on profits and demand specific profit amounts from startup leaders. This leads to the fact that some startups, even those that have received wide public recognition, risk closing soon, because they “do not demonstrate the necessary profitability.”

Ultimately, the inflated estimates and expectations formed over the past few years regarding the startup market are being replaced by more accurate forecasts. Will this affect the number of interesting yacht projects in the information field? Probably yes. We hope not critically.

What attracts investors to yacht startups?

According to Marine Industry News, there are a number of factors that are particularly attractive to investors. Here are some of them.

Artificial Intelligence and Yachts

Yes, while funding for tech startups is more selective than it used to be, AI is still a powerful attention hook for many investors. A startup doesn’t necessarily have to be AI-based, but having AI as part of a larger project can be a plus. 

Awake.ai is a startup that has created software to improve logistics at ports and marinas. The key element is the use of AI.

Naturally, artificial intelligence should be used meaningfully and not just included in a project for show.

A well-developed plan of action

A good idea is only part of the final product. The yachting industry is famous for its sustainable development, and that is why many investors come here. They are looking for a stable market that will not suddenly collapse or shock with a rapid rise in prices.

Marine Industry News claims that “startups with forward-thinking, flexible and dedicated founders have a much better chance of long-term success, no matter what product they’re working on.” The same goes for having a well-thought-out plan of action – prototype this year, pilot next year, small production, and if that doesn’t work out, test… 

Awikus is a subsidiary of Hyundai that grew out of a startup of the same name. It specializes in creating autonomous navigation solutions. Avikus technology was used for the successful autonomous navigation of the Prism Courage gas carrier. The vessel autonomously passed through the Gulf of Mexico to South Korea via the Panama Canal using Avikus' HiNAS 2.0 technology.

Specific steps attract not only investors, but also potential clients. When a person sees that a company offers a well-developed plan for all stages of product creation, then trust in the company increases.

Financial planning is a priority

Financial planning should be a priority from the very beginning of a yacht startup. According to Marine Industry News, poor financial planning is what dooms most new startups in the marine industry to failure. 

Dozens of books have been written on the topic of financial literacy, so we will only provide some of the main points:

• initial cost estimate – all expenses that will be needed at the first stage of product creation (development costs, operating costs, rent, etc.);
• forecast for 12-18 months – the second stage of financial planning, at which goals are formed for the “medium” distance and the amount of money for them;
• long-term perspective – the stage at which many investors and clients become involved in financing.

In the first two stages, you will have to invest your savings as well. Investors highly value the fact that you used your hard-earned money to create a startup – it shows your commitment to the cause.

Raising money is an ongoing process

For a yacht startup to thrive in the long term, it is not enough to raise money twice, lock yourself in a garage with a friend and create your own technology. For a startup to exist in the long term, it needs constant investment.

In fact, receiving constant investment in a startup of any direction is the best possible scenario. Returning to the topic of yachting, it should be noted that the presence of constant investment in a startup will also have a positive effect on the reaction of future investors.

Levels of Yacht Startups

There are several funding rounds for yacht startups. Each of these three main stages has specific goals, types of investors, and expected results. 

Pre-sowing stage

Funding amount: 60,000 - 300,000 $
Sources: work, friends, family, venture capital firms for early stage startups.
The goals of this stage are to validate the idea, create a minimum viable product, and conduct initial market testing.

This is the riskiest stage from the investors’ point of view. A startup may only have an idea, a small team, and an early version of the product. Investors are interested in the founders’ vision and the long-term potential of the business.

Sowing stage

Funding amount: 300,000 - 2-3 million $
Sources: Initial investors, venture capital firms for early stage startups.
Goals of the stage: creating a working product, launching the product, attracting the first clients and users, increasing popularity, branding.

The seed stage is crucial for a startup. At this stage, the idea is put into practice and the market entry begins, where the startup must find its real customer. Investors at this stage will look for evidence of market validation of the product, i.e. studying user engagement, revenue, reviews, etc.

Exit stage

Funding amount: 2-15 million $
Sources: venture funds, corporate investors
Goals: scaling, expanding the client base, hiring new key team members.

The exit stage marks the end of the startup – and the beginning of the company. At this stage, the company demonstrates its idea and long-term plans, as well as the possibilities for sustainable development. Investors receive their long-awaited profit, and the company reaches a new corporate level.

New video on the Interparus channel!

At the end of the year, we decided to diversify our classic videos a little with an unusual episode about airplanes! Sasha Goron will talk about Dragon Fly airplanes - and making your dream of the sky come true🛫

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07.01.2025