The traditional RV or recreational vehicle has yet to be phased out in place of something that matches the taste of current consumers. RV manufacturers still use 70s-era design elements. This might explain why sales of RVs are down significantly.

According to wholesale RV shipment numbers from the RV Association, RV sales as a whole are down 16% in 2018.

Source: RV Association

RVs were meant for adventurers and gave those who enjoyed traveling an option to do so whenever they pleased. Unfortunately, these vehicles have become outdated and are no longer on trend with how American’s like to travel.

With more inexpensive and unique travel options available via platforms like Airbnb, Skyscanner and Expedia, the way we travel is becoming more diverse and lightweight. The idea of owning a massive motorhome is falling out of favor, in place of more flexible, lower cost travel options.  

Unsurprisingly, there is one glimmer of hope in the RV sales report above and it comes from the Van Campers (Type B) class, which grew 20% last year. Some of the best versions of these campers can be seen HERE, including ModVans.

Put simply, Van Campers are the lightweight, lower cost, flexible solution to RV travel, acting as crossovers between a versatile everyday van and travel camper. And with more Americans shifting their lifestyle to urban areas, who really has the room for a mega-RV anyway?

Take one look at the above images, and it’s clear that the old, stodgy RV class just doesn’t fit the image of the today’s American traveler. Though the numbers are still small the opportunity for more dollars to shift to this class of travel vehicles is clear.

ModVans is building a superhero of campervans. ModVans’ CV1 is a multi-purpose campervan that can function as a minivan, pickup truck, SUV, or RV. Their long-term vision is to disrupt the market for Class B RVs, minivans, SUVs, and pickup trucks but as of now, their focus seems to be on attracting RV buyers.

ModVans is trying to sell the idea that campervans are only campervans when you want them to be. The company is a manufacturer with a line of modular campervans and RVs built for work and play.

ModVans’ CV1 includes unique features that reflect advances in material, technology, and manufacturing processes. With their product, consumers no longer need to spend tens of thousands on an RV that doesn’t fit with their needs or an RV that is used only a couple of times a year.

ModVan’s is the new age RV and is becoming one of the leaders in the only growing category of RVs. The best part is, the company was born out of a need Co-Founder, PJ Tezza had, which was finding a camper that met his own family’s travel needs. It just so happened to be met with great excitement from neighbors, friends and fellow travelers alike.

Why We Like It

1. Traction: In May 2017, the CV1 prototype was completed and during the first 12 months of business, ModVans sold over $2.4 million worth of CV1s (approximately 28 vehicles) and achieved positive cashflow with almost no money spent on marketing. For the last 12 months, all sales have come from unpaid organic growth via Google searches, customer referrals and mentions online and in the press.

   
   According to our discussion with PJ, ModVans’ demand for ModVans far exceeds their present ability to produce them. Although they have not revealed the number of orders that need to be filled, it is safe to assume that their sales will grow.

   
   ModVans are currently in 30 cities across the country. The company was only producing 2 units per month in October but plans to increase that number to 10 by September 2019.

2. Founders: The two founders of the company are PJ and Laura Tezza. One of the main reasons this company is a worthwhile investment may be because of the founders. The KingsCrowd team met with PJ and it was apparent that he was an entrepreneur who could get things done.

   
   In addition to his articulate nature, PJ has a technology background having been a VP of Engineering, selling a software company, and founding multiple other technology startups, PJ is no stranger to the world of entrepreneurship and neither is Laura. Laura has worked in a product development role for a startup before and has worked with entrepreneurs prior to her involvement in ModVans.

   
   Their ability to bootstrap to $2M+ in revenue shows that they are efficient with their capital and are meeting a real market need.

    

3. Potential Acquisition Target: ModVans is playing on the idea that they can get acquired by a larger manufacturer like what happened to Grand Design RV in 2016 when they were bought by Winnebago for $500 million after only being in business for 4 years.

   
   To be clear, Grand Design RV was manufacturing 6,000 RVs per year while ModVans will likely have 40 to 100 sales in 2019. Regardless, if the team can continue to scale (1K+ / yr. In 3 to 5 years), it will be an exceedingly interesting acquisition candidate.

   
   The reason we think this team can become a large acquisition target ($100M+) is because as the RV market continues to fall off, larger RV manufacturers will look to invest in sectors of the market that are actually growing. ModVans, happens to be in the only growing portion of the RV market currently. We think timing and market positioning aligns the team well for acquisition in the next 3 to 5 years.

Concerns/Risks

1. Luxury Good: We like the fact that the market has been fast growing for ModVans offering, and that the team has shown product market fit to date. Regardless, in order to achieve a $100M+ type exit, the team will need $50M+ in annual revenues (remember this isn’t a tech play, so revenue multiples are much lower).

   
   After an 10 year plus bull market the feeling is we will see an economic downturn in the next year or two. Since this is a luxury good at $85K+, sales may very well be hampered by a downturn. And the additional question to ask is, how large is the market for a luxury travel van like this?

   
   Though it is a fast growing segment of RVs, there may be a ceiling on how large it can be in an age where millennials increasingly look to travel in a cost efficient way, and prefer variety of travel experiences over assurance of travel.

    

2. Competition: ModVans faces direct competition from Airstream and Sportsmobile, both companies with similar offerings to ModVans. Both companies have also been around for longer periods and will require ModVans to continue to innovate and provide a uniquely positioned brand.

ModVans is a promising business with a strong management team that has displayed an ability to capture market share in the fastest growing segment of the RV market while driving healthy margins (net incomes is 71% of sales) on a bootstrapped budget, and is positioned well to be a leading acquisition target.  

Regardless, ModVans is still a luxury good in a market that has taken a major hit and has struggled to resonate with a younger, more urban travel demographic. At the current $12M valuation, we do think the team is still worth investing in, but may be hampered from outsized upside due to market conditions. For these reasons, ModVans is a Deal To Watch. Be sure to invest HERE.