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Topgolf: Game On.

Please take a moment to closely examine the image we selected (above) to grab your attention this week. You see a woman following through on her swing at a driving range. But wait, you think… What’s with all those big colorful round things on the ground? Then you look closer. But wait, your brain screams… Why is she wearing those ridiculously high platform sandals at a golf facility? Then the details sink in. The high-tech display that sits in each bay, the carnival-like atmosphere… and then there is a detail you cannot see but that I will tell you about. Each golf ball at this range is implanted with a microchip that provides unprecedented levels of detail about the person who hit it. And, no, I didn’t just make that up.

 The image, a screen grab from this post on Golf Digest’s Instagram page [ https://www.instagram.com/p/BFiU6nPKwGL/?utm_source=ig_embed&utm_campaign=embed_video_watch_again ], was chosen because it captures the spirit, the energy, and the innovation that makes Topgolf the unique experience that it is. Please click the link for a little taste of that experience. It’s from Topgolf’s Las Vegas location, and the non-professional video provides a very candid snippet of what goes on in these places… and it just might make you want to try it out for yourself.

 So how does a woman swinging a club while wearing completely inappropriate footwear make such a statement about what this company is about? Topgolf brings people together, whether they have been hitting the links for decades or if they are just figuring out which end of the putter they are supposed to grasp. Topgolf provides first-rate food and entertainment. Topgolf issues individual driving, chipping, and putting challenges aided by those illuminated targets on the range. Topgolf offers lessons with professionals. At Topgolf, you might even shoot some billiards, play shuffleboard, take in a football game on one of their many HDTV screens, or hit the dance floor. The one in Vegas, as seen in the video, even has two lounging pools surrounded by cabanas complete with televisions, pool furniture, twenty-eight-foot HD Video Walls, full swim-up bars, and access to hitting bays. This company is revolutionizing golf culture on a significantly greater scale than young Tiger Woods ever did when he burst onto the scene in the 1990’s.

 Topgolf was born in 2000 in Watford, in southeast England. The original idea was to take an ordinary driving range and upgrade it significantly, mostly by applying cutting-edge technology like the range targets and the chip-implanted balls. The experiment worked out well: in its first year, Topgolf Watford’s revenue was eight times that of the range’s previous operator. Venture Capitalists took notice. The deep-pocketed investors enthusiastically funded the company and enabled it to rapidly evolve into the all-inclusive entertainment destination it is today. Perhaps Topgolf’s highest profile investor is Callaway Golf (NYSE: ELY). Investments in 2017 and 2018 have made Callaway the owner of 14% of Topgolf, and it is this part of Callaway’s portfolio that is solely responsible for Cowen and Company’s upgrade of ELY, as their analysts project that Topgolf’s revenue could surge to $1.8 billion in 2020, compared to $1 billion in 2018. Any investor seeking growth would do well to let those numbers sink in.

 It’s worth repeating for emphasis: this is not a company that exclusively caters to people who have been playing golf for a long time. Amazingly, about half of Topgolf clientele are complete novices… but use of their facilities has translated to increases in play at traditional courses. In other words, newbies get bite-sized golf nuggets in a fun and relaxed environment, and then eventually take it to the next level at the country club. Also, roughly half of Topgolf customers are aged 18-34, the “sweet spot” of the most highly coveted demographic in almost every consumer-centric business, sports related or otherwise. The goal, according to Topgolf CEO Erik Anderson, was to “take out a lot of the barriers of golf, such as around time, cost and skill, and make it about fun and community”.

 In an interview last October, Anderson said that he expected Topgolf to be in fifty markets by the end of 2019. With four months to spare, that goal has already been surpassed, with three Topgolf locations in the UK, one in Australia, and fifty-two in the United States. Many more are in the works, including ones in Canada, Mexico, and (of course) Dubai. The newest aspiration definitely gets our pulses pounding: within the next two years, Topgolf plans to have over one hundred outlets. We like this piece of news particularly because such expansion requires money, and money like that can easily come from an IPO. Anderson went on the record saying that Topgolf is considering an IPO for the company: “We are a candidate to go public for sure. It would be silly to say otherwise. … We’re probably an interesting public company, like Starbucks was given how people connect with us.”

 Given Topgolf’s meteoric growth in company revenue… $165 million in 2014, $500 million in 2016, $1 billion in 2018 and almost twice that projected for next year, the notion of an IPO sounds highly appealing to any savvy investor. Sadly, most of the investing public will need to wait until the big day when Topgolf makes its pubic trading debut. But, of course, your friends at Iron Edge VC can hook you up today. Pre-IPO shares of Topgolf are notoriously difficult to procure, but we are extremely proud to announce that we have Topgolf in inventory.

 At the beginning of the summer, we introduced you to Topgolf with a newsletter titled “Topgolf: Your Pre-IPO Hole-In-One”. Please click here to read the article on our website, complete with a link to an even cooler video than the Golf Digest one. Today’s newsletter is called “Game On” because, finally, the opportunity for you to have your own piece of this remarkable company has arrived.

5f6e0d464e388c4975685025 Paul Min

Paul Maguire

Founder And Managing Partner