Adding Another Courtside Seat

When we launched Courtside Ventures 4 years ago, Deepen and I were two first time fund managers, hoping to prove that sports was an industry where you could make venture returnable investments. I still remember trying to negotiate a carve out with our LPs that would let us invest some portion of the fund in companies that had nothing to do with sports as a way to hedge against us being totally wrong about our thesis. Luckily our LPs had more conviction in us than perhaps we did ourselves, telling us to stick to our guns, and focus on what we had set out to do. 4 years later, we can say that we have been pleasantly surprised by the number of passionate entrepreneurs who are building innovative products for huge markets. Quality deal flow it turned out, was not an issue.

One of the first things we needed to figure out is what portfolio construction meant as an early stage firm. How many deals do we do? How big are our initial checks and what are we reserving for follow on? What ownership percentage are we targeting? How quickly are we going to deploy our capital? Do we want to lead or follow? How many boards can we actually sit on?

It turned out that while traveling the world looking for great companies you can write a check into is a fun job, to be successful, it’s all about being disciplined in your approach. You have to get over the FOMO which can rope you into doing a lot of deals just because some blue chip Silicon Valley fund is doing it.

One of the best things we learned was that in venture, you don’t need to do every great deal, but every deal you do needs to be great.

As first time fund managers, Deepen and I felt strongly about not hiring any other partners, analysts or associates for the first few years in order to really learn the ropes. We came up with the following blueprint:

1. We were going to do between 25 and 30 deals total out of the fund. (We ended up overshooting this as a result of us having to do more seed deals than we had planned due to Series A deals being over priced without being sufficiently de-risked to justify the price. Obviously these deals are riskier, so you end up writing smaller checks and instead spread that risk across a broader portfolio)
2. Our checks were going to be $250K on the low end and $2M on the high end. (We ended up going lower than $250K on a handful of deals because we came to the table late and there wasn’t much allocation left. In hindsight, we shouldn’t have done those deals, as tiny checks rarely end up generating the type of return you need vs the time you put into the deal)
3. We were holding 50% of investable capital on day 1 to be kept in reserve for follow on investments in companies that were doing well. This is probably one of the most important parts of venture investing — you have to defend your position in your winners at all cost. (We did this very successfully in one huge winner, and we were unable to do it at all in another huge winner)
4. Our goal was to own at least 10% of a company if we were the lead, and ~5% if we were following on. (While we generally stuck to these numbers when we were the lead, some of those smaller checks referenced in point 2 above left us with very small ownership percentages — it was better not to have done those deals at all)
5. We were going to make all our initial investments over the course of the first 4 years (We actually ended up deploying most of our initial investments in a little over 3 years)
6. With only 2 partners, we needed to be careful about how many deals we led and took board seats on. We felt like neither of us should be on more than 4 boards, which meant we could lead a total of 8 deals. (We actually ended up leading 11 deals, but in a few of those cases we took a board observer seat instead, and allowed another investor to take our actual board seat)

We probably looked at well over 5000 deals during those 3 years, and ended up making 40 investments between the two of us. Most importantly, we wanted to refine our thesis on what we really believed were venture returnable ideas in this space. We ended up settling on 3 major areas of focus:

1. Sports (media, content, culture and participatory)
   We led the seed round in The Athletic which has set the standard for sports journalism. We invested in StockX which has changed the way people buy and sell sneakers online. We backed the phenomenal team of Gotham Chopra, Michael Strahan and Tom Brady in their mission to tell sports stories through the Religion of Sports.

2. Fitness / Wellness (personalized apps, smart devices, community)
We invested in Europe’s biggest fitness app, Freeletics. We led the seed round of RecoverX, a company that has created the first ever battery operated hot and cold pack. We are part of ZenRez, a SaaS tool that is helping boutique fitness studios build bigger businesses.

3. eSports / Gaming (studios, developer tools, social communities)
We helped incubate 100 Thieves which has quickly become the gold standard in how to create an eSports organization that goes beyond just the titles you play. We invested in ChronoGG which is creating a new distribution platform for games by leveraging the audience of streamers. We were part of Players Lounge which is facilitating real money wagers on head to head video gaming.

While the two of us were fairly well versed with the first two areas from our past lives, neither of us are gamers, and so we had a couple of years to “fake it till we make it”. But the time had finally come where it was impossible to ignore just how important gaming has become to a worldwide audience. This is a $150Bn industry that dwarfs the global box office. If we’re going to be serious about investing in gaming, we need the best and brighest mind leading our efforts.

That’s why we’re thrilled to announce that Kai Bond has joined Courtside Ventures as a Partner to lead our gaming investments. Kai is a former entrepreneur who started and sold numerous companies, and most recently was running the Catalyst fund at Comcast Ventures. He’s a sports fanatic like us, and really understands the media and fitness landscape, given that his last streaming company pixietv was sold to Samsung. Kai also brings the structure and best practices from a highly successful institutional fund to level-up our team at Courtside. He also passed the “do we want to have a beer with this guy on a Friday night” test with flying colors, despite the fact that I don’t drink.

Deepen and I have co-invested on a handful of deals with Kai over the course of the past few years, and so having him join us was an easy decision on both sides. Most importantly, unlike “Parikh” and “Kulkarni”, “Bond” is a much more badass name.

If you’re building something cool in gaming, or you’re just interested in learning more about how we think about the space, you can reach Mr. Bond at kai@courtsidevc.com

About Courtside:
Courtside Ventures is an early stage investor in sports, fitness, and gaming. www.courtsidevc.com