The Pitch: In 1999, I lost most of my right leg in a traffic accident. When they told me I would never drive a regular car again, I bought a Ferrari. I discovered that no one in the United States alters sports cars for disabled drivers. So I struck a deal with a manufacturer in Italy and started RediAuto Sport. We have two product lines--a sports car line with hand controls for the accelerator, brake, and clutch; and the Soft Touch, a lever that lets older drivers accelerate and brake by hand. We're mainly selling direct to consumers. But one of the country's biggest Ford (NYSE:F) dealers wants to display Soft Touch in its show room. And a top car-rental company is interested, too.
Company: RediAuto Sport
Owner: Daniel Reyes, 47
Location: Santa Monica, California
Employees: 9
Founded: 2004
2006 Revenue: $6,500
2007 Projected Revenue: $900,000
Clients: Disabled and elderly drivers
Financing so far: $2.2 million ($1.1 million of Reyes's own funds and $1.1 million from an angel investor)
Investment Needed: $6 million for product engineering, marketing, and sales
Recent Buzz: Mentions in The Wall Street Journal (NYSE:DJ), Disabled Dealer, AutoWeek
Investors React
Hook the dealers
Reyes is very smart to talk to dealers. If he can show them how to make money by upselling his products, he can build a really good sales channel. The drawback is that after-market parts--parts you install after you buy a car--are very difficult to scale. Many seniors would be more comfortable if Soft Touch were an option offered by car makers because they don't want to mess with the car or the warranty. Reyes should raise $250,000 to $500,000 and use it to get commitments from dealers in places such as Florida and Arizona that have older populations.
Target seniors
Reyes needs to narrow his focus. The sports car idea doesn't interest me because it's a limited market. But as a former physical therapist, I'm intrigued by the hand controls that enable seniors to drive. We baby boomers are having trouble doing things we used to do. Reyes should raise $2.5 million to $5 million and use it to secure more distribution. It's nice that dealers and the car rental company have expressed interest in the product, but it's not enough to hook investors. An actual letter of intent from a dealer is what investors really need to see.
Perfect the product
It seems like Reyes has spent more attention on marketing than on the product itself. If he's buying the products from an Italian manufacturer, he should get it to pay for product engineering. I like the concept for both products, but I think he's underestimating the competition, and I think the projected growth rate is unrealistic. Plus, I'm not sure that Reyes has worked out how consumers will pay for it and whether insurance will cover it. Finally, the burn rate is fairly high for a company with such little revenue. At this point, he should raise more funds from angels.
