March 23rd, 2017
How Quebec’s Dubuc Motors is using U.S. equity crowdfunding to bring you a flashy, fast electric car
MONTREAL — For a region that has never had an automotive manufacturing sector and where winters are too harsh for most sports cars, Quebec City-based Dubuc Motors says it was surprisingly easy to find local sources for almost all the parts it needed to build a high-performance electric vehicle.
What has really proven difficult for the company is sourcing Canadian investors to help take its Tomahawk electric sports car from a prototype to the consumer market.
After years spent seeking financing close to home, Dubuc Motors is looking south, becoming the first electric vehicle company in the world to launch a car through the U.S.’s very new equity crowdfunding program.
“Nobody wanted to invest in cars in Quebec,” said cofounder and company chief executive Mario Dubuc. “We wanted to prove that our technology was different and we could make it.”
On Friday Dubuc Motors began their campaign to raise money through StartEngine, one of a handful of online platforms that facilitates the U.S. JOBS (Jumpstart Our Business Startup) Act, which allows private companies to connect with investors for the funds they need.
Dubuc and business partner Mike Kakogiannakis met in Moncton, N.B., where Dubuc’s wife ran a chip wagon near Kakogiannakis’ wife’s ice cream parlour. The two bonded over their mutual love of cars and, although neither had formal experience with the automotive industry, in 2004 began designing the Tomahawk electric sports car part time.
Kakogiannakis, 33, says he believes Tesla Motors Inc. “paved the way” for the electric car market in North America and gave the industry a credibility it needed.
The Tomahawk looks like a hybrid between a Dodge Viper and a Tesla Model S, with a hint of Lamborghini. It can go from 0 to 60 km/h in three seconds and has a top speed of more than 250 km/h — higher than those in the Tesla line. It also has a bonded aluminium chassis invented by the Dubuc Motors team, something Kakogiannakis saiys he was inspired to create after he took up flying planes.
Four years ago the entrepreneurs made the leap to work full time on the car.
Every component of the Tomahawk is sourced from within 45 minutes of the company’s Quebec City facility, Kakogiannakis says, except the windshield, battery and tires.
What was difficult locally, was finding either government support or investors willing to put up capital for the company.
Dubuc says for two years the company tried to find funding in Quebec and elsewhere in Canada.
“All the time it was ‘no’ and closed doors. When I started everybody thought that I was a fool because nobody was making cars in Quebec,” Dubuc says.
“The reason it took (us) 12 years is, I believe, that society wasn’t ready,” Kakogiannakis says “In 2004 when we were talking about this, people looked at us very strangely.”
Still, Tesla’s brushes with bankruptcy have drawn unfavourable comparisons when Dubuc Motors approached venture capital firms, making it difficult to secure funding.
“They don’t seem to think about how (Tesla) was the first one on the planet to come out with an electric car, the hurdles they had to go through and the naysayers along the way,” says Kakogiannakis, who is also Dubuc Motors’ chief operating officer.
He says at first he worried the company was doing something wrong in the way it sought financing, before learning that even Tesla CEO Elon Musk was unable to secure venture capital in the early stages.
“I realized that he laid it on the line himself, while he had a lot more capital and stature than we did. If he didn’t find (VC funding), what were the chances that we would?”
So far, the company has spent more than a million dollars developing the Tomahawk, sourced entirely through Kakogiannakis and Dubuc’s personal resources, in addition to some “love money” along the way.
“My paycheque for the past three years has been zero,” says 51-year-old Dubuc, who began working on cars out of personal interest at 14. “I didn’t want to be 70 years old and regret that I didn’t do this.”
That drive led Dubuc Motors to StartEngine, which is helping the company take advantage of the JOBS Act, a process sometimes described as being like a “mini IPO.”
Kakogiannakis says the target is to raise $15 million for a minority stake in the company, somewhere around 10 per cent, though the final amount would depend on how investors react to the initial campaign.
Because the Tomahawk is designed to be the only “2+2”-seat (built for the driver and one passenger in the front plus two smaller seats in the rear) electric sports car, Dubuc Motors believes this is a demand not currently being met.
Kakogiannakis says although Tesla’s current line of cars may look sporty, the target market is not the same as those who would be in the market for a high-performance roadster.
“We wanted to develop a product that wouldn’t compete with the big automakers. If we were to do that we would get hammered,” he said. “What we’re trying to do is complete Tesla’s line, not compete with it.”
This car is not for everyone in either the electric or combustion engine realm, as Dubuc Motors is aiming for wealthy customers who want a flashy, fast car.
The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more About Us or visit www.ncfacanada.org.