British F1 Prospect Dan Wells gave up a a very promising and secure academic career in pursuit of his bliss to become a racing driver. In this Richland F1 exclusive, Wells muses on his unique business vision, leveraging the passion of motor racing into a business opportunity, and his dream team to drive for in Formula One.
Tell me about Dan Wells and Investors.
I formed it in June of this year. Basically, I’ve been racing with one hand tied behind my back. When I did Formula Ford, I tested the car once that year. I remember when I did Formula Renault, I did two test days, and when I did Formula Pilota last year,I did two test days. But I still won races, I still took podiums, still did well. Now I understand you need to put a financial package together to enable yourself to compete, and I’m fed up with raising relatively small sums. Last year I couldn’t afford my food and rent. The whole thing about this is that I want to focus on driving. I’ve got the proper package around me now. My manager is now Ian Phillips, ex-CEO of Jordan Grand Prix.
How did you meet Ian Phillips (Former Jordan Grand Prix Commercial Director / Former Force India Director Business Affairs) ?
It’s a good typical Hong Kong story really. Basically, my father (Trevor Wells) was out here helping me. He is CEO of the company. He was out here helping me put the project together. And he was actually standing just here having a cigarette. He was chatting to this guy and saying he wants to put me in a Formula 1 Simulator. The guy was like, “No but I can.” I was flown to the UK two days later, put in a simulator. Ian Phillips comes along and watches the assessment, meets me and the assessment came back with very positive results. And he came on board as chairman of the company and driver manager.
Talk about the business model on which Dan Wells and Investors is built upon.
This idea has been done before. Justin Wilson, Scott Dixon. It’s been done in Europe. It’s been done in America. It was done in ways which were slightly different – Slightly more limiting to investors. Basically I took that sort of idea and brought it to the project that I’ve got now. We’re selling 35% of the next 15 years of my future income, sponsorship, and endorsements. In return we need 4 or 5 million US dollars to make the business plan work.
We’ve got four business plans – Career plans basically – which include Formula One, IndyCar, and the New Japanese Touring Cars. But we’re working towards Formula One – That’s where we want to be.
The investment opportunity itself is unrestricted. If the project makes 6000% over 15 years, the investor gets 6000%. If it makes 300%, then it’s 300%. But with the other programs like Justin Wilson’s, the investors were limited to 100% return. So even if he made 5000%, they only got 100%, so this is a more attractive opportunity in that sense.
More attractive ROI (Return on Investment).
Yes. I’ve been working with the Asia Bankers Club on it. They have been fantastic.
How did you meet Kingston Lai (Founder of the Asia Bankers Club)?
Basically, when my plans for Japanese F3 fell through this year, I raised enough money to live in Hong Kong, but not to race. I was fed up with raising a few thousand euros here and there. To get to Formula One, you need big bucks. And I thought ‘OK. I’m going to start thinking bigger things.’ So I started e-mailing some companies, and I e-mailed the Asia Bankers Club. I got an e-mail back saying, “Yes, we’d love to”. I mentioned the idea of racing drivers as an investable commodity and he was like, “wait a minute, what was that?” and I explained my vision. We went to lunch and that was in March. He’s been working on this project since.
I’ve got some great sponsors since last year who are staying on board for the project. We have a long term vision, coming through Asia, racing in Asia, doing things differently. Everything I’ve done is a little bit different. I started racing relatively late, and coming to Asia at a time when even Asian racing drivers are going to Europe is a weird scenario. However, the way I see it working, Asia is the place to be to get to where I want to be.
How has the reception to your business venture been so far?
From an investment point of view, it’s been good. We’ve had a lot of interest. Obviously this is something that’s done in Europe and America, but never in Asia. Now, the racing scene here – People don’t know as much as they do in Europe and America. We did events in Hong Kong and Singapore. Singapore they knew more – From the F1 Grand Prix.
It’s been really interesting to gauge perceptions, and we’ve done well and gotten further interest. It’s obviously very tough because the minimum investment is $125,000 US Dollars. It is a huge amount of money, but everything is relative. I’m looking forward to getting back on track and focus on driving.
You’re basically selling 35% of your future earnings to your investors, which you have valued at about $12.5 million USD. How did you come up with that number?
If you look at the Red Bull driver scheme, they give away 50% of their earnings, but then they are completely in the hands of Red Bull. If you look at what a racing driver would give away, it’s between 30 and 50 percent. We came up with a particular breakdown whereby the funding we need is about 4 to 5 million US Dollars. So that’s where the valuation comes from. It’s a high risk alternative investment with the potential to profit massively, and I hope it will.
From a business perspective, what makes your investment more attractive compared to others?
It’s a lot more fun! If you look at the alternative investment market, say art. You get 6 or 7% per annum on a piece of art work. If you appreciate art, that’s great. But that’s about as far as it goes. If that’s your thing, that’s your thing. However, to actually say you own a part of a racing driver – You come along on race weekends, you get hospitality, you’re able to market, you’re able to network with other high net worth individuals. You can touch it and watch it. it’s something which is real. To be able to actually have that, it’s a big pull.
From the passion investment side of things, if you can combine making money with something that you love, that’s the best way to do it. There are higher risks involved with passion investments. I think the markets are doing very well at the moment, and it’s something I can see growing, especially as Formula One becomes more prominent in this part of the world.
You gave up a very promising path to life by giving up university. How do you your parents feel about that?
I was at college doing economics and politics – Top 10 in the country for politics and economics, and I was going to university. But then I entered this college karting competition. There were drivers from the Super One Championship there, so they were proper drivers. I beat some of those drivers, and the thing is I really loved it. I just had this huge passion for it, and I was good. I said to Dad: “I really want to do this.” Two months it took of him testing me and me saying “I really need to do this”. He woke me up at 4 o’clock in the morning one day and he took me downstairs in the conservatory and said “Son, one thing in life you can be sure of is that if you’ve got a dream, chase it. Just make sure you know what you want.’ I said, ‘I want this’, and he said, ‘let’s do it then.’
So I went down to Clay Pigeon karting track, we got a kart, and I entered my first karting race. In a field of 24 drivers, I got fastest lap in my first ever race .
I said If I wasn’t any good at it, we’d stop. I’m not there to be at the back of the field. I’m there to win. From there we went into Formula Ford, we won Five Class Races in 2010. I got picked up by the Racing Steps Foundation, which is a pretty good school in itself. I did Formula Renault UK and finished second in that. The opportunities ran out in Europe, and when I put my mind to something, I make it happen.
What advice would you give to aspiring drivers who are trying to make it into motor racing?
I get quite a few e-mails from drivers – Anything from 10 years old to 20 years old. They email me and they ask me, “How do you do it?” And the one thing I tell them is, “if you know what you want, you have a real passion for it, and you have faith, and you’re willing to work hard, then you can make it happen.”
Knowing what I know now, I moved here to Hong Kong with the equivalent of about 850 British Pounds, which is enough to live for about three weeks, and I only knew one person. Did I know how I was going to do what I’ve done? No. Did I believe in what I could do? Yes. The main thing is belief. And work hard.
How long have you lived here in Hong Kong?
Since April 28th, 2012.
Did you believe that you would achieved the amount of success that you’ve had in such a short time since moving here?
Did I expect it? Yes. The vision of what is happening now, I’ve had the vision three or four years ago. It’s awesome to be living it.
I’ve got some great support from so many different people all over the world. My main sponsor here is a company called Start JG, and that came about as a result of just just me asking on Twitter for a meeting. They do branding for the company and branding for me. I raised money on Twitter last year. Without the 150 people who contributed , I couldn’t have done what I did last year. I’m hugely indebted to the people who have put their faith in me to be able to make it.
You’re going to extraordinary lengths to raise money in order to go racing. Do you think the sport has become too expensive for its own good?
If you look at the Formula Renault Euro Cup, you still got 30 to 35 drivers. There is some money out there. Are all these different Formulas diluting the grid? Yes it is. Are the prices too high for new cars coming out? Of course they are. When you’re looking to go into Formula Renault and you’re looking at a budget of about 300,000 euros, it’s a huge amount of money. Does it need to be that expensive? No. But it’s a business, and that’s the way it is.
There’s a lot of down time for a racing driver – You’re not always at a track or inside a racing car. Describe what the life is like for a racing driver.
Last year I was working 16. 18 hour days, taking meetings, doing PR stuff. Obviously I’m very active on social media. I had a plan of what I wanted to do and there’s a huge amount of legwork. This year I’ve managed to get my schedule to a point where I can train 5 to 6 days a week. With flying around everywhere it’s more difficult, but I’ve managed to get my training to a good point, which was better than last year. The position I want to be in is one where I go to the gym, I focus on my diet, I’m in the simulator, and I’m driving. Of course I still have promotional events but I don’t want to organize them myself. I don’t want to manage myself anymore.
How do you stay sharp physically and mentally?
This year not driving has been good for me, to be honest. I did jump into a car a couple of weeks ago when I did some coaching in Zhuhai, and I felt quicker.
I think Adrian Sutil said the same thing when he had his year break: He said he just felt not revitalized, but just had a better understanding. The proof will be in the pudding. We go to Shanghai in three weeks* time. I go there looking for victory, and we’ll see where we are.
You’re pretty active on social media. How important is it for a racing driver?
It is important. I think gone are the days when drivers can be thinking they’re too good for ordinary people. I think that’s long gone. I think there are still some drivers in motorsport, even in Formula One who are like that. The new generation understands you need to have a good presence with your fan base from a sponsorship point of view . It’s hugely important. I’m lucky in that my fans support me all over the world. They are fantastic. They really are. I have people email me from Poland, America, people asking me for advice, and I’ve even been with a couple other racing drivers in different categories – Other drivers who are in a similar situation as me. We share ideas on how to overcome the difficulties of funding. It is amazing to see.
How would you characterize the state of Formula One today?
I would say healthy from a business perspective for Formula One Group. I think their revenues are now up to $1.5 billion. 7 or 8 of the Formula One races are now in Asia. There’s huge money over here, which Bernie is doing a great job at tapping into. So from that perspective it’s very healthy. From a team’s point of view, they are struggling. I think 6 or 7 Formula One teams are sort of on the edge. Do they need additional help? Yes. But at the end of the day, it’s a capitalist economy and they need to help themselves.
Putting you on the spot here: If you were offered a place to drive for any Formula One team, which team would you drive for?
Without Hesitation. Why?
They fit my mentality. I was thinking about this question the other day and the McLaren background itself is quite considered, quite methodical. I like they way that they go about their business. I think it fits with me.
* Interview conducted at Wagyu Restaurant & Bar in Hong Kong on 1 October, 2013.