From Wallstreet to Mulsanne straight

It was pre-crash 1987. Yuppies, women with big shoulder pads, Wall Street and “greed was good” were in. This was even true downunder in little old New Zealand. My fiancé was a junior lawyer at an Auckland law firm. In an homage to corporate tackiness, her law firm’s 1986 Christmas party featured an Ice sculpture whose centre piece was a Dollar sign. All around the world, stock markets were on fire and stockbrokers were a hot date.

As a lowly engineering student, I was not. Rather, I was an embarrassment to my fiancé compared to the high-flying lawyers, financiers and property developers that she moved with. Not surprisingly, we broke up. However, it was something else about the year 1987, beyond the sorry state of my relationship, that stuck with me.

Earlier that year, NZ financier Michael Fay bankrolled NZ’s first America’s Cup challenge. Mr Fay had a company listed on the NZ stock exchange. Every time his Yacht won a race, the shares in his company leapt higher - driven by nothing more than a heady mix of pride, passion and patriotism. The fact that the markets could be ruled by passion and not just “fear and greed” stayed with me.

Years later, this observation informed ThrillCapital’s approach to funding race drivers. Lawyers call this approach “Personality Securitisation”. In English, this process means high profile people, including sports stars, can sell a piece of their future career earnings to their fan base. You may recall that the late great Justin Wilson used this method to raise money to finance a Minardi drive back in 2003. For investors, such an approach represents a 100% pure emotional return on investment.

Race fan investors get to be true insiders, intimately involved in their passion for a fraction of the cost of founding a race team. However, while very exciting, given the financial risk, such an investment is the antithesis of “Widows and Orphans” capital. Pure “thrill capital” if you will. Discretionary spend only please!

How could we mitigate the risks and improve on this approach? Could we somehow replicate an investment and the trading of shares in Mr Fay’s company? Could we optimise financial and emotional returns for sports investors and at the same time get deserving sporting talent funded? Answering these questions became ThrillCapital’s mission. Two previous posts have looked at possible answers to these questions. How we seek to create financially sustainable race teams that have no reliance on pay drivers. How the ultimate race team is an R&D Hub that “just happens to go racing”.

How Project 424 is a gateway project to develop talent tech and business. The bonus for us is that the problems faced by Project 424 and PERRINN address many of the important issues of our times. Sustainable mobility, providing opportunity for global talent and the Future of Work are far more engaging, vital and important things to be working on than the somewhat “first world problem” of getting race drivers from downunder funded that we started with.

So how are things progressing? We have newly formed the PERRINN THRILLCAPITAL Motorsport Technology Hub. Over the last few months, we have discussed our vision for the Hub with global learning providers, Universities, Governments and other partners. We are still at a very early stage. However, feedback to date has been very positive. It seems there is real interest in developing a Hub based around motorsport technology, Project 424 and the PERRINN Platform.

Potential partners in the Hub like the idea of using Project 424 as a portal for providing opportunity for talent, commercialising technology and connecting businesses, universities and professional organisations worldwide. They like the idea of creating a Williams Advanced Engineering or a McLaren Technology Group right from the ground up rather than after the fact.

There is a step we want to take beyond the Hub. Several years ago, at a conference in Lausanne for International Sports Federations, we presented our vision for the ultimate sports funding structure. This funding structure was a diversified Sports Fund. The Fund we proposed consisted of a mix of Real Assets, Sports technologies and our old friend Personality Securitisation. Our Fund would optimise investor financial and emotional returns while providing an alternative to traditional sports funding - government grants and sponsorship.

Motorsport is by far the best candidate for such a Fund. Motorsport’s voracious appetite for funding, global fan base and huge tech component guarantees this. Plans for our Motorsport Hub to ultimately spawn a diversified Motorsport Fund are the first step along this path.

The mix of Hub and Fund assets which are the subject of early stage talks include the following. Real Assets such as a motorsport engineering centre, simulator and race track. Technologies tangential to Motorsport that are likely targets for Fund commercialisation can be seen on the PERRINN Project 424 home page. These range from advanced material development to battery technology and Autonomous Vehicles, amongst several others. Finally, psychometrics, simulators and advanced driver coaching techniques will facilitate the search, evaluation and development of up and coming race drivers and other race personnel.

Ultimately this will allow for the creation of a stable of drivers in which – just like with Justin Wilson – fans can own a piece of their future. However, the fund’s balance of assets will mitigate the outlandish financial risk of an investment in a single race driver’s career.

Instead, the Motorsport Fund applies a more rigorous Venture Capital/Private Equity approach to Motorsport and Hub portfolio company investment. Underwritten by large tech companies, Government and Private investment, the Fund will ultimately seek funding from the Crowd. Our secondary market place provides Fund investors with a degree of liquidity for their investment and the opportunity to trade based on Fund performance. “Passion Invested”

There is an awful lot of work to be done! However, at ThrillCapital we are excited that the PERRINN Team, Project 424 and Motorsport have become a Lightning Rod for world changing technologies and given us a chance to “road test” our vision for the future.

David Tomlinson