Love climbing—both as a sport and a culture? Wish you could quit your day job to open your own gym? Need financing to make that happen? Here are four reasons why the timing may be right to crowdfund a bouldering gym:
1. Interest in climbing has become mainstream
Have you seen the fanfare and positive reaction to Free Solo? The Dawn Wall? The former just won an Oscar for best documentary feature (and surely would have walked away with “Best Sweaty Palms Inducer” had that category existed). The latter, though less death-defying, is easily just as good. Climbing documentaries and their superhuman subjects have clearly gained more mainstream attention in recent years. These movies, along with TV shows like American Ninja Warrior—which often feature competitors who hone their ninja skills at climbing gyms—have brought a sport once reserved for the most outdoorsy-adventurous among us to a more mainstream audience. Sport climbing will even make its Olympic debut in Tokyo in 2020. This broadening interest in the sport creates a wider customer and potential investor base for entrepreneurs wishing to get into the climbing business.
2. Crowdfunding is a more viable option than it used to be
There are two broad categories of crowdfunding: rewards crowdfunding and securities crowdfunding. For most people, the idea of “crowdfunding” brings to mind sites like Kickstarter, GoFundMe, or Indiegogo. These sites allow people to contribute money to a business, person, or a cause they support, despite not receiving much in return for their financial contribution (other than good karma or, say, a “free” T-shirt or membership pass). Rewards crowdfunding is largely unregulated. Though someone dishonestly conducting a rewards crowdfunding campaign may be subject to anti-fraud regulations (remember this?), rewards crowdfunding offerings do not need to be registered with a regulator.
Securities crowdfunding offerings are different. Securities crowdfunding occurs when a business owner uses the Internet to entice investments by promising investors equity in the business, interest on a loan, or some other financial return in exchange for an investment. This type of transaction is a security and, as such, is subject to complex federal and state securities regulations designed to protect consumers. The JOBS Act of 2012 loosened some securities regulations that previously made it challenging for business owners to raise money in this way without going through a rigorous, time-consuming, and expensive registration process. Entrepreneurs now have more options than ever to raise money online through various securities registration exemptions that permit securities crowdfunding campaigns that are carefully structured and marketed to fit within certain regulatory parameters.
3. Climbers bring a crowd
There is a culture to climbing. It is one of those lifestyle sports, like skiing or surfing, that inspires its own language and its own icons (Alex Honnold, Tommy Caldwell, Lynn Hill, and Minnesota’s own Jimmy Chin, to name a few). Members of a climbing gym often work out together, socialize together, and carpool to outdoor climbing excursions on the weekends. As those friendships develop, so too does a loyalty to the gym that brought that social community together.
Many investors in crowdfunding campaigns, including securities crowdfunding campaigns, invest because they feel a connection to the business, the product, or the business owner—not only because they hope to make money. There is a reason why breweries are notoriously successful at raising money through securities crowdfunding campaigns: people who like beer want to feel a part of a community of beer-lovers, and they like the idea of co-owning a neighborhood brewery. I suspect climbers would share a similar enthusiasm for co-owning a piece of the neighborhood climbing gym. All it takes is the right person(s), with the right network, and the right space to build a gym. The crowd will follow, and they will invest.
4. There has been steady growth in the indoor climbing industry
According to the Climbing Business Journal, 43 new commercial rock climbing gyms opened in 23 states throughout the U.S. in 2017—nearly twice as many as opened in 2016 and representing a 10% growth rate in the industry. This has attracted interest from at least one private equity group, Tengram Capital, who in 2017 made a big investment in Earth Treks, owner of several of the largest climbing gyms in the country.
Minnesota is among the states that have seen growth in the climbing industry. Not so long ago, the Twin Cities metro area was home to one or two climbing gyms with a modestly sized, though loyal customer base. By my last count, the Twin Cities metro area is now home to five rock climbing gyms—several of which have opened in the past three years alone.
Two of these gyms, the Minneapolis Bouldering Project and Vertical Endeavors Twin Cities Bouldering, focus on offering bouldering projects rather than top-rope or sport climbing routes. Though it takes an amazing amount of strength and technical ability to be good at bouldering, I can say from experience it does not take a lot of either to humbly enjoy it. Bouldering gyms feature climbing problems that are no more than 20 feet off the ground—meaning climbers can safely participate without needing a rope, harness, or belay partner. Because bouldering is relatively accessible to those unfamiliar with climbing equipment or uncomfortable with higher elevations, it seems likely that the interest in bouldering gyms will continue to spread throughout the country in coming years.
Excited about getting started?
Before engaging in a securities crowdfunding
campaign, future climbing gym owners will want to prepare a thoughtful business
plan and engage a competent securities attorney to help discuss options and
strategies— as well as what not to do. That’s where I come in. If you need a securities attorney, and/or a
belay partner, you can reach me at firstname.lastname@example.org
Brian Edstrom is a Shareholder and Attorney at Avisen
Legal, P.A. He brings to Avisen clients the ability to “speak regulator,” having
spent several years working for federal and state regulators in Washington D.C.
and Saint Paul, MN before entering private practice. Brian assists
clients in all aspects of working with securities regulators, whether it be to
obtain a license or registration, prepare for an audit, or respond to an
enforcement investigation. Brian also regularly advises clients on their
general business needs, particularly surrounding raising money through