Riding the EV Wave: Our Investment in Arc
The transition from fossil fuels to electricity in the multi-trillion-dollar transportation industry is an inevitability. We find ourselves at a critical inflection point for electric vehicles: The climate crisis and resulting legislation have intensified, powerful long-range batteries are becoming cheaper to produce, charging infrastructure density is increasing, and consumers are becoming attuned to the higher reliability and lower maintenance costs of EVs. The technology curve of EVs is converging with consumer demand and environmental necessity. The time to build is now.
The Right Moment for Marine Electrification
Tesla electrified our commutes, and other modes of transportation are quickly following suit. We believe that the marine industry is the next frontier of electrification for five key reasons:
- Battery and motor technologies have advanced to the point of being able to sustain high speeds for traditional hull boats, creating a powerful, smooth ride that outperforms combustion engine counterparts.
- The charging infrastructure for electric boats already exists. Most marinas already have 240-volt outlets, since even combustion engine boats require electricity. Some have DC fast chargers.
- Any prospective boat owner has probably been warned: “The best two days of boat owners’ lives are the day they buy it, and the day they sell it.” Combustion engine boats are unreliable and maintenance nightmares, and engine failures out on the water can be downright scary. Electric boats have much simpler engineering, and their engines are tightly sealed so no water enters. This means much higher reliability and fewer outings spoiled by mechanical issues.
- Between maintenance and gasoline costs, combustion engine boats get expensive. The average boat owner will pay $5,000-8,000 per year in maintenance costs, which decrease dramatically when shifting to electric. Fuel at marinas costs about a dollar more than at the gas station, and boats get terrible gas mileage—most sport boats get less than two miles per gallon, far worse than even a semi truck.
- Regulation promoting EVs in the marine industry is on the horizon. There are several bodies of water in Europe that have already banned the use of gas boats, and some in the U.S. are following suit—California will require certain commercial vessels to be electric starting in 2025. Restrictions on the use of gas boats (e.g., fueling restrictions, higher launch fees, etc.) are on the rise, and less fuel-efficient two-stroke engines are broadly banned.
Combining Cutting-Edge Tech and Master Marine Craftsmanship
Given the tailwinds propelling us forward, we are excited to invest in Arc. Led by a team of former rocket engineers and marine enthusiasts, Arc blends modern aerospace design and manufacturing techniques with traditional marine craftsmanship. They design their own battery packs, powertrain, thermal control systems, and software in-house. Their development times are incredibly fast; they launched their first model, the Arc One, about a year after the company was founded.
The Arc One boasts market-leading specs: 500 horsepower (2x a Tesla Model S), a top speed exceeding 40 mph, and three to five hours of range. The custom-built twin battery packs feature state-of-the-art cooling technology that allows them to charge faster and last longer than others on the market. The powerful electric motor creates a remarkably quiet ride—the roar of a traditional combustion engine replaced with the sound of the hull cutting through the water.
From Aerospace to Waterways: A World-Class Engineering Team
Any tech investor knows that “hardware is hard,” but we are confident that Arc has the right team to electrify the marine industry. Arc’s founders share a love of water sports and the technical aptitude to deliver cutting-edge hardware products. CEO Mitch Lee grew up in the Bay Area and spent weekends waterskiing with his family on the Sacramento River Delta. He started his career working on the Apache helicopter at Boeing and spent time building software as the founder of Penny, a consumer fintech company that was acquired by Credit Karma. CTO Ryan Cook is a lifelong engineer—at the age of 6, he says his whole family knew he had a career in engineering given the contraptions he would build around the house. He also worked on the Apache at Boeing, and continued to hone his technical skills at SpaceX, where, as lead engineer, he spent almost eight years building rockets. The two of them have been talent magnets, recruiting former colleagues from SpaceX to help build Arc, while also drawing engineers from Tesla, Rivian, Joby, GM, and existing marine companies.
Accelerating Towards the Future of Transportation
The future of transportation is upon us. Innovative companies like Arc are harnessing cutting-edge technologies to drive us to a brighter future, one that is not only ecologically sustainable but can bring about more efficient, safer, and user-friendly modes of transportation for people worldwide. With a history of investments in forward-thinking transportation innovators like Uber (NYSE: UBER), JUMP (acquired by Uber in 2018) and Whisper Aero, the team at Menlo Ventures is excited to back transformative companies that will drive transportation forward. If you are building in the space, we’d love to hear from you.