3 Things Your Sports Startup Needs To Receive Investment
Breaking down the funding buzzwords
Investors are always interested in building out proprietary deal flow, access to entrepreneurs and the ability to scale great tech startups. The rise of the sports tech sector presents new opportunities for some investors to leverage their expertise like never before.
“There’s faster adoption of technology in sports than there was even 24 months ago,” according to Reid Snyder, Founding Director at Fullstack Sports Ventures. “However, the sports industry is still nascent with regards to early-stage technology investment.” Early stage sports startups, potentially high-growth businesses, don’t necessarily have exposure or relationships to navigate the sports investment landscape. That’s why accelerators, professional teams, athletes and VCs are taking notice.
Smart money is moving into the space, but how can sports startups stand out? When seeking investment from investors it’s imperative that you satisfy three categories. Let’s break them down:
Team
The team is incredibly important and within the team, you have to be qualified in a unique way to attack the opportunity. If you aren’t the best people to attack the opportunity, then investors will recognize that right away.
I want to know what unique experiences you bring to the table that are going to give your business a faster time to market, a better designed product, more knowledge of your customers problems — a higher likelihood of success. — Mark Suster, Partner at Upfront Ventures
The initial team needs to have an understanding and unique approach to a particular space that you can’t find anywhere else. Exemplifying deep domain expertise gives you an unfair advantage and is a huge positive in the eyes of the investor.
Maybe you’re a former player, a coach or an equipment manager. Think about how your insights could position your founder story and startup for success, and make sure you tell that story in a clear way.
Traction
In such a competitive landscape, you need far more than just a good idea and a qualified team. Early traction — evidence that your business model is working — and a sign that you have at least prodded in the market are incredibly important to investors.
A good example of how to display traction is Fullstack Sports Ventures portfolio company SidelineSwap, which just raised $1.5M in seed funding to change how athletes buy gear. The peer-to-peer marketplace grew ~20% for 7 months before closing their round. View Founder, Brendan Candon, describe SidelineSwap’s traction in his 500 Startups demo day pitch below:
Show MRR (monthly recurring revenue), customer happiness metrics (like a Yelp review) and MoM (month over month) growth. Even if you’re an early stage startup, it doesn’t necessarily need to be a huge rolodex at that point.
Strategic Fit
Strategic fit expresses the degree to which a startup is matching its resources and capabilities with the opportunities in the external environment. The matching takes place through strategy and it’s therefore vital that the startup has the actual resources and capabilities to execute and support the strategy. Strategically thinking of how investors can be involved is also helpful. Investors want to help you be successful, open up their network and continue to scale-up.
For some startups like ticketing platforms, sports is a gateway.
Selling into sports can be a strategic way to grow the overall
business and eventually break into additional markets. — Reid Snyder, Founding Director at Fullstack Sports Ventures
In other cases, it’s a matter of the structure of that sales team and filling up that pipeline in niche industries.
The best way to be prepared for funding is by illustrating team, traction, and strategic fit. Investors will also be looking for pattern recognition, competitive landscape and other indicators of success or failure. It helps to display the ecosystem in which your startup not only survives but thrives.
