RaceCraft

For a quick easy overview find our Pitch Deck Here.

Business Summary
Motorsport enthusiasm in the U.S. is surging, propelled by the popular Netflix docuseries ‘Drive to Survive,’ which has notably expanded the Formula 1 fanbase, including an increase in female viewership up to 40% of the fan base. IndyCar racing has also witnessed a 22% rise in attendance for the 2023 season, with similar growth trends observed across other motorsport events. The global motorsports market is valued at an impressive $5.9 billion and is experiencing a robust annual growth rate of 7% (Motorsports - Global Strategic Business Report 2024). The United States contributes significantly to this industry, accounting for approximately $1.8 billion of the market value.

Transitioning from spectator to participant in motorsports is a formidable financial endeavor. Prospective racers can anticipate numerous large expenses including training and licensing, required safety gear, a properly fitted race car and method of transporting it to the track. The cost of a competitive vehicle varies widely, with none being modestly priced. This is before accounting for event participation fees, vehicle maintenance, and the ancillary costs of travel and accommodation. It is, without question, a substantial monetary commitment that is prohibitive for many. Add to that the time commitment and the risk, it’s a very dangerous undertaking, and we quickly understand why sim racing is growing in popularity.  An experience that once cost close to six figures and a risk to your life, can now be had for the modest cost of a night out on the town at RaceCraft. 

Technological advancements in simulation, software, lidar, and computational power have democratized the racing experience. Modern racing simulators employ sophisticated software that accurately models vehicular dynamics, handling, and response to diverse road conditions. This software is complemented by lidar-scanned track data, enabling the replication of track surfaces down to the smallest undulation, providing drivers with immersive haptic feedback. The haptic feedback in these simulators incorporate motion systems that, using strategies developed in Olympic athlete training, simulate the sensation of G-forces to the inner ear, thereby harmonizing visual cues with the physical experience of motion.  Add to that surround sound speakers and vibration transducers to deliver the growl of the engine and the vibration of the car as the revs approach the redline on the tachometer.  Wrap around screens provide the full field of view to provide incredible visual input. This is an immersive experience that really makes it feel like you’re there in the car and on the track. 

Research by Cushman and Wakefield indicates a staggering 386% increase in competitive socializing ventures since 2021 (The Edge Vol. 8 From Putt to Pint, Exhibit B). “The competitive socializing category is very active in the US and is something that provides landlords the opportunity to bring new energy and recurring business to the property,” said Jason Greenstone, executive director of retail services at Cushman & Wakefield. “It’s profitable, scalable and it’s a welcome addition and draw for so many retail neighborhoods.” People love to eat and drink, and people love to play games, and what they love most is being able to do it together with their friends, family and colleagues in a fun, lively atmosphere. Millennials and Gen Z are spending more and more money on experiences and this concept capitalizes on that trend. Major players in the category have achieved notable growth and valuations.  Top Golf (a competitive socializing concept focused around a driving range) achieved $4.3 billion in revenue in 2023 with a 7% growth year over year.  Swingers (a putt putt golf competitive socializing concept) closed a $52 million dollar raise and projected $60 million in revenue in 2023 after only opening 5 locations.  Flight Club (a social darts themed concept) is estimated to have ~$70 million in revenue in 2023.  There is a lot of room in the ecosystem for new concepts to flourish. 

RaceCraft, an innovative concept in competitive socializing, aims to introduce competitive sim racing to a broader audience within a sophisticated, club-like environment. The establishment will offer exceptional hospitality services, featuring an extensive menu of culinary delights and beverages, alongside a calendar of engaging events. Boasting 22 state-of-the-art, full-motion, professional-grade simulators, flanked by comfortable lounge and table seating, RaceCraft will enable guests to engage in live racing competitions. Patrons will relish the communal atmosphere, utilizing the same caliber of equipment employed by professional racers, as they strive to surpass their peers. Non-participants will also be engaged, watching as their friends tackle the turns and overtake one another on the track action screens, ensuring an inclusive experience. The simulators’ professional-grade features allow for authentic haptic feedback, adjustable to accommodate both seasoned racers and novices, guaranteeing an enjoyable experience for all skill levels. 

The simulators will all be connected to a venue management system which will allow the staff to automate set up for the various purchased experiences. This will reduce staffing requirements and reduce transition time between customers. The experiences can be set up to allow the customer to choose from a wide variety of car types and manufacturers all with accurate physics built into the software.  Any of those cars can also be placed on most notable racetracks around the world.  You can practice on your own as the only car on the track, race against others live in the venue, or populate the track with AI powered competitors. 

RaceCraft will also serve larger groups and corporate events by offering a private event space. This area will be outfitted with six racing simulators, spectator screens, a large projector, and comfortable lounge and table seating, all supported by the venue’s in-house culinary and bar services.  The events and programming will include watch parties for the larger motorsports’ events, hosting for various area car clubs, and leagues and monthly racing challenges. 

The environment will combine industrial, practical, high end garage styling with soft, comfortable, hospitality provisions within the space to create an elevated experience without succumbing to the kitschy nostalgia sometimes associated with motorsports venues.  The aesthetic will speak to an elevated material palette for the items you touch and feel and interact with, all contained in a modest approachable garage and industrial style container.  The sounds of racing and banter will be prevalent as the customers race against each other.  The venue will have strategic lighting to keep the light levels low to avoid glare on the screens and use lighting as a design element.  Colored lights will bring excitement and interest to the space, elevating the industrial modern garage aesthetic.

The target audience for RaceCraft can be categorized into several key groups:

Kyle Barker is an experienced professional in the areas of real estate, design, construction, building teams, and scaling branded businesses.  His accomplishments include leading the expansion of WeWork locations from its third location across the US and then internationally as the company launched new markets.  He was chosen as one of four people to seed the business in China to launch its company across the Asian markets.  During the two years he grew the business in Asia he helped launch locations in China, Japan, India, Australia, South Korea, Hong Kong, Singapore, and Malaysia. By the end of his tenure there he was managing teams totaling 180 employees across the region launching over 80 locations.  After those businesses were up and running, he was called back to the US to help launch the next big expansion the business needed, a real estate private equity group to purchase strategic properties and lease them back to the operating company.  At the peak WeWork Capital Advisors had $1.8 billion assets under management.  After those experiences Kyle moved on to lead the North American real estate expansion of GoPuff, an instant needs delivery company.  Growing their micro-fulfillment centers from 80 in pipeline to 450 locations being developed to support the needs of the growing business.  Kyle is a trusted executive with the knowledge and skills to work with many disciplines to orchestrate growing and scaling branded businesses.  

Summary Financials
The Venue is estimated to produce ~$6.4m of top line revenue annually at stabilization and incurs an estimated ~$4.7m of annual expenses.  This leaves a projected ~$1.7m of NOI and after Debt Service a projected annual profit of ~$1.1m.  This results in an anticipated return on Investment of the ~5m of capital required of approximately ~22%. The anticipated EBITA Margin of ~25% and a profit margin after debt service of ~16%. 

Capital Requirements
Projected to require ~4.7m to launch, the project will be funded by a combination of Debt and Equity.  A 3.5m debt facility has cleared underwriting and is ready to fund pending completion of the equity raise. The debt is collateralized with the founders assets.  1.5m of equity is being raised to fund the balance and will provide a 30% ownership stake in the location.  This funding will provide for securing the lease (final negotiations wrapping up), building out the facility, pre-opening expenses, and working capital to sustain the business during the ramp up period. 

Aspirations

RaceCraft will bring motorsports to the masses.  Once the first location has launched and achieved profitability we will look to raise capital to expand quickly across the US.  This business is highly repeatable and applicable across all urban environments.  We will seek to expand with both company locations as well as franchise expansion.  Motorsports is a growing segment in the US and globally one of the largest fan bases in the sports industry.