The Pitch: "We sell cool, fun equipment for skateboarding and snow sports. Designers bring us original products: We buy the patents and handle manufacturing and distribution. Our products are known for their advanced design. The Flowboard, our top seller, has a greater range of movement than a regular skateboard. The demand for our products has been so high that we haven't been able to keep up. During the last two holiday seasons, we sold out of almost everything. We're in the process of acquiring three new products to launch in the fall. We're looking to raise capital to finance inventory, ramp up marketing, and develop new products."
Owners: Michael Kern and Scott Rickett
Location: Long Beach, California
2008 Revenue: $3 million
2009 Projected Revenue: $10 million
Products: Flowboard, a 14-wheeled skateboard; Snowskate, a skateboard that works on snow; and Snowchuck, a snowball launcher
Profit Margin: About 60 percent
Retailers: Some 800 stores, including Wal-Mart, Target, and Toys "R" Us
Funding Sought: $3 million
The Experts Weigh In
May Need More Capital
Sport Technology certainly has a hot product line. I couldn't find a negative review online, and the products, particularly the Flowboard, seem to have breakthrough designs. The company has an interesting product acquisition model, and I like that it owns the patents. I'm concerned about the revenue projections, though. Any time a company says it can triple revenue in a year, you have to wonder about its ability to scale. The $3 million may be sufficient for inventory and operations, but it seems that the company might need more for sales and marketing support.
Santa Monica, California
Continue to Bootstrap
This company has definite traction in the market, and it has lined up strong retailers. It could benefit in this economy, because its products are relatively inexpensive in comparison with many other products in the skating and snow-sports categories. The question is whether these products will be novelty items or gain lasting, widespread appeal. The margins are very good, so Sport Technology should be able to achieve more growth internally. It would serve the owners well to bootstrap a little longer and avoid diluting their stake in the company.
Easton Capital Investment Group
New York City
Keep the Patents Coming
Sport Technology really isn't in the business of selling skateboarding products. It's in the business of finding and buying patents. But what gives this company a competitive advantage in finding the next hot product? Investors will need confidence that this team can replicate those results over and over again. Sport Technology should also focus on defending the proprietary nature of its products. The patents offer some protection, but there aren't tremendous barriers to entry. Overall, though, the pitch is intriguing.
Highland Consumer Fund Highland Capital Partners