Types of Capital in the Glamping Space

With so many avenues for raising capital, the prospect of funding your glamping project can seem daunting. In this article we’ll break down the different types of capital providers and options that broadly exist within the space, and the benefits of pitching your idea at events like the Glamping Investment Connection.

Bank Financing

Exploring a traditional bank loan is a great place to start in your quest to raise capital. You can apply for a bank loan through your bank, or choose a bank that works with your business needs. Banks will consider a number of factors when reviewing your application, including household income, business licenses, etc. The diligence processes can be extensive and take considerable time compared to other options but the rates you can typically get will be more competitive. Banks gravitate towards low risk projects and their rates are low and therefore they really need every so they will be looking for ways to protect the loans. The process of being approved for a loan can be lengthy, so it’s important to begin the process early.

Inventory financing

As the industry continues to grow, more and more unique solutions are now available to finance parts of your operations. One such option is inventory or equipment financing. Programs like Glamping Hub Structure financing provides financing for glamping structures using a revenue share model with no upfront cost.  Revenue share models work well because both partners are invested in the success of the unit and Glamping Hub can source the structure quickly and can provide additional marketing and booking services.  An ideal candidate for structure financing will be ready to receive units quickly, with land, permitting, and utilities already in place. 

Another option for inventory financing is through Koala Capital. Once you are approved, Koala will pay the manufacturer directly for the full amount of the glamping structures. This financing option will only be applicable for glamping structures and not items such as land, utilities or other operational improvements. The application is straightforward and there is a follow-on diligence process where you will need to submit relevant paperwork. You will hear back in a few weeks if you have been approved for the capital. 

Friends and family investment

In the early stages of launching a Glamping operation, investment from those in your immediate personal and professional circle may be what your business needs to get you to your finish line. These kinds of investments should still be documented properly for your business records, as they will be relevant when working with future capital providers. Just like every option, there are positives and negatives with this. You can often raise quick capital through your personal network but should always be careful with who and how you are raising this type of capital. Many glamping operators have started this way because they were not able to raise capital elsewhere at the rates that they wanted. This type of capital can either be treated as debt or as an equity investment and our recommendation is to always make sure that you have a lawyer involved on the front end of this process to protect yourself and your business, even if you are dealing with friends and family.

Equity investment

There are certain investors and VC style funds that are active and very interested in this space, and this category has grown larger over the past 3 years. They are typically well capitalized and can move large sums of money towards your project with additional resources as well. These investors are usually very well versed in the investment space so providing a sophisticated and thorough business plan and vision for the project will be a must. Often they have specific score cards and execution that they are looking for and if your business is in the early stages they will be looking to take a sizable equity stake to justify the risk they may be taking on your business and will usually be looking for some kind of proof of concept in your business. So if for example, you have a few units up and running for a season or two and are looking for capital to expand your chances of gaining their interest is higher than if you don’t have a current business operating.

Investors

Investment groups and individual investors can provide direct funding for your glamping project.  Events like The Glamping Investment Connection provide business owners the opportunity to pitch their business plan to a panel of capital providers. The Investment Connection is an in-person, glamping industry specific event designed specifically to assist businesses in the glamping industry to obtain access to capital and resources for new and existing glamping projects.  It’s also a unique opportunity to network with operators at all stages of development.

Though funding within the Glamping space has become easier to obtain, it still comes with its challenges. By having a clear, scalable business plan, covering your legal bases, and getting investors excited about your project, you’ll be well on your way to raising the capital necessary to move your project forward.