Red Mountain Resort launched a new equity crowd funding campaign on Tuesday, inviting members of the community to invest in new capital projects for the resort and own a piece of the mountain.
The campaign, branded “Fight the Man, Own the Mountain,” was launched on Start Engine, a site similar to Kickstarter or Indiegogo, except that instead of investors receiving rewards based on the amount they’ve contributed, they receive equity. In this case, investors will receive a shareholder certificate of limited partnership in Red Mountain Ventures.
Right now Red is in the “testing the waters” phase under regulation A of the United States Securities Act of 1933. Those who reserve an investment on Start Engine are only indicating their interest and will be under no obligation to actually invest if and when the company decides to move to phase two. If Red does move to phase two, interested investors will receive more information, including a valuation of the company, which will determine how many shares their investment gets them.
“If we get enough interest, in dollars, then we’ll go to the lawyers and we’ll go the accountants, and come out in March or April with all the SEC [Securities and Exchange Commission] documents, and all the Canadian documents, and all the audited statements for the previous two years,” explains Katkov.
In addition to shares, Red is also offering perks for each level of investment.
“We wanted to give people immediate benefits to invest and then obviously long-term benefits of being a shareholder,” says Howard Katkov, chairman and CEO of Red Mountain Ventures.
There are six tiers, and each comes with rewards. The first tier is $1,000 and investors will gain access to a new club house at the top of Grey Mountain and will support a new, local academic scholarship that Red plans to create — both of these rewards are shared with the other five tiers as well.
The second tier, at $3,500, includes custom designed skis or a custom snowboard and a total of 10 transferable adult lift tickets, good for five years. The third tier, at $5,000, includes everything in the first two tiers, plus one adult season pass for one year that can be activated within a five-year period. With a $7,500 investment, investors enter tier four, where they receive all the rewards in the first two tiers, plus either a one-year family season pass or two one-year adult season passes.
Tier five, at $10,000, ups the ante with everything in tier four plus an extra pair of custom designed skis or a custom snowboard and access to the six overnight on-mountain cabins that Red is planning to build on Grey. At tier six, a $25,000 investment, investors receive everything in tier five, but instead of the choice between a one-year family pass and two one-year adult passes, they have the choice between one five-year family season pass and two seven-year adult season passes.
Red Mountain is looking for $10 million in investment, and as of this writing there are already 151 reservations with $459,501 reserved. Possible future capital projects include not only the club house and overnight on-mountain cabins for Grey, but a restaurant on Grey, remodeling Paradise lodge, additional run development for expanded cat skiing on Mount Kirkup, the extension of the Silverlode chair to allow access to Granite Mountain and Grey, a multi-use summer trail from the base to the top of Grey and connecting to Seven Summits, and a youth hostel.
“If we really hit it out of the park we want to build a funky, European style youth hostel at the base for young people who can’t afford condos or hotels,” explains Katkov.
Katkov wants to be clear that the crowd funding campaign is for future capital projects that Red Mountain Resort wants to undertake; the company isn’t crowd funding because it’s in trouble.
“Red Mountain has had the most successful year last year in revenue, skier visits and profitability in its 67-year history,” says Katkov. “So I started looking at this eight months ago, as a way to raise capital for future projects and to give our fans and our customers, who have an emotional connection with our brand, an opportunity to invest in the company.”
In the PR materials released for the campaign Katkov refers to “our shared community values.” Given that investment is open to residents of BC, Alberta and the US, we asked him if community referred to Rossland or the ski community at large. Katkov, who splits his time between Rossland and San Diego, Cali., replied, “Rossland community. I don’t differentiate Rossland and the ski mountain. I mean the people that work at our mountain live in Rossland, the people that ski at Red live in Rossland. I think that the ski resort, and the way we operate it, and our strategy, lines up with how the community would like to see the ski resort grow for future generations.”
The PR materials also emphasize that Red is an independent ski hill, not owned by a MegaResort and of course the name of the campaign itself calls on investors to “fight the man.” Asked how he’d respond to Rosslanders who, confronted by lift ticket prices at Red, might consider him “the man,” he said, “This is a business: I don’t go to Ferraro’s and tell them what they should sell their fruit for; I don’t go to the chocolate lady and say what she should sell her chocolate for; I don’t tell Petri [Raito of Rossland Beer Company] what he should sell his beer for, but if I think it’s good value, I pay for it.”
Katkov points out that money had to be spent on the Grey Mountain expansion and there are of course the regular costs of doing business, such as insurance and taxes, which need to be paid even in a bad year.
“I’m a good man; I’m not that ‘man,’” says Katkov.
