If you have been in the market for an RV or camper van in the past year, you are not alone. The RV Industry Association reported record-breaking sales in the first quarter of 2021, with 56 million Americans planning to travel by RV this summer.
The popularity of RV travel skyrocketed during the COVID-19 pandemic as people sought safer travel options and access to the great outdoors. And there’s no indication that the popularity of RV travel will be slowing down any time soon.
This was good news for Joel Holland, CEO of Harvest Hosts, a membership club that grants RVers unlimited access to overnight stays at unique locations such as wineries, breweries, golf courses, museums, and farms. As he was ramping up advertising and staffing preparing for the 2020 RV rush, his phone began ringing off the hook with private equity firms interested in his business.
After repeatedly telling investors that the three-year-old company was not interested in taking on an equity partner, Joel took notice of the valuations he was receiving and the added value a potential partner could bring to the table.
Harvest Hosts vetted a few bids before signing a $37 million deal with software and consumer investor Stripes.
On this episode of the How I Raised It podcast, Joel talks about exploring the United States by RV, purchasing the Harvest Hosts business, and what private equity firms look for in an investment.
How He Raised It
💰 Who: Joel Holland
💰 Company: Harvest Hosts
💰 Where to find him: LinkedIn
💰 Money quote: “My advice to founders is, always take the call. Even though I had zero interest in fundraising, I still took all the calls.”
💰 Noteworthy: Joel was an enthusiastic member of Harvest Hosts and knowledgeable about the RV travel industry before he reached out cold to the company’s founders, starting a conversation that led to negotiations and a sale.
[01:10] Hitting the road 👉 After selling his first company, Storyblocks, Joel and his wife purchased an RV and traveled across the lower 48 states, landing in Vail, Colorado.
[03:16] The Harvest Hosts hookup 👉 Harvest Hosts was created to connect the 14 million North American RV owners with unique small business attractions — think wineries, breweries, golf courses, and lavender fields — for off-grid overnight stays.
[08:44] Mutual benefits 👉 Harvest Hosts subscribers pay $99 a year for unlimited access to host sites, and they are encouraged to support the host businesses. Members are projected to spend $40-50 million directly with host businesses this year.
[14:54] Finding the next venture 👉 Joel bootstrapped his first business from the ground up, but he couldn’t decide what he wanted to build next. Once he decided to purchase a business, he began looking at where his skills and interests intersect.
[17:08] Make an offer they can’t ignore 👉 “Would you sell this business for the right price?” Harvest Hosts was not up for sale, but these nine little words were Joel’s key to opening negotiations and ultimately purchasing the business from its founders.
[21:47] Always take the call 👉 Joel wasn’t planning to bring on a partner when PE firms starting calling, but he saw the added value that Stripes could bring along with their $37 million investment.
[27:20] What private equity firms look for 👉 PE firms often look for established businesses with a lot of runway and the potential for substantial growth over the next 5-7 years.
[29:16] Marriage of the minds 👉 Choosing the right partner in a private equity deal is crucial. Joel found a great match in Stripes’ Chris Carey, who has provided invaluable support for recruiting efforts.
[31:20] Building the board 👉 Joel chose to recruit board members who bring strategic value to the table, rather than take on additional equity partners.
[33:15] Hindsight on 2020 👉 The pandemic turned out to be a boon for the RV travel business, and Harvest Hosts hit the ground running.
Top quotes from the episode:
“Build a company from wherever you want to…. I think you'll actually end up building a better company if you're in a mental place where you're happier.”
“I think the way that a lot of people go about purchasing a business is wrong, and that is to use traditional methods, to go through business brokers or go on BizBuySell.com. To me, that's too efficient. ... It's too easy. Everyone can go in there and look at it, bid, buy. So you're paying a premium. My approach is to get to know a vertical really well, and something that you personally enjoy would be my choice.”
“If you want to probe or buy a business, that's what you say, would you sell this business for the right price? That little qualifier there always gets a response. Because even if the group had no interest in selling — which, by the way, the owners of Harvest Hosts had no interest in selling — they had to find out what the right price was.”
“The advice I was given when I raised in my 20s for Storyblocks was that a financial partner is like a spouse that you cannot divorce. So the advice between the lines was, pick very carefully because you're with this person, this group ‘until death do us part’ — hopefully a transaction and not a liquidation. It's not just the firm you choose -- the partner you choose at the firm, that's really what matters, because that's who you're going to be spending a lot of time interfacing with.”