Creating the perfect artificial wave has long been the stuff of dreams. For the past 60 years, variations on the idea appeared everywhere from theme parks to hotels and beyond, innovating with each iteration. And now the day has arrived and adventure capital in surf park development is a thing. Here’s what happened.
But among the cognoscenti December, 2015, changed everything. That was when Kelly Slater unveiled his Surf Ranch in Lemoore, California.
“[Slater’s] technology opened the door for the growth of our entire industry,” said Skip Taylor, a partner at the San Diego-based consultancy, Surf Park Management.
“That was a tipping point that gave [the industry] a lot of credibility. Every developer that doesn’t know much about the space who calls me says, ‘We want to build something like what Kelly Slater built.”
That confluence of innovation and credibility has been a key impetus for new surf parks and new generations of wave-making tech. Just as crucially, it also spurred the growth of so-called “adventure capital.”
Kelly and Michael
Michael Schwab, an entrepreneur, developer, and surfer, said the term first emerged in reference to a real estate project he and his colleagues were developing in Romania. Since then, as Schwab fell in love with surfing and began to invest in related projects, including the Kelly Slater Wave Co., it came to signify–however unofficially–an investment class for action-sport-related ventures. Or simply today known as adventure capital in surf park development.
Schwab and his venture capital firm, Big Sky Partners, are among the investment leaders in the space. In addition to KSWC, the company’s portfolio includes a luxury surf resort in Indonesia, a surf lodge in the Marshall Islands, a wave pool and golf resort in Mexico, and the Natural Selection Tour, which runs snow, surf, and mountain bike contests from Canada to Queenstown, New Zealand.
Despite the exotic settings, Schwab’s vision is the same as that of every surfer: find the most perfect waves in the world, and surf them with few other people out.
“I’m not trying to create an ultra-exclusive thing,” he said. “I’m trying to create a controlled situation where everyone has an amazing time and is willing to spend a little bit more than a typical surf vacation.”
Adventure cap goes global
While Schwab is one of the recognizable names in wave pool development, he’s just one of a number of deep-pocketed wave addicts embracing the adventure asset class. In Brazil, Oscar Segall and his company, KSM Realty, have led the pack. They started with Praia da Grama, which opened in 2021. Located about 45 minutes from São Paulo city, it was the country’s first surf park–but far from the last.
Segall followed up that first development by launching Beyond the Club, a surf park and community hub in São Paulo, which will fully open in October. The central feature is a 28,000-square-meter Wavegarden lagoon with 25 types of waves, from rolling, beginner-level options to steeper barrels for the advanced set. Filipe Toledo serves as the club’s surf ambassador and will lead the coaching program and participate in events.
“This is a visionary project, and I am proud to be a part of it,” said Toledo. “I never really imagined that technology would evolve to this level in my lifetime.”
True to its name, the facility will indeed have countless other activities, from a gym to a wellness center, tennis courts to a skatepark.
In the wake of Praia do Grama, several other projects have popped up. Surfland Brazil, in Santa Catarina, opened in 2023, as did Boa Vista–a private wave pool in São Paulo. At least six more Brazilian projects are in development.
The (slowly) rising tide
Even as bullish developers like Segall and Schwab dive right into wave pool development, adventure cap is still a slow-moving tide.
Doug Sheres is a founding partner of Beach Street. They are a surf park development and operations firm that’s among this new generation. Like Schwab, Doug waded into the business out of passion for the sport. Now he is watching it evolve from a front-row seat. For Sheres, it’s not the concept of adventure capital that’s novel, but the specific challenges for surf park development. Surf parks, he said, are a fresh spin on “experiential real estate.” Which is a way of saying projects made for consumers who’d rather mountain bike, rock climb or trail run than sit idly by the pool.
“The surf park surf destination space is fairly new, so it’s a more challenging place to raise capital,” he said. “There are not enough of these, particularly in [the U.S.], to get capital super comfortable. So [as of 2022], the parks that have been built in the US were more or less funded by wealthy individuals.”
Once those wealthy individuals draw up their plans, however, another hurdle pops up. It’s difficult raising what Skip Taylor, from Surf Park Management, called “the big dollars” to actually build. Not to mention, cost uncertainty in a rapidly fluctuating marketplace.
“That is where it’s getting a little bit tougher,” he said. “Construction costs have gone up by 25 to 40%. We had $15 million in cost overruns in [a Hawaii] project. People building a teeny project in Dallas, just two and a half million dollar debt on what they thought was going to be a $7 million project—now we’re getting close to $10 million. When you have a 25% increase on expenses on the capital costs that ROI then starts to diminish more and makes it that much harder to raise the funds.
“It takes time… . And they need that supporting data before you start to see larger institutional capital coming in the space.”
Are These Projects Finally Being Noticed?
Yet, the tide may be starting to turn. According to Schwab, the data set is building, albeit slowly.
“There’s this huge groundswell of waves coming through, but I think we’re just at the beginning,” said Schwab. “I think there are going to be wave basins around the world just like there are golf courses.
“We’re just at the beginning here. What seems to be a lot of projects will just be the tip of the iceberg.”
