Technology start-up MiRunners is hoping to broaden the appeal of horse racing by making thoroughbred ownership affordable for more Australians through crowd funding.

In building its business it has had to overcome hurdles familiar to any company that finds itself trying to transform a long established, highly regulated industry.

MiRunners purchased its first colt for $165,000 in the Gold Coast Magic Millions yearling sales in January this year. It’s bred to run early and MiRunners executive director Chris Ryan is hoping it runs fast early.

Consumers can become a part-owner of the yet-to-be-name colt by buying a share in the horse for $165. There’s also a $15 monthly subscription fee that covers the costs horse’s upkeep. Currently, MiRunners has sold a third of the units in the first horse, which is being trained by Kris Lees.

Traditionally, racehorse ownership is restricted to an individual or syndicates consisting of 20 owners or less.

The big challenge for MiRunners — a business which evolved from trainer-to-owner communication platform MiStable — was to find a legally compliant micro-syndication solution, which allows more than 20 owners.

The company eventually settled on a registered managed investment scheme, a legal structure signed off by ASIC that allows the general public to participate in a financial instrument. In this case the horse is considered a financial instrument in the same vein as assets like shares, property or paintings.

“Believe it or not horses are regarded as a financial instrument in the eyes of the government,” Ryan told Which-50.

“We settled on what we thought was the most conservative, gold-plated solution that we could afford.”

But MiRunners isn’t marketing itself as a financial investment, it’s selling an experience along the lines of becoming a member of a football club — that might one day win the grand final.

“You would have to buy a lot of units in a super star horse to be financially rewarded,” Ryan said. “We are selling the dream and the bragging rights.”

To provide a unique experience MiRunners is working with some of Australia’s best trainers and buying thoroughbred horses.

Reinventing the Ownership Opportunity

One of the biggest challenges for horse trainers is attracting new owners to their stables, Ryan said.

“Finding the new owners is hard, but also it’s hard for a lot of trainers to come up with the money to go to the sales. It is very common for trainers to go to the horse sales and buy a horse on spec, they will spend a quarter of a million dollars on an an unraced yearling, with no idea who they are going to sell it to.”

MiRunners, which is hoping to double the number of owners in Australia over a decade, wants to provide the security for trainers. Once the brand is established, the business is hoping demand will be strong enough to “de-risk life” for racehorse trainers.

The company also has ambitions to broaden public interest in horse racing and attract a new audience to race days, which are suffering from a decline in attendance.

In particular, MiRunners is hoping to increase the involvement of women in the industry. Market research conducted by MiRunners estimates 40 per cent of its co-owners will be women.

Historical Challenges

Ryan says MiRunners has attempted to address criticisms of previous attempts at micro-syndication. It has partnered with Sire Custodians, which will act as an independent custodian tasked with acting the best interest of all unit holders to eliminate any vested interests of owners.

Another historical complaint is that micro-syndication dilutes the ownership experience which, Ryan argues, is overcome by it MiRunners digital platform.

“Technology is the enabler here. It has allowed us to deliver a digital ownership experience, so there is no qualitative loss other than you don’t get to put the trophy on your mantel shelf, because there’s more than one of you, and that’s the case when there is 20 owners anyway.”

In 2016 MiRunners raised $1 million from private investors and existing shareholders MiStable, the communication platform which allows the trainer to provide updates to any number of owners via digital channels.

“Technology wise I think we’ve solved it, regulatory wise we’ve solved in. The big one now is establishing the brand.”

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