How Tough Mudder's millionaire founder lured investors into funding his immersive gaming venture
Without investment, turning a million-dollar idea on paper into a reality is nothing more than a dream. Or at least, that’s usually the case. Tough Mudder, the military-style endurance experience—where contestants looking to test their mental and physical limits can take on 5K to 24-hour muddy obstacle courses that require them to run, jump, crawl, climb and swim—was the exception to this rule.
Its founder Will Dean, a former British counter-terrorism officer, was forced to self-finance the obstacle course after investors couldn’t wrap their heads around why anyone would pay to go through such torture.
“We found a small ski hill in the middle of nowhere in Pennsylvania, we built a website and then suddenly we were selling tickets and I realized I don’t need to raise any money,” he recalls to Fortune. “We sold 5000 tickets in three weeks, so it turns out they were wrong.”
Tough Mudder went on to become one of the U.S.’ fastest-growing athletic and “team bonding” activities, by 2017 it was turning more than $125 million a year, as per the Financial Times and over 6 million people have completed the obstacle course since its launch in 2009.
But by 2020 the company plunged into administration following various disputes and was sold to Spartan.
Two years before it all came crashing down for Tough Mudder, Dean cashed in on his brainchild for “millions”, bought a new house, and after “three months proper off” started brainstorming his next venture.
The British entrepreneur’s second light bulb moment came on a family day out with his two kids at a VR experience on a wet Sunday afternoon.
“I found myself with motion sickness,” he remembers, adding that it resulted in him throwing up in a Swansea shopping mall bin.
“If VR is succeeding and people are doing it, yet in my experience it’s antisocial, not fun, and it makes me sick—you can’t help but think I could do this better.
“Having finished Tough Mudder, which was all about bringing people together through sheer physical endeavor, I thought to myself: I wonder if I can create some sort of business that uses tech in a similar way to create shared memories?”
Nine months later, he brought David Spindler, a fellow Tough Mudder veteran, on board as co-founder and CFO and built a simple prototype for what is now Immersive Gamebox in a warehouse in North London.
All of the games, which currently include ones based on Ghostbusters, Black Mirror and Paw Patrol, put the players in the heart of those imaginary worlds with rescue missions and virtual villains displayed on the touch-sensitive walls, paired with surround sound and motion trackers—no headsets needed.
But Dean would have to impress investors to get his idea off the ground.
“With Tough Mudder, you could sell the ticket before you built the thing,” the Harvard Business School alum says. “With this business, you’ve got to build the thing before you sell the ticket.”
How he literally played investors off against each other
The entrepreneur spent days pitching for funding for business idea number two, a London-based immersive group gaming experience, before offering investors the chance to go head-to-head in a live demo.
He emailed venture capitalists inviting them to test the game for themselves while flexing that he knows “a thing or two about putting on live experiences and selling tickets”.
“I’m not Elon Musk, but because I’ve created Tough Mudder, all the major funds were all willing to come and at least see what I was up to,” Dean says. “The idea was to make sure they got a high score and then they’d post-rationalize everything.”
The CEO staggered each firm’s appointment, used their company name as their team name, and had their scores ranked on a public leaderboard.
“It was very deliberate,” Dean adds. “Look at all these other people—if you don’t invest, one of these other people will.”
It worked. Investors injected $3.5M into his venture and the startup officially opened for business in October 2019.
Since then, it has raised $65 million to date from backers including Index Ventures and Sweet Capital; partnered with the likes of Netflix for a “Squid Game” experience; and expanded beyond U.K. territory to over 25 locations spanning from the States and Dubia to Australia and Berlin.
Today, 1.2 million people have given the in-person gaming experience a go and the plan now is to open 1,000 sites by 2028.
‘Create this fear of missing out’
The reason Dean’s investment hack did the trick isn’t just because getting a high score stroked the egos of venture capitalists playing at Immersive Gamebox (although, he admits, that helped.)
It’s because they could see who they could lose the business to—and that’s something any entrepreneur can emulate.
“You have to create this sort of fear of missing out,” Dean says. “I remember someone saying, ‘Greed starts negotiations, fear closes them.’”
So how can an aspiring entrepreneur instill fear in big-shot investors?
Dean has a few tricks up his sleeve: Turn up to a pitching presentation with the wrong investor’s name on the deck.
“Say, ‘Oh, I’m sorry, that’s still that presentation has the name of one of your competitors,’” he laughs. “I don’t know how that happened.”
He’s even emailed investors in the past with the wrong email, before swiftly sending a follow-up note saying: “Please ignore that email that was meant for somebody else.”
“Things like that are not bad ways to create a bit of competitive tension,” Dean assures.
