Arc, a Los Angeles-based maker of high-performance electric boats, has raised $50M in Series C funding led by Eclipse. The round includes participation from Andreessen Horowitz, Menlo Ventures, Lowercarbon Capital, Necessary Ventures, and Offline Ventures. This brings Arc's total funding to $160M since 2021. The capital will scale production of electric tugs, ferries, and defense vessels alongside consumer sport boats.
Commercial Tugs Heat Electric Race
The raise aligns with surging demand in electric boating. Vision Marine Technologies reported a 446% year-over-year increase in sales under contract to $1.12M for 2026 deployments per PR Newswire. Arc's $160M partnership with Curtin Maritime for eight hybrid-electric tugs underscores commercial viability. Competitors like Candela ($116M raised) focus on hydrofoils, while X Shore ($113M) targets dayboats.
Gas Boats Drain Operating Costs
Traditional gas-powered boats suffer high maintenance and fuel expenses exceeding 50% of operating costs for tugs. Noise, fumes, and winterization add hassles for recreational users. Diesel prices rise amid emissions regulations like EPA Tier 4 standards. Electric alternatives cut these pains through zero emissions and reliability.
In-House Powertrains Power Performance
Arc designs all systems in-house, including massive batteries and powertrains, using aerospace-grade engineering. The Arc Sport (23ft wake boat, 500hp, deliveries begun) and sold-out Arc One demonstrate 4-6 hours of watersports without gas compromises. Upcoming Arc Coast adds center console versatility. This vertical integration enables features like OTA updates and joystick docking.
As CEO Mitch Lee told TechCrunch:
“Our thesis is the entire industry is going to go electric in the same way that lawn equipment is all going electric, because it’s just a way better experience.”
Eclipse Backs Tesla-Like Strategy
Eclipse returns from prior rounds, signaling conviction in Arc's consumer-to-commercial path. Greg Reichow of Eclipse noted the strategy mirrors Tesla's playbook. a16z and Menlo add growth expertise. This investor mix validates Arc's pivot to higher-margin sectors like defense propulsion.
As Greg Reichow explained:
“The right strategy was go develop the technology, get it to work on the high end of consumer boats, then take that technology… to the commercial sector.”
$7B Market Eyes 13% Growth
The electric boat market stands at $6.78B in 2024, projected to reach $14.09B by 2030 at 13.5% CAGR per Grand View Research. Regulatory pushes for zero-emissions marinas drive adoption. Arc positions ahead with U.S.-made platforms for rec and commercial. Peers include Navier ($31M) and Pure Watercraft ($100M).
SpaceX Alums Fuel Marine Shift
Co-founder and CTO Ryan Cook led engineering on SpaceX Falcon 9 and Starship. CEO Mitch Lee, a serial entrepreneur, sold prior startup Penny to Credit Karma. Their hardware-software blend accelerates from prototype to 150k sq ft LA factory and 200 employees. SpaceX veterans fill key engineering roles.
Tugs Hit Water Amid Hiring Surge
Arc plans first electric tug in water this year under the Curtin deal, with deliveries by 2027. The Series C funds production scaling, engineering hires, and sales expansion. Recent additions like ex-Rivian Head of Revenue Marco Batra support growth. Defense powertrain supplies and ferry designs follow.