Successful Sports VCs Will Represent A Combination Of These 3 Industries
How (and why) the most promising sports startups exist at the intersection of sports, tech and media.
Sports are a unifying force and an increasingly attractive market for investors. Investors spent over $1 billion in venture deals for sports related startups in 2015, and it’s not going to stop anytime soon. According to a TechCrunch Tableau study, venture funding for sports tech startups is growing nearly 30% year over year since 2012.
Sports has become this large, explosive market where you see more investment and even star athletes themselves coming into the space. Teams are setting up accelerators. Smart money is moving in and a huge percentage of sports teams owners made their money in tech; so it’s only a natural progression to invest in sports tech.
Sports consumption is changing, too. ESPN, the worldwide leader in sports, reportedly lost 621,000 cable subscribers in the last month, making it the worst month ever in the network’s history. Outkick The Coverage columnist Clay Travis, believes “it’s going to change everything about sports — team revenue and player salaries will plummet and the way that average fans consume sports will change rapidly.”
Investors already realize that ESPN and traditional media business models might not make sense at all anymore and are investing in the future of the sports tech ecosystem.
There is a general direction in which investment in sports properties is developing that integrates sports, technology and media. The players that will be the most successful in this sector will encompass all three industries because they’re the ingredients for the ultimate fan experience. There’s “a cultural expectation,” says Whitney Wagoner, director of the University of Oregon’s Warsaw Sports Marketing Center. “There’s no question, this is the direction we’re all headed in. It has to be that holistic, entertaining fan experience.”
Below are a few examples of sports VCs using their deep domain expertise to meld sports, technology and media:
Courtside Ventures
Courtside VC invests in early-stage founders that are transforming the intersection of sports, technology and media. The $35 million fund is back by Bruin Sports Capital’s George Pyne and Cleveland Cavaliers owner Dan Gilbert. In particular, Bruin Sports Capital has a vast investor syndicate and Pyne has over 25 years of experience in sports business which includes a role with IMG.
“The idea is that technology is changing the way media is consumed, products are consumed, data is consumed. Sports engages consumers around their passion points in a way that other things don’t. We want to be at the forefront of that distruption and change and empower entrepreneurs trying to build disruptive technologies.” — George Pyne tells Forbes
The fund is managed by Vasu Kulkarni and Deepen Parikh — both of whom have launched their own sports startups. Courtside utilizes its network of influencers within sports and tech to source quality deal flow. Courtside’s portfolio includes LiveLike which raised $5M to redefine the sports viewing experience enhanced with VR.
Monumental Sports & Entertainment
Ted Leonsis is the Founder, Chairman, and majority owner of Monumental Sports & Entertainment, which owns the Washington Capitals, Washington Wizards, Washington Mystics, Washington Valor, and the Verizon Center. Recently, Leonsis has revealed plans of raising a $10 million fund to invest in tech startups with the potential to change the way consumers watch and experience sports. This is an area Leonsis knows well having co-founded Revolution Growth.
Leonsis is forward-thinking in that he wants to create a whole new game experience for fans. He’s currently an angel investor in mobile, analytics and views VR as the future of sponsorships telling Washington Business Jounal, “it’s going to change everything.” VR has a direct correlation within the sports space to media and there’s a broad spectrum of ways VR can be powerful.
Fullstack Sports Ventures
Fullstack Sports Ventures is building out a network of sports executives and entrepreneurs that are actively looking to syndicate deals that are productive for the overall ecosystem. The team comprises talent across investment banking, media, tech, and sports backgrounds.
Their average size of round varies, but their initial investment range is generally $100–500K. They have nine companies in their portfolio with their most recent investments in Sideline Swap, Jobble and Burst. Burst delivers the only solution for capturing, managing and monetizing mobile video content across the sports media spectrum. According to Reid Snyder, Fullstack Sports Ventures Founding Director, technology companies enabled by sports make up a new vertical which has raised $1.5 billion in first three quarters of 2016. Snyder goes on to say:
“There is certainly a trend of entrepreneurs and investors who have expertise in a particular industry building an investment thesis around their ability to leverage that experience for their investments.” — Reid Snyder, Fullstack Sports Ventures Founding Director
Other notable firms whose investment theses are focused in the mergence of sports and media include Causeway Media Partners and R/GA Ventures to name a few. There’s an abundance of emerging startups that can benefit from industry access and there are established firms looking on the horizon for new technologies and business models. The VCs listed above have the same belief that sports are a powerful platform for executing their respective strategies to enhance the overall fan experience.
