I was a bit shocked last November when I learned that a Formula 1 racing team was using crowdfunding in order to continue to race. It’s no secret the sport is incredibly expensive, as there have been several teams who’ve bankrupted themselves to live the dream. I’ve talked in the past about what routes you can go through to start racing, and gain sponsors, but this dilemma posed by the Caterham Formula 1 team had me stumped.
The team was new, only starting in 2009 when they official gained entry to the 2010 FIA World Championship. Practice and due diligence proved to be successful as they set out only to beat the other new teams for the year, as a realistic goal. Wanting to come back stronger, their goal for the 2011 Series was to place at least tenth, which was completed without ease but other problems were brewing within the organization.
Mostly with troubles on the track, drivers continuously failed to yield results for team owner Tony Fernandes, who vowed to quit the team if they did not improve by the 2014 season. With 56 races in their career, Caterham set an unprecedented record – for most race starts without scoring a single point. Sadly, without those results being fulfilled, Fernandes left Caterham, taking his funding with him.
The team went into administration, prompting Bernie Eccelstone to give them the permission to miss two Grand Prix races, in order to find a new owner. Meanwhile, 40 employees filed lawsuits claiming they were unfairly terminated during Caterham’s cost cutting initiative in July 2014. Things were not looking good for the already sinking ship.
After repeated attempts to find a buyer, Caterham decided to launch the crowdfunding campaign in order to finish out the 2014 season at Abu Dhabi. The campaign was successful, funding £2,354,389 – definitely not a figure to be laughed at, even in F1 standards. This final sendoff was to prove to potential investors that the team could still be a contender. Both Caterham cars finished dead last at Abu Dhabi, effectively destroying the dreams of those involved in the team. The sale of the assets associated with the team when on sale March 2015, bringing the end of the auction last Friday.
At the end of the day, it’s just business. They gave a valiant try in order to continue to see the team improve, but that’s not always the case. There are always lessons to be learned, and in this case, it was an incredibly expensive lesson.
Photo courtesy Flickr Creative Commons