Spartan Race's Private Equity Adrenaline Boost


NEW YORK (MainStreet)—Joe DeSena, co-founder of extreme obstacle course company Spartan Race, knows there's an evolutionary basis for why his company has taken off with hundreds of thousands of participants around the globe since its 2010 founding.

"We spend so much time inside now--we type on computers, we dress in funny outfits...and it's not natural," he told us at New York's 9th Annual ACG DealSource conference. "And so when you actually push a person outside and get him into that environment that we were so accustomed to forever, it feels good and you want to tell friends about it."

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The company generates north of $40 million annually with social media helping to boost word-of-mouth about the appeal of these endurance races, but private equity funding has become necessary to deal with the demand.

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"We thought this was just going to be a fun little hobby, be nice to do, but it absorbed enormous amounts of capital," DeSena said. "Everytime you go to a new market, you need to spend money." In the last three and a half years, Spartan Race has opened more than 60 markets, which causes enormous digital strain with the social media platforms and timely customer service necessary to keep this buoyant.

That's where Raptor Consumer Partners, the prviate equity arm of Raptor Capital Management LP, came in to provide an undisclosed figure last August.

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The financial world can help Spartan Race put on its events with cargo nets and mud pits, but the mental toughness gained there can also help in the business world. Spartan Race views the tenacity acquired through its events creates "obstacle immunity," which allows participants to relativize minor setbacks in everyday life against the true pain they've had to endure.

"People get out and they deal with these obstacles, and they start to build immunity towards them," he said. "So whereas a cold cup of coffee, or your car not starting, or even children screaming were major obstacles that day, you no longer view them as major obstacles. So when applied to business, that theory, we've all had bad days. You missed that deal you were trying to get done. You have a bad's less painful if you have a frame of reference."

--Written by Ross Kenneth Urken for MainStreet

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