Hunt A Killer is using crowdfunding to top off an $8.3 million equity round as the business shifts toward getting its party games into big box stores.
The Baltimore startup closed $8.3 million out of a $10 million goal in December 2021 with support from Lyra Growth Partners, Early Light Ventures and others. Now, CEO Ryan Hogan is tapping into crowdfunding to potentially raise up to $1 million in additional capital for Hunt A Killer. The round will be used to help the company transition out of a direct-to-consumer subscription model into traditional retail.
Hunt A Killer creates party games that bring people together to solve a "whodunit" murder mystery. Customers subscribe to Hunt A Killer and get a “season” of one murder mystery a month with an overarching theme or story. The company is shifting toward single-story boxes that are sold as standalone products in Target or Walmart.
The crowdfunding round aims to raise $1 million and is based on a $31.8 million evaluation and comes with several additional perks for investors. Investors who give $1,000 or more get free admission to an annual conference of Hunt A Killer fans, while people who give over $25,000 can have their likeness become a character in a future game. The ongoing round has raised $113,995 so far and will close on April 21.
"It was a matter of whether should we go back to the institutional investors and people that have already invested in the company," Hogan said, "or do we provide an opportunity for people that we know want to be closer to the organization?"
The crowdfunding effort comes more than a year after the $8.3 million fundraise because Hogan was called up from the U.S. Navy reserves and had to step away from Hunt A Killer just three months after the round closed. Hogan balanced his responsibilities at the mystery company with transport missions in Europe and Africa for most of 2022, while also giving his crewmates the chance to try out Hunt A Killer games.
A love of entrepreneurship, not mystery novels, is what motivates Hogan. The end goal for Hunt A Killer is to go public or provide investors an exit through a merger or acquisition.
"It's always been about the chase of creating value and experiences in people's lives," Hogan said.
The pandemic caused a boom in Hunt A Killer’s business since people were looking for something fun to do in the comfort of their homes. The company got its first major physical big box client with Target in 2020 to expand beyond the direct-to-consumer market. Subscription box companies often hit a ceiling because it's hard to acquire new customers to replace people who end their subscriptions once a company captures a large portion of the market. The subscription box industry has also declined overall after a boom during the pandemic. For example, shares in food subscription box companies Blue Apron and Hello Fresh have fallen dramatically over the past several years.
Most tabletop game companies only make around 30% of their profit from direct-to-consumer sales, with the majority of sales being in retail stores, Hogan said. Two to three years ago, 95% of Hunt A Killer’s sales were direct-to-consumer, he added. The push to traditional retail sales has led to cash cycle challenges for Hunt A Killer. Retail sales require more capital since Hunt A Killer needs to deal with the middleman of Target or Walmart, instead of handling most transactions in-house and instantly earning money after a sale, Hogan said.
The company made a round of layoffs in March 2022. There are currently 34 full-time employees at Hunt A Killer, Hogan said, down from over 100 in 2021. When the company shifted to retail it outsourced its fulfillment, packaging and shipping operations.
Hunt A Killer declined to disclose its 2022 revenue because it is actively raising funding. The startup ranked as the sixth fastest-growing private company in the country in 2019 according to Inc. Magazine, with $27.3 million in revenue that year.
Hogan plans to add five to 10 new stories each year to the Hunt A Killer catalog. Hunt A Killer is also trying to create a television show based on the brand.
