Wing Acoustics Ltd

Investment Details

Investment Target
$1,780,000 - $1,780,000 NZD
Pre-Money Valuation
$0 NZD
Investors
54
Time Remaining
Closed

Investment Status
115%
$2,050,471 NZD
115% of maximum target

CEO of Wing Acoustics, Chris Hardy, pitched to EA members and guests in February. Since then, Enterprise Angels has undertaken Due Diligence on Wing.  The DD team found this opportunity particularly exciting because the product is so disruptive it could revolutionise the audio driver/speaker industry. The driver performance is game-changing, the industry verticals are massive, however, focus on securing licensing deals in the headphone industry is a must, and this is not an easy task to execute.

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Business Summary:

Wing Acoustics have reinvented the loudspeaker, developing the world’s first rigid audio driver (the acousticWING®) that delivers the purest sound ever heard combined with the deepest, distortion-free, bass - It looks like nothing seen before. The IP is extremely robust; the first PCT, filed across 150+ countries, is over 700 pages containing up 69 inventions, the 2nd PCT contains up to 26 further potential inventions. Wing have also recently filed National Phase patents across 67 countries. Their first US patent was granted in October 2017 securing the world’s largest audio market for the next 20 years through a continuation filing strategy. They aim to license this technology, and further innovation, either directly to audio manufacturers and brands or in joint development with audio manufacturers.

Who we are:

Wings Acoustics are an audio engineering company based in Auckland, New Zealand. The two co-founders/ inventors, Mike and Dave Palmer are brothers, audio engineers and classical musicians. They have been working on this revolutionary tech for over a decade, but really hit their straps around six years ago, when they created what has been described by some of the world’s foremost audio engineers as “The world’s best headphones”.

Customer Problem:

Currently, virtually every sound device on the planet uses a conventional ‘cone’ audio loudspeaker driver. Based on 100-year-old principles, cone speakers operate using a trampoline-like suspension and a floppy-piston action to move air and make sound. This jelly-like movement shakes masses of unwanted vibrations (resonance-distortion) into your music, significantly polluting the quality of the original audio – even in expensive audio systems. The industry, both manufacturers and brands, try to manage this resonance-distortion to improve sound quality, but it cannot be eliminated from conventional audio drivers.

Wings revolutionary audio drivers deliver ZERO resonance-distortion over the widest operating ranges ever achieved, resulting in:

  • The Purest sound ever heard
  • The Deepest bass in headphones (with zero resonance-distortion)

Their driver, the acousticWING® is the first real innovation in loudspeaker drivers in almost 100 years.

Product/Services:

Their aim is to license their audio loudspeaker drivers for deployment in headphones, home-audio systems, ear-buds, automotive systems, televisions, mobile phones, PC’s, noise cancellation products, portable speakers, music studio systems and any future sound generating device where world-leading pure sound quality and deep bass is required.

Target Market:

Audio manufacturers/ brands worldwide. The market globally for headphones alone is worth approximately US$16 Billion in total unit sales. Wings aim for a 10% penetration of this market, at least, within 3 years.

Customers:

B to B. They will sell to audio transducer manufacturers and audio brands the rights to manufacture using their acousticWING® technology. In the same way Dolby sells their ‘inside’ technology to Hi-Fi brands, or Intel sold to PC makers. The path to license breakthrough technology via licensing agreements within specific geographies and verticals is a well trodden path in the audio market.

Sales/Marketing Strategy:

The aim of their sales strategy is a simple one. To secure licensing contracts with major audio manufacturers and audio brands. To do this they take their core technology (production ready prototype, CAD-Drawings, Bills of Materials, Patents Files and Testing Data) on roadshows -- selling directly to large manufacturers and brands via targeted direct sales campaign; and also via highly specific audio trade shows in Europe and the USA. Wing Acoustics was selected, from audio start-ups around the world, to exhibit as a free participant in the Newcomers area at the High End International Audio Convention in Munich,10th - 13th, May 2018. With over 900 brands, and 20,000 visitors, High End is one of the world's largest audio shows. Wing’s selection, based on new innovation in the audio field and a real world-first, was a further validation of the company’s unique technology.

Their 2-3 person sales teams - made up of their CEO and lead engineers are supported by a cohort of lawyers, licensing specialists and finance experts who slot into specific sales cycles with each prospect as required.

Over the past 12 months, they have demonstrated the Wing to over 30 of the foremost acoustic engineers, and their headphones and home-audio prototypes have consistently stunned them (see their IM on the feedback). They recently spent a day at Neil Finn’s (Crowded House) famed Roundhead Studios in Auckland, demonstrating to their music recording engineers. Videos of their stunned reactions can also be viewed on their website.

They will also drive recognition and profile through pop-up demonstrations in LA, NY, UK, etc. and build social media buzz. This will be timed with coordinated with sales cycles to manufacturers and audio brands.

Business Model:

Wings aim to license this technology either directly to audio manufacturers and brands or in joint development with audio manufacturers. As an example they are currently in discussions with a large audio brand in the UK. Discussions are confidential, but encompass potential; joint development, joint IP, global scale manufacturing and licensing across particular verticals and potential equity opportunities.

Competitors:

Audio manufacturers selling conventional cone loudspeaker drivers. There has been little advancement made in this field in almost a century so the potential market penetration is substantial.

Competitive Advantage/IP:

  • Reinvention of the audio loudspeaker driver
  • Up to 100 potential inventions secured in first two PCT global patent applications allowing for protection in up to 150+ countries
  • First US patent granted October 2017 securing 1/3 of global audio market for next 20 years by adopting cascading yearly filings
  • Up to 67 patents filed across top licensing targeted GDP countries
  • Rapturous feedback from many global audio brands and significant interest from media
  • Purest sound ever heard
  • Ultra-deep bass (with zero resonance-distortion)
  • Looks like nothing seen before

Use of Funds:

  • File additional PCT applications for their latest generation audio driver prototypes and audio driver concepts for mobile phones, PC’s tablets, and TV’s.
  • File acousticWING® trademark in key countries.
  • Demonstrate their latest prototype to potential strategic partners.
  • Begin new audio driver development, mid 2018, for verticals outside of headphones such as: Ear-buds, Automotive, Television, Mobile phones, PC’s, Noise cancellation, Portable speakers.
  • Look to secure licensing transactions across multiple verticals prior to the end of 2018.

Shareholder Value:

While a formal IPO strategy is not being pursued it remains a possibility. The core strategy is to focus on a strong revenue and profitability path within 2 years with an industry sale the most likely liquidity event in the medium to long term. By focusing on the core licensing strategy, and avoiding the cost and complexities associated with initiating a manufacturing base, and building a retail brand of our own, we are aiming at a margin rich operational configuration – a small R&D team supporting a lucrative licensing play in multiple verticals and geographies. Dividends on an annual basis will be more likely in this scenario.
 

Overview as at June 2018

Website
https://wingacoustics.com/
Industry
Audio Engineering
Founded
2004
Employees
3
Funding Stage
Seed
Burn Rate
US$110K per month
Deal Type
Convertible Loan
Contact
Chris Hardy
Board / Management

Chairman: Simon Harding

CFO: Tony Letcher

Co-founder/ Exec Director: Mike Palmer

Co-founder/ Exec Director: Dave Palmer

CEO: Chris Hardy

Advisors

Lawyers NZ: Johnston Prichard Fee Ltd

Lawyers UK: Birketts IP

Lawyers US: Alston & Bird

IP lawyers Australasia: Discover IP