Epic struggle pays off for IT engineer

T started with an expensive three-day mountain-bike race in Costa Rica in 2002 and an IT solution architect at a bank in London who was keen to be his own boss, preferably in Cape Town.

Kevin Vermaak, an electronic engineer, was not looking to get rich, but wanted a “cool project” to satisfy his entrepreneurial spirit.

The Costa Rica trip sparked an idea: If people were willing to pay top dollar to go cycling in Costa Rica, surely they could be persuaded to do the same in the beautiful Western Cape.

“I got back to London and started doing some research and found some international marketing partners.

“About three months in, I realised I needed to focus all my time on this. I quit my job and moved back to Cape Town early in 2003. Within a few months of being back here, I realised this thing really had legs,” Vermaak said.

Last weekend, he celebrated the successful hosting of the 10th Cape Epic, now one of the world ’ s most famous races — the Tour de France of mountain biking. It is the race for world champions and Olympic medallists — and amateurs who are brave enough to tackle the sevenstage, nearly 800km off-road race, which includes nearly 15km of climbing.

Teams paid R45 900 to enter this year’s race, which was run from Cape Town to Somerset West via Citrusdal, Tulbagh, Wellington and Stellenbosch. The entry slots are in such demand that the early allocation for next year sold out in 34 seconds on Monday.

Reserved slots come at a premium and they are paid to two charities: the Big Tree Foundation, which provides school uniforms to pupils in rural communities in the Western Cape, and the JAG Foundation, which uses sport as a way of uplifting children.

Some teams spent as much as R200 000 on entry fees and related expenses to participate, Vermaak said.

The total prize money is R1.4-million — the largest in world mountain biking.

A stage win will earn you R5 000, whereas the men’s winner takes home R200 000 and the women’s R50 000.

Vermaak ’ s strategy from the start was to host a world-class event and attract the world’s top mountain bikers. They, in turn, bring media interest and TV coverage — the Epic is the most widely broadcast of the world ’ s mountain-bike races, which is important to attract and keep sponsors.

This year, seven of the top 10 London Olympians in mountain biking participated in the Epic, along with several former and current world champions and sports stars from other disciplines, including soccer, rugby and rowing. “I travel to races across the world to invite top racers to join us at the Epic,” Vermaak said.

Despite the importance of attracting top riders and a limit of 1 200 competitors (two per team), there would always be room for amateur participants, he said. “They are critical to the event — they give it a unique flavour.”

About 70% of the amateurs are CEOs, senior managers or directors — an attractive market for sponsors.

Although there has been a huge demand for racing slots since the launch in 2003, the success of the race did not initially translate into profit. After the 2005 race, Vermaak’s Grandstand Management was technically insolvent and that was almost the end of the Epic. “We were using the entry fees for the 2006 race to cover expenses for 2005. It wasn ’ t a sustainable model.”

The Industrial Development Corporation helped with R3-million bridging finance in 2006 — the corporation ’ s first sports-related loan.

“Any commercial bank would have laughed at me at the time,” Vermaak said.

And his ability to spot an opportunity bore fruit yet again. After struggling to find a big sponsor, he discovered that one of the 2006 riders was the executive assistant to Absa ’ s CEO.

The bank not only came on board as headline sponsor from 2006, but also put Vermaak in touch with a business mentor.

Diversified miner Exxaro also became a sponsor after some of its executives completed the Epic. This inspired the company to start putting money into developing mountain biking, particularly among black youngsters. This year, it sponsored 20 development teams at the Epic.

The event showed its first profit in 2009 and today it has 20 full-time employees who work exclusively on organising the race. “During the race, we have about 800 people reporting to those 20. We’ve managed to create a brand to the point where we have international volunteers paying us to come and work here. The money covers food and accommodation and is one of the cheaper ways to see the race,” said Vermaak.

The race has reached its limit for competitor numbers, so the focus is on growing the profile of the event by boosting sponsors, prize money and the calibre of participating riders.

“Whatever we do, we want to be the best in the world,” Vermaak said.