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Crash and burn?

6 September 2010

Is it just coincidence that days after I wrote this column the Martin Aircraft Company (MAC) starts trotting out press releases suggesting that they're doing really well and that the product is in great demand?

Well I have to say that it's a worrying sign from the company.

Now I'm not saying that this is the case with MAC but I've seen this kind of thing happen so many times before... a company starts trotting out all sorts of "look at us, aren't we doing well" publicity as they enter their death-throes.

It would be a huge shame if MAC have reached the point where their funding has run out and all those "expressions of interest" have amounted to nothing but if I were an investor, I would be concerned right now. After all, they still don't have a product to ship or any significant contract to supply.

They seem to be betting the silverware on setting up those "adventure tourism" operations that were initially touted a long time ago. Just this weekend I see that they've revived that prospect in the media but are talking about a cost-per-flight of around $320.

With the NZ dollar still hovering around the US$0.70 mark, that's an expensive ride, even for overseas tourists and I think it would take a long, long time (if even possible) to recover the $2m needed to set up the venture.

Before firing off press releases like these:

Thrillseekers to get chance to fly jetpack for $320 US military eying NZ made Jetpack

both of which are clearly designed to buoy investor confidence and help solicit further funds, I would have thought the company would have been telling us more about the huge new factory that must be in the process of construction as a result of this deal that was allegedly signed back in March.

I note also with great interest that the company is considering a public listing on the NZX within the next 18 months. Well I'm sorry but I'd put this right up there with IndraNet in terms of the likelihood of seeing any return on investment. As a technology venture I'd place in in the same league as that other Kiwi vapourware aerospace developer, TGR Helicorp and its Snark and Alpine Wasp -- with the same likely outcome.

In fact the parallels between MAC and TGR Helicorp are far to many to ignore.

It's not my desire to knock any Kiwi technology but I do feel that it's a shame so much taxpayer and investor money has been squandered on this ill-conceived folly.

This is especially true in light of the way the government's dollar-for-dollar $40m VC fund can't find any takers, simply because there are no private-sector investors willing to ante-up with their dollars to invest in the technology sector.

If this isn't a damning indictment on government's utterly failed policies when it comes to building any kind of hi-tech industry in NZ I don't know what is.

I feel so sorry for those smart, innovative, hard-working but capital-poor Kiwis who might be sitting on hugely valuable ideas and technologies but find themselves stonewalled at every turn in their attempts to raise the funding necessary to turn it into a commercial enterprise. They must frown every time MAC publish another "pie in the sky" press release on the back of the $1m they were *given* by you, me, and all those hapless capital-starved ideas guys.

So, bottom line...

I'm predicting that MAC will stumble on for a year or more at most. They'll do some more fund-raising but I doubt they'll attract much in the way of public capital.

Perhaps the government will ante-up with a little more of *our* money because they just love the photo-ops and the ability to crow about how well NZ is doing in the jetpack industry (what industry?).

I also predict that we'll see MAC change tack fairly soon.

Watch out for the announcement that they're diversifying into the "unmanned" jetpack market. I'm picking they'll claim to be developing a UAV version of the jetpack for military and commercial applications. Unfortunately, it didn't work for TGR and I don't think it will work for MAC

Today's questions..

Is MAC another example of exactly why governments should not try to pick winners in the technology area?

If MAC listed on the NZX, would *you* by shares in the company?

Is the failure of the $40m government VC fund proof that its policies in respect to hi-tech are completely worthless?

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