Steve Gervasio · Fri, 09/23/2011 - 11:02
Business
Business Overview:
The E-Crete Company (E-Crete) was formed to capitalize on the development activities, carried out over the last few years pertaining to the roll-out of a modern, practical and environmentally friendly alternative building material in the United States – E-Crete AAC, (Autoclaved Aerated Concrete). E-Crete-AAC is a highly cost effective and environmentally superior product that, if developed in a systematic manner has the potential to become a significant building material in the domestic construction industry in the foreseeable future. The E-Crete Company is seeking $6,000,000 in equity. Based on the current projections, the equity investor will receive over a 3X multiple on investment within 7 years. E-Crete has the exclusive USA rights to a proprietary technology for the production of AAC product and for the construction of factories to produce E-Crete AAC.
Project Type:
Industry:
Project Website:
http://www.e-crete.com What are your future milestones, and how much capital will you need to achieve each of the milestones outlined?:
E-Crete expects to have the Vineland plant back in operation in early 2011 to begin supplying the pent-up demand in the NJ/NYC area, and as a base to be able to supply materials and demonstrate the 3AC process for further franchise development. The Vineland plant is projected to achieve sales revenue of $1.9 million in 2011 building to about $13 million by 2016. Projected results of operations are for a loss (after interest expense) of about $530 thousand in 2010, and profits of $4.3 million in 2016. The plant should be operating profitably (before interest expense)by year end 2011. Cash Flow from operations is projected to be positive $810 thousand for 2012 and $4.3 million for 2016.
Starting in 2012, the Company will be pursuing franchise/J.V. operations throughout the USA and expects to be adding two plants per year.
How many future rounds of financing do you project? :
To execute its two-phase Business Plan, the Company is seeking to secure $35 million in equity funding over a five year time-frame; this equity funding will represent 45% of total company equity with 45% retained by Svanholm Holding Company in exchange for its proprietary 3AC Technology and 10% allocated for initial funding, costs and management.
Who is the Customer?:
E-Crete-AAC is a highly cost effective and environmentally superior product that, if developed in a systematic manner has the potential to become a significant building material in the domestic construction industry in the foreseeable future.
What is the Customer Pain that you are solving?:
Produced for more than 80 years in Europe, AAC offers considerable advantages over other construction materials, one of the most important being its very low environmental impact – AAC is a “LEED” certified material. AAC’s high resource efficiency gives it low environmental impact in all phases of its life cycle, from processing of raw materials to the disposal and/or recycling of AAC waste. AAC is in fact a naturally occurring mineral – tobermorite 11A – and the raw materials to produce AAC are all common, readily available and eco-friendly – silica sand, cement and/or lime, aluminum and water. Use of some other materials such as fly-ash, mine tailings, rice hull ash and paper ash may also be used, with appropriate quality control procedures. The chemical reactions occurring during production of AAC do not produce any CO2 or other green-house gasses.
What is the Target Market?:
In 2003, The Svanholm Group contracted with Ducker Research of Michigan, to conduct a
Market Feasibility review for the market for AAC from a plant in New Jersey. (The complete
report is available for review). Based on the Ducker study, the market potential for AAC in an
area that can be readily supplied from the Vineland, NJ region is conservatively estimated at a
very large 45 million square feet of wall surface per year.
Sales/Marketing Strategy:
The marketing strategy will be to position e-crete® AAC as more utilitarian, more sustainable, LEED certified, and a more cost-efficient replacement for the common concrete block and traditional wall construction.
While AAC has been used in the United States since the early 1970’s, AAC only just received approval under all applicable building codes in May 2007. Therefore the Company’s marketing and sales efforts will be focused on expanding knowledge, awareness and acceptance of E-Crete AAC as a better building material in most construction applications. This means a marketing plan with a three pronged offensive, and one which is focused on the “specifiers” (i.e. Architects, Engineers, etc); “users” (i.e. contractors that produce housing where AAC is a “natural” – apartments, etc); and government encouraged housing (such as HUD, the Native American communities and others).
Provide use cases :
E-Crete AAC has been used in over 500 construction projects throughout the United States including three high profile projects, such as: the 27 story Rockefeller Hotel in New York, the exclusive Bayonne Country Club in New Jersey, and the 12 story International Bricklayers Union Headquarters in Washington DC. All three projects received LEED environmental status, and were built under budget and were occupied up to 90 days ahead of their original construction schedule.
Competition:
In the USA, the primary competition for e-crete® AAC is the plethora of construction materials that have been in use for many years that perform “wall” functions. Many of them are so common that they are considered commodities and are treated as such. These products include plywood sheathing, OSB sheathing, 2byX wood framing lumber, plaster board, sheetrock, concrete block, poured concrete, asphalt coating, insulation and countless other products. These products are so interchangeable that they are referred to in Architectural Specifications through their generic name and not their specific brand. These products are typically sold through competitive pricing at the point of purchase. E-Crete’s marketing challenge will be to add e-crete® AAC to that list in such a manner that e-crete® AAC becomes the material of choice wherever it can be readily used.
One-line Pitch:
Creating Green, Affordable, Sustainable Buildings in America
Business Model:
The E-Crete Company’s mission is to create a viable, profitable business by providing a Superior, Green, Affordable and Sustainable construction material alternative to the residential, commercial and industrial construction industry in the USA - e-crete® AAC. The E-Crete Company has the exclusive licensing rights to manufacture, distribute, sell and sub-license a proprietary technology to manufacture Autoclaved Aerated Concrete (AAC) in the USA (the “3AC Technology”). The Company intends to pursue expansion primarily through forming joint venture/franchise partnerships - with construction industry participants such as the top US Concrete block producers. An additional potential target will be Native American and other communities where there is an emphasis on filling housing needs and job creation.
Product/Services Overview (what does it do):
Autoclaved Aerated Concrete (AAC), (sometimes also known as Autoclaved Cellular Concrete (ACC)), is a lightweight building material; AAC products include blocks, mini wall panels, a floor system, and lintels, and can be used for residential, commercial and industrial construction both internally and externally. AAC provides structural strength, excellent fire protection, thermal and sound insulation, and pest and mold infestation resistance in a single material that is eco-friendly. One of AAC's advantages in construction is its quick and easy installation since the material can be cut to size, routed, and sanded on site using standard carbon steel band saws, hand saws and drills. Screws and nails can be readily used on the material in a similar fashion to wood. And finishing is similar to finishing traditional dry-wall surfaces.
Technology
What makes the technology/business unique and have a defendable competitive advantage?:
E-Crete AAC is less expensive and performs better than traditional building materials including– concrete block and wood frame, and offers better thermal protection, sound abatement, and resistance to rot and infestation. It is also as workable as wood and can be used with familiar construction techniques and tools. The E-Crete manufacturing process uses less energy and water resources than the production of concrete, weights 50% less than concrete; and generates no toxic or environmentally unfriendly waste. As independent testimony to AAC’s eco-friendly benefits, Wal-Mart has settled on AAC as one of only 3 construction materials to be used in its continued expansion and renovation under their “GREEN initiative”.
Describe in detail the technology used in the Project - Address the innovation in significant detail :
Aluminum, as a natural expansion agent, causes the concrete to rise like bread dough leaving homogeneous air bubbles throughout the material. As a result, AAC is approximately 80 percent entrapped air resulting in a light weight product (up to fifty percent lighter than concrete)which also leads to significant reductions in CO2 emissions and energy consumption during transportation.
AAC’s “trapped air”/porosity structure gives excellent thermal efficiency and makes a major contribution to environmental protection by sharply reducing the energy needs for heating and cooling buildings. Unlike other building materials, AAC can eliminate the need to be used in combination with insulation products, thus reducing the environmental impact and cost of construction.
In addition, AAC’s easy workability allows accurate cutting that minimize the waste during use.
Team
| Name | Title |
|---|---|
| sgervasio | CTO |
| Ray Wright | President |
| Robert Rhault | VP |
| Jack Morris | VP |
Financials
Amount Sought:
$6,000,000 Testimonials
Check out Carole Murphy's work at www.carolemurphy.com/gallery
See what you can do with E-Crete besides Building 27 story hotels
Sun, 09/25/2011 - 16:38
