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Sports and entertainment online content group Dude Perfect LLC has hauled in a nine-figure capital investment that the YouTube stars hope will lead to tenfold growth — and turn the North Texas company into a global giant.
Dude Perfect was started by a group of five Texas A&M University roommates who made viral videos of trick shots, such as scoring a basketball from the third deck of Kyle Field. Today, the group's main YouTube channel has more than 60 million subscribers and the business has grown to include other ventures such as live tours, toys, books and even television. The company also employs about 25 people.
Highmount Capital Management LLC, a New York-based investment firm, provided the capital. Details of the deal were not disclosed, but it's thought to be between $100 million and $300 million.
CAA Evolution served as the exclusive financial advisor to Dude Perfect and King & Spalding acted as legal adviser. Highmount Capital was represented by Stinson LLP.
Cory Cotton, one of the founding "Dudes," said the group wants to bring the fun and enjoyment people get from watching their videos to other types of experiences, something he said they call "Dude Perfect 2.0."
"What we're looking to do with what we keep calling Dude Perfect 2.0 is to continue to find ways to invite people into the ethos of what Dude Perfect stands for and ... feel like one of the dudes and be able to engage in the type of fun things that we do," Cotton said. "Whether that's through products that people can purchase or an experience at home, we just want people to feel like they're the sixth member of Dude Perfect."
Cotton declined to disclose financial details about Dude Perfect but described the business as "very healthy." Dude Perfect generates revenue from advertising on its videos, sponsorships, product sales and tickets for its live tours.
When the company decided to go to market and raise capital, Cotton said, the group was "shocked" by how much interest it received from investors. Highmount came into the fold because of its CEO, Jason Illian, who previously lived in Dallas.
Illian first met the Dudes years ago because they all attended Watermark Community Church. When he heard Dude Perfect was out raising capital, mutual friends helped connect them for a conversation. At first, Illian said he just simply wanted to help Dude Perfect with the process. But the conversation eventually evolved over time into Highmount officially becoming the investment partner.
Illian, who earlier in his career worked as a managing director at a venture capital arm of Koch Industries, said he views Dude Perfect as similar to how the Walt Disney Co. began. What started as Mickey Mouse drawings evolved into a massive corporation with theme parks, television shows, food products and more.
"They built a platform, and I think that the Dudes have done the same thing," Illian said. "They pioneered that for YouTube, and now it's grown into all these different areas whether they're hosting Thursday Night Football for Amazon or doing live events or working with retailers. There's all these different outlets."
Dude Perfect plans to use the investment from Highmount to "take the next step" and build out a C-suite of experts who can help the Dudes use the intellectual property they have created for things like animated shows and possibly even an entertainment park, Cotton said.
"We feel like we've done a really good job at certain things but these dreams that we have are really big and we knew that we needed to take another big step," Cotton said. "And for us that was not only bringing on capital, but bringing on expertise and leadership and people that really know how to take IP ... to help us 10x what Dude Perfect is and what it can be."
Dude Perfect has already begun a CEO search and will look to hire a chief financial officer and individuals for other C-suite positions in the months ahead.
The investment from Highmount will also help support Dude Perfect's eventual plans for a new headquarters. The group unveiled in 2022 plans to build a new corporate HQ and entertainment destination, including a 330-foot tower that can be used for trick shots, and said it was looking in North Texas and elsewhere. San Antonio-based architecture firm Overland Partners is helping to design the project.
"We're still extremely excited about that vision," Cotton said, adding that the group still sees an "opportunity to create a big, in-person destination."
While plans for the new headquarters "are moving forward," Cotton could not provide a timeline for the project. In the meantime, Dude Perfect is building out a new 20,000-square-foot space in Frisco at 15900 Gateway Dr., a project with a price tag of $3 million, WFAA reported in December, citing a filing with the Texas Department of Licensing and Regulation.
The new office should be ready in a couple of months, Cotton said, and will be almost twice as big as Dude Perfect's current space.
"It's another basically warehouse space that we're able to really customize and build out. And boy are we customizing it," Cotton said. "It is not your typical space. It's going to be pretty special."
Cotton said Dude Perfect wanted to wait until it brought on new investors before making any decisions about the HQ.
"We're a team moving forward," Cotton said. "We've got lots of ideas. Whether we start with [the original plan], or whether we start with traveling experiences to be able to touch more people more quickly, we still are very serious about that. And as you can see from all the renderings and everything, we've got that very well thought out and feel very strongly that something like that should exist."