8 minute read
547 Days: The Search for Investment
The Coal Burned Spoon Sanctuary is an incredibly ambitious project to create a unique, food-focused eco-glamping experience on roughly 500 acres of wild forest in the mountains of western Maine. In February of this year Karen Bolduc, who co-owns The Coal Burned Spoon Sanctuary alongside her husband John Bolduc, finally finished her search for funding, a search that took 547 days. Securing funding is often the most difficult and exhausting part of a project. Will Rusbridge, Editor of Glamping Business Americas, caught up with Karen to hear about her journey and the lessons that she has learnt along the way.
“When my husband John and I first began our site search 3 years ago, it was a very intentional and deliberate process for us with a clear idea that we wanted to launch a glamping business together,” says Karen. “We knew we wanted a place to showcase and share the beauty and bounty of our gorgeous home state of Maine. We know that there is profound healing to be had in nature, and in food. Simultaneously, we also saw a large underserved market of travelers burnt out with so-called “experiential” vacations, that were really just repackaged goods and services for consumption.”
Looking for the perfect location, Karen and John, “bushwacked, hiked, snowshoed and snowmobiled our way through nearly 50 properties.” During this search they saw places that were promising on paper, but in person the land just fell flat. Eventually, they came across some land in Greenwood that, “had everything we wanted, plus the magic, a feeling you had in your gut that the land was particularly special, tapped on the shoulder by destiny to be great. It was the unicorn that we had been searching for and we couldn’t pass it up.”
Karen Bolduc
Using their own money, they purchased the land and the search for funding to create their glamping sanctuary began. Karen originally thought that they would have to sell equity to fund the project, “We had been told repeatedly that traditional lenders wouldn’t touch a “speculative” deal like ours with a 100-foot pole, so we just accepted that debt-financing wasn’t an option and thus aggressively and diligently went about looking for equity.”
Being a self-confessed introvert, who loathes persuasion and selling, Karen found this to be “exhausting and miserable work,” but, “I went through the motions - developed a business plan and pitch deck, had a feasibility study done, and grew our network of high-net-worth individuals. Some reached out to us after we received a little press, some we met attending glamping industry summits around the US, some were friends of family or friends of friends of family, some were active investors met at competitions I pitched in; and each one would lead to another. We met several dozen potential investors this way, and after a year of often discouraging but generally enlightening conversations to try to attract investment on the project one thing became clear: investors won’t invest until you’ve proven your concept on your own nickel first - at least not if your concept is brand new, as ours was.”
John Bolduc
This was among the biggest problem that Karen and The Coal Burned Spoon Sanctuary went through. Investors like to bet on proven quantities, if it’s been done before, then there is information on what went right and what went wrong; ideas to adopt and pitfalls to avoid. But something new and innovative, no matter how good the idea, comes with risk.
“Investors had heard of high-end glamping where butlers serve you in your safari tent and chandeliers light your “rustic” sleeping quarters, but not of one where guests paying $1000+ per night would be expected to get their hands dirty. Some of them called it “high-end DIY” but whatever you want to call it, we couldn’t find anything like it to use as a comparison. So, we felt defeated and wondered where on earth we were going to find $4M for the first phase.”
All hope was not lost however, and out of the blue, Karen received a call from her small business advisor at Maine SBDC, who’d helped hone all the financial projections in the business plan, “I gave him the discouraging update. He noted that it was important that we’d already used our own money to acquire the site, build roads, establish our owner’s cabin there, and have architectural drawings, civil engineering and permitting done. He asked what precisely the $4M we were seeking would be going toward. When I told him nearly all of it was physical construction, as we’d already covered most of the other soft costs, he said, why don’t you just approach it as a commercial construction loan collateralized by the future value of the structures? Then we could also potentially pledge the land to make up any collateral gap.”
This advice changed everything for Karen, who started to look at the search for funding in an entirely new way, “It was still a tough sell to banks who nearly all indeed called it speculative as soon as they heard the word ‘treehouse.’ But once *I* became convinced this was just a straight-up collateralized commercial construction loan, and pitched it that way to banks, focusing on the more traditional cabins we also have planned, it was only a matter of time before one local bank saw it that way, too.”
While the advice Karen received from her small business advisor helped immensely, the newfound approach would not work on its own. The decision was made to pair the advice, “with the additional strategy of minimizing risk for the lender by only having them fund the minimum viable product (MVP). Originally, we had planned two major phases - we knew we eventually wanted about 2 dozen units, so I originally thought to do 12 in one phase and 12 in another. But once I really understood the concept of MVP, I took a very hard critical look at what was the absolute minimum number of units we could possibly build and still operate in the black and prove that our idea works. I ran a billion scenarios and got it down to 6 units and $2M needed. This turned out to be the magic number and what the bank was able to stomach as tolerable risk once fully collateralized.”
This new plan consisted of three separate phases:
Phase 1: Bootstrapping soft costs to get traction (achieved by selling off the farm, John’s general contracting business, and some mutual real estate investments)
Phase 2: Proof of concept using only the MVP (this was done by debt-financing construction w/a traditional commercial construction loan)
Phase 3: Taking the project to scale (In the future, likely to be achieved by a combination of debt-financing and equity funding to expand once a few years of historical financials and good occupancy rates under their belt have been attained)
With phase one behind them and funding secured, the time has finally come for construction to begin, this includes, “1.5 miles of new road, 6 units, one welcome center, one maintenance building, a day-care building, 2 sheds, and 5 amenities.” “After construction is finished, we’ll likely have a soft opening in which we invite the local community to come stay at highly discounted prices in exchange for feedback on the experience. After working out the kinks we’ll officially open for business, and at that point, my sole focus will be on doing everything necessary to meet customer expectations such that we can achieve the rate and occupancy assumptions we made in our business plans. We plan to open by late summer or early fall 2023 if all goes well.”
What advice would Karen give to people who are in a similar situation, searching for funding? “I would say, ignore all the small-minded naysayers who will nit-pick every bit of your vision every step of the way, and learn instead to trust your vision - it is your unique vision that will be attractive to fund, not some glossed over version of it that everyone else is doing,” she also adds that if you are currently searching, “read articles like this and glean as much as you can from others’ mistakes! That will take you half the way right there. If you read five articles about how people found funds, I promise you’d glean patterns and start to figure out what to do. Lean on examples of what worked.”
