Motoring along

By Nikki Mandow

Monday 1st November 2004

Everyone knows it's tough being a startup entrepreneur. Established businesspeople mock or steal your ideas, the bank hassles you, and you get the finger from potential investors. For some, though, everything seems to fall into place. Take Robert Knight (right) and Bruce Polwart (left). In January, they came up with the idea for Landcrab, an all-terrain vehicle powered by electricity (rather than petrol or diesel as for other farm bikes and tractors), aimed at the lifestyle block/small farm market. Eight months later, the pair have a prototype, a strategic plan, and potential investors. Perhaps most importantly, they have landed themselves a free place in Auckland University of Technology's Technology Park, and therefore lots of help with the next stage of development.

Landcrab started last summer when Knight, a physiotherapist with a small block of land in Matakana, north of Auckland, watched his neighbour pottering about his vineyard on his petrol-powered farm bike. He'd ride the bike for a few metres, get off to tend a vine, then on for another few metres, then off again for more tinkering. It was, Knight reasoned, a woefully inefficient system, as you wasted fuel by leaving the motor running, or you kept turning it on and off, wrecking the starter motor. Wouldn't an electric vehicle be better? "I came home that night and rang my film technician friend Bruce and he came up that weekend with one that he had cobbled together from a golf cart. It worked really well."

Over the next six months, Knight and Polwart developed their idea, while continuing to run their respective physiotherapy and film businesses. Their tests showed their vehicle was cheaper, more reliable and cost-effective to run than existing all-terrain vehicles (ATVs). They also found that by placing the heavy batteries that powered the machine at the bottom, it was much more stable. ACC figures show about a third of all farm deaths are from rolling farm bikes.

The pair sussed out the market: approximately 140,000 lifestyle blocks and productive small holdings in New Zealand, with growth of around 5% annually. There are about 70,000 quad-bikes in the country, with 7,000 new ones sold each year. They visited the US and South Korea to talk to electric vehicle manufacturers and engineers and spent $40,000 of their own money.

Despite their inexperience with new product development, they got on rather well. "We decided early on that rather than iron out the problems with our early prototype, we'd step back and look at the market. We did a business and a marketing plan without having a final product," Knight says. Just when they were thinking about how to take their idea further, Knight and Polwart heard about the Unlimited/AUT Technology Park "Up-Start" competition. They entered as an exercise in putting a strategic plan together, rather than with any idea of winning. So they were somewhat astonished when they did.

"It's a bit scary how everything we've tried has fallen into place," Knight says. "I thought I would combine going to the US for my brother's wedding with a business trip to see an overseas manufacturer of a four-wheel drive system for electric vehicles. When I checked it out, the US engineering company was a 45-minute drive away from where my brother was getting married." Acquaintances they talked to offered financing (they haven't accepted any yet, though they'll be looking for some over the next few months as they develop their prototype before seeking some "real" finance to get the product to market).

The plan is to have their vehicle on the market in New Zealand by the end of 2005 and to be breaking even by year three and making a good net profit by year five. They are aiming at having 5% of the local lifestyle/productive small-holding market (with annual vehicle sales of 1650 and turnover of $4.5 million) by five years after the launch.

They are also investigating selling into overseas markets, starting with the UK, but that's not cheap. By the time the first profits come in, Knight expects Landcrab to have chewed through a cool $1.3 million in seed funding.

Even when things are going well, moving from Up-Start to fullyblown entrepreneur is a scary process. Learning about exchange rates, and the language of business (things like SWOT analysis, which the pair had never heard of before last month) so they can talk sensibly with potential investors, suppliers and overseas customers, is enough to raise a sweat.

Being part of AUT Technology Park will help, not only with basics such as office space and broadband connections, but also with providing credibility with investors, Knight says. There is also the benefit of mentors, and the expertise of other park occupants. "On our first day at Tech Park we were talking about what we needed to develop the electronics of the truck and we found there's a company in-house doing that sort of thing."

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