When it comes to raising money, Eclipse Aviation Corp. has always been in the wrong place at the wrong time, says its president and chief executive, Vern Raburn.
For instance, when Eclipse was founded in the late 90s, dotcom mania was in full force, and no one wanted to hear about a company whose mission was to manufacture airplanes that would make private jet travel affordable for commercial air passengers. Then, when Eclipse went back out to fund raise a second time, the dotbomb meltdown had hit full force, and investors rapidly retreated to the sidelines to lick their wounds. And, just when it seemed it couldn’t get any worse, the Sept. 11 attacks happened, blowing Eclipse’s fund-raising efforts almost completely off course.
“Between all of that, the investor sentiment toward the end of last year was, Go away, leave me alone. I just want to survive this year,'” Raburn explains.
Despite those seemingly insurmountable difficulties, the Albuquerque, N.M.-based company recently managed to raise a whopping $100 million in its third round of financing. The company closed on $62 million in September, and brought in an additional $38 million this month. Most of the capital came from undisclosed private individuals. In fact, a majority of the $220 million Eclipse has raised to date has been put up by private investors, Raburn says.
“Aviation start-ups are rare entities, and their track record is abysmal,” he adds. “Investors don’t look for a reason to say yes, they look for reasons to say no. It’s easy for them to say no because they don’t know anything about this area.”
Building airplanes is a capital-intensive business, however, so Raburn is already talking to investors about a $100 million Series D round, which Eclipse expects to complete by year-end.
The company has developed the Eclipse 500 jet, which is purported to be the first business jet with a price tag of less than $1 million. The twin-engine airplanes, which are roomy enough for five passengers and a pilot, are expected to begin rolling off the assembly line next year. But the company has some tough challenges ahead before that, namely an 18-month flight test program during which it will do all of its certification work with the Federal Aviation Administration. The certification is similar to the approval process pharmaceutical companies go through with the Food and Drug Administration, Raburn says.
The company will target private pilots and corporations that own their own aircraft fleets. It will also look to break into the air taxi business, which would enable business travelers to call and meet the plane at a nearby airport and then travel to any destination he or she wishes for less than the cost of a coach fare on a commercial airliner.
Currently, Eclipse has the capacity to manufacture 600-700 airplanes per year. In the future, it could produce up to 3,000-4,000 planes annually.