Kiteboarding business

[MG]

Does anyone know some basic facts and figures about the kiteboarding market?

How big is the WW market/how fast is it growing?
Which private equity firms are backing some of the major players?
What are annual sales/market share of any of the majors (North, Cabrinha, Slingshot...)?
What are the margins on manufacturing; distribution/retail?

thanks a lot

MG

[feixaq]

Haven't seen any stats available re: size of addressable market, growth rates, gross or EBITDA margins for the kiteboarding market... a lot of people reuse the quote that kiteboarding is the "fastest growing watersport", but obviously CAGR is going to be high off a small base. I'd hazard that kiting is still a niche sport; in any case, too small for VC/PE firms to back on an institutional level. However, I wouldn't be surprised if some partners/principals at some firms have invested personal money into specific companies -- cf. Alex Shogren at Best Kiteboarding was formerly at Tuna Capital.

[bigkahuna]

I tried to research this a couple of years ago and didn't find much.

What are the margins on manufacturing; distribution/retail?

Back 2 years ago when I was more involved in the sport, markup (from distributer to dealer) on kites was about 30-50% and boards 20-30% (based on MSRP). My best guess would be that the price from the manufacturer (based on my limited dealings with China) is about half of that. Most dealers (here at least) are lucky if they average 20% profit margin. Like most sporting goods, they make most of their profits on accessories (markup is around 50% and most sell at full retail).

[obie]

Regarding marketshare of "extreme sports", kiting isn't like snowboarding (read mega-growth) where thousands of kids can haphazardly slide around in the great outdoors and drive home to tell mom and dad about it. You have to be a bit more of a thrill seeker to spend money on equipment (IMHO). But I could be wrong, I'm a newbie and I'm hooked. What's stopping the rest of the world?

[feixaq]

I am most definitely NOT a Best shill, but I thought this press release was interesting from a business perspective. Never thought a kiteboarding company would get funded by an institutional investor, but I guess I was wrong. It's unclear, however, at what valuation Allen & Co. made the investment, and how much was invested in the Company vs. providing some shareholder liquidity to Alex, Shannon, et al:

BestKiteboarding.com Secures Financing

BestKiteboarding.com, the Web-based action sports manufacturer and retailer founded by internet entrepreneur Alex Shogren and professional wake-boarder turned kite-boarder, Shannon Best, has closed on its first round of funding led by Allen & Co., the New York investment bank. Other investors include several influential names from Wall Street and the action sports industry.

Ian Huschle, CEO of parent company Best Action Sports, Inc., said, ìWeíre extremely well positioned with the business experience and financial backing of our new partners. This investment gives us the wherewithal to push forward with our broad development plans for the brand, both within kite sports and the wider action sports market.î

Only two years after BestKiteboarding.comís disruptive online business model rocked the action sports world, the company has achieved tremendous success and is now the leading kiteboarding manufacturer in the world. The companyís content rich Web site merges e-commerce and community of interest features, allowing for a truly unique and effective approach to marketing and selling action sports equipment. This strategy is further supported by its extensive traditional distribution chain, through 300+ retailers around the world.

Best Action Sports, Inc. Founder and Executive Chairman Alex Shogren said, ìWe sold our first kite two years ago this month, and now we are the largest kiteboarding company in the world. This incredible achievement has perked the interest of Wall Street and weíre very pleased to welcome our new partners. Best Kiteboarding is already positioned for its best year yet in terms of retail sales. Weíre only two months into the year and pre-orders for our new user-friendly kite, the Waroo, exceed those placed by dealers last year for our entire product range.î

Partner and Founder Shannon Best said, ìWe knew we had market leading product this year as soon as we got feedback from our European dealer conference in November. We then got additional positive reinforcement at the SIA show in Vegas for our snow-kite product line. While other kiteboarding companies are suffering due to decreasing market share, we are both consolidating our leading position in the market and increasing the size of the market by attracting new participants with our aggressive pricing modelî

Terms of the deal and amounts were not specified but the company reported that capital will be used to broaden and accelerate itsí significant R&D program, helping fund further advances in kiteboarding development and seed its aspirations within the action sports and mixed-media delivery markets.

Best Kiteboarding is the largest kiteboarding manufacturer and retailer in the world, and its philosophy is simple: offer the best kites, boards, bars and all other equipment one needs for a safe and fun kiteboarding experience at extremely affordable prices. Best Kiteboarding is staffed and run by kiteboarders - people who live, breathe and dream of kiteboarding. Its unique approach to selling and distributing kite gear, combined with a work hard/play hard ethic that runs through all levels of the company, has enabled it to consistently deliver the Best prices and products in the industry.

[Live2KITE]

Kiteboarder Magazine tried to assess the market growth from the manufacturer perspective. Unfortunately they didn't collaborate enough.

[MG]

so they did not get anywhere? or they have only rough estimates. Also, did they get at the market size - i think that is even more interesting questions (the growth will no doubt be pretty high, but what's the current base?)
Do you have any idea?

[elli]

Its all private companies, so getting data is not easy. Most of them have no interest in releasing data.

When Best say they are the biggest, that may be based on feedback they get from their retailers, which is also not accurate.

If they got funding based on an evaluation that they are the biggest kiteboarding company in terms of units sold or dollar sales, they probably had to proof this claim somehow to the investors. I wonder how.

After the Hellfish fiasco Best brought an experienced corporate CEO, a finance guy not from the kiteboarding industry. I believe this was a key in getting the additional investment. Investors look thoroughly at the experience and background of the management team.

What this guy was not so successful in doing, is make Alex Shogren (the founder) control his big mouth. :mrgreen:

[Live2KITE]

Well there is a lot of history of both the guy who came in as well as where he came from.
Anyway, Best was using export data from China on kite products exported. What is being produced is only indicative but inaccurate for showing market size, since inventory is getting buffered upstream. (e.g.dead inventory sitting in someone warehouse).

Interesting I had this discussion recently on market size. Look at the european market as an example. Well sponsored events, high exposure in TV and Media, big companies (outside of sports) participating and putting money in the sport, why don't we have the same in the US? At this point we are left w/out a major sport event in the country, except from King of Bay that is getting revived thanks to a local star. Everything else terminated due to lack of sponsorships.

Anyway, my point is that without getting explicit data about the US market size companies don't trust their marketing budgets to kiteboarding.
We are trying to change that.

MG - why the interest?

[Greg]

I found this tread interesting.
Alex's web company was called TUNA something... and the line about controlling his big mouth was too funny!
I think American companys are reluctant to put money into kite boarding becouse there exposure -vs- potential profets doesnt add up to good business models.
Frankly I think getting into (starting or financing) a kite boarding business is a very slipery slope... Anybody that jumps in (with the facts) either has money to burn or balls of steel. What I will say about BEST is those folks are not the type to hold back. Either way, I love there self confidence.
Greg Boyington. AKA. LM.G.