The T-Rex of sports – Angel Investing Mistakes – Revolutionising strength training – Digital Twins and the Tour de France – A Framework for the Metaverse
Week 5
Skin In The Game covers the business of sports investing.
We also run a regulated angel syndicate connecting investors with visionary SportsTech startups. By providing a platform for investors, founders and execs to collaborate and co-invest, we’re helping to shape the future of sports.
Confessions
The T-Rex of sports – Private Equity – continues to stalk boardrooms across the globe. Its vision is based on movement, and we have seen a lot of that in recent months. Clearly basketball is de rigueur, with Dyal HomeCourt Partner buying a stake in the Phoenix Suns, Arctos Sports acquiring a piece of the Golden State Warriors, and Sixth Street teaming up with Michael Dell to get a slice of the San Antonio Spurs. If that’s not enough corporate finance for you, Ares Management has invested more than $1bn in the sports, media and entertainment industry, including the San Diego Padres, NHL’s Ottawa Senators, Atlético Madrid, and F1’s McLaren Racing.
I find this big picture “business of sports” stuff fascinating. It’s a million miles away from my office in Bradford-On-Avon, but like all men of a certain age and disposition, I dream of owning my own team one day. For the time being though, I think there’s something far more interesting going on in sports – and far more relevant to angel investors. And that’s SportsTech.
Our investment thesis at Skin In The Game – that sports is an incubator for ideas and technologies with mass market appeal – continues to be validated by early-stage deal flow. For me, the interface between sports and health is where it’s at, but entertainment, corporate wellness, insurance, and defence also stand to benefit. These are all humungous industries that map neatly to innovation in sports; a space where data is abundant, investment is emotive, and people simply can’t look away.
At the same time, it seems to me that the venture space in Europe lacks sports specialists. The US market feels more mature, sophisticated and yes, gung-ho, writing large cheques in unknown SportsTech startups, often with the covering fire of heavyweight angels from the overlapping worlds of sports and entertainment. A casual glance at Crunchbase will tell you that US venture firms are becoming increasingly active in Europe, casting their clutches further afield in search of new markets, experienced operators and wealthy consumers. But we hardly ever hear about Asia. This is an important market for sports innovation (China and India are both highly active, and South-East Asia is becoming more prominent by the day) and I think there’s an opportunity to adopt a more inclusive, global approach to sourcing deals and building relationships with investors. Off-piste action in Singapore, Jakarta and Mumbai is just as interesting to me as reds and blacks in London, NYC and Berlin.
Athlete empowerment (and in some ways, its inverse) continue to dominate the press. The athlete-as-creator narrative is still in its infancy, but it already feels structural. In fact, the very essence of sports is creative – every day, sportspeople create moments of rare beauty, euphoria, and sometimes, heart-crushing pathos. But unlike their scripted cousins in Hollywood, they do it without artifice. They do it with the kind of existential authenticity that makes the rest of us wince. These Übermensch remind us of what we could become, if we could only harness the unique gifts buried within us, obscured by sedimental layers of excuses, compromises and tomorrows (not to mention subcutaneous fat). To many, these people are gods – but they are human. There is so much pressure on athletes to be business-people, media personalities, social activists, and paragons of human performance. I am in awe of those who put themselves out there and lead by example, even when things don’t go entirely to plan.
I’ve been enjoying spreading the word about Skin In The Game. I’m hopelessly biased, because I’m in love with practice of investing in sports, but the vast majority of people I talk to grasp the concept and want to get behind the newsletter and angel syndicate. So much so that I’m thinking of creating a group chat (WhatsApp?) for power users of the newsletter to share deal flow, organise meetups and source game tickets. Let me know if you’re interested.
It’s still early days, but in many ways, those are the best days – when you are still naïve and borderline delusional enough to think and act without constraints. A reminder that falling in love is crazy – but somehow makes complete sense.
Deal flow
💪 Arena Secures $5.2m in Funding to Revolutionise Strength Training – Connected fitness company Arena Innovation secured $5.2m in seed financing to (in their words) “revolutionise strength training”. This looks super cool… a gym in a box with 4 attachments for 300+ exercises.
👕 RPM Training Closes Series A Funding Round – RPM Training closed a Series A led by Partnership Capital Growth and KC/LLC. It’s a lifestyle brand focused on the intersection of training and action sports (in other words, they make activewear).
🙍♀️ Take-Two Interactive Acquires Red Dead, NBA 2K Facial Animation Studio – Take-Two Interactive, the parent company of developer Rockstar Games, has acquired Dynamixyz, a studio that has provided facial animation services for Take-Two games NBA 2K21 and Red Dead Redemption 2.
🥊 Cornerstone leads seed round into Boxx – Fitness studio and digital content platform Boxx offers flexible at home and studio workouts across boxing, HIIT, strength and yoga. More than 2 million minutes of Boxx’s workouts have been completed online, with 200k app downloads.
💵 Why NBA superstar Steph Curry invested in pay equity startup Syndio – The Seattle startup has scored more than $30m in funding in 4 years. Syndio’s EquityTech software analyses salaries, rooting out discriminatory differences in pay that are tied to gender, race, ethnicity or age while providing strategies for fixing those disparities.
🤖 Fobi raises $7.4m through private placement – Fobi raised over $7.4m. It provides real-time data analytics through artificial intelligence and helps sports clubs do fan engagement (amongst other sector verticals).
🎮 Schalke 04 LEC spot sold to Team BDS for €26.5m – German football club Schalke 04 has completed the sale of its League of Legends European Championship licence to Swiss esports organisation Team BDS for €26.5m.
🧃 16m Series D for X2 Performance Line led by L Catterton – New York Giants running back Saquon Barkley became the latest A-list athlete to invest in the X2 Performance line, a natural alternative to energy drinks and supplements. He joined the likes of LA Clippers star Kawhi Leonard and Tampa Bay Buccaneers linebacker Lavonte David on the cap table. More on the “sports drink wars” here.
🏎 Porsche invests in Israeli startup to give fans greater race thrill – Porsche has acquired a minority stake in Israeli startup Griiip, a developer of cloud-based software that provides race car data in real time to fans, drivers and team players so they can get a feel for what’s going on inside the cars and compare performance.
🕹 Swedish e-sports giant MTG acquires PlaySimple for $360m – In one of the Indian gaming startup ecosystem’s largest deals, Sweden-headquartered e-sports and gaming group Modern Times Group has acquired Bengaluru-based word games developer PlaySimple for $360m.
🎮 Excel Esports wraps up €20m investment round – UK competitive gaming organisation Excel Esports has completed an investment round of €20m. You can buy their team jerseys here.
⌗ JPMorgan unit buys stake in sports data provider Kraft Analytics – JP Morgan Asset & Wealth Management has taken a stake in Kraft Analytics Group, the sports-focused data analytics firm with clients that include the NFL, teams across major American sports leagues as well as college athletic programs. JPM is looking to leverage the data flowing in from ticketing sales and legal sports betting to better service its clients.
💳 Fitness-Rewards Startup Paceline Raises $30m in Series A Round – The round was led by Acrew Capital, with participation from Mubadala Capital Ventures and with existing investors Montage Ventures, Propel Venture Partners, Northwestern Mutual and BlackRock’s Mark McCombe.
🩺 Inspired by founder’s childhood asthma, NuvoAir raises Series A to tackle respiratory illnesses – The Boston-based startup has now raised $12m in a Series A funding led by London-based AlbionVC.
📹 Catapult Boosts Video Analysis With SBG Sports Software Acquisition – Melbourne-based Catapult Sports has acquired SBG Sports Software, which performs video and data analysis for sports teams in order to gather real time strategic insights, most notably in motorsports, soccer, and rugby. Catapult paid $40m for SBG to improve its ability to provide video analysis as a tool for performance optimisation.
Big picture stuff
✊ How we entered the age of the activist athlete – From Colin Kaepernick to Marcus Rashford to Naomi Osaka, activism in sport has come a long way in a short space of time. Here, author Matt Rogan asks: Is the Summer of Sport finally the moment we start taking our athletes seriously?
🌳 2 1/2 Angel Investing Mistakes You Can Easily Avoid – Before founding Homebrew, Hunter Walk made c. 20 or so investments in startups using his own savings. He says he never really tracked IRR or net returns, but did pay close attention to lessons learned. Here’s 2 (and a half) mistakes he made that you should avoid.
🚴♀️ Tour De France 2021 Organisers Use Digital Twin To Manage World’s Most Famous Cycling Race – “Digital Twins” could transform venue management by allowing operators to simulate safety procedures, crowd control measures or any other number of scenarios.
🌌 A Framework for The Metaverse – The Metaverse is often misdescribed as virtual reality. Or as a virtual user-generated content platform. Or a “persistent virtual space enabling continuity of identity and assets”. But what is it, really? Brilliant (and very rich) read from everyone’s favourite gaming expert, Matthew Ball. Those with less time, read this primer from Sports ETF specialists Roundhill Investments.
⛹️♀️ Women’s Sports Already Winning – When the NIL era arrived on July 1, it wasn’t just the top men’s sports athletes who profited. Women’s sports athletes capitalised too – and it’s clear they could be some of the biggest winners of the new era.
🎓 The Dynamics of College Sports Are Changing and So Are the Business Prospects – Some moneymaking opportunities are straightforward: a cut of jersey sales, an autograph signing at a sporting goods store, or pitching a product on a billboard or to social media followers. But a new market is sure to attract some novel enterprises (if you haven’t run out of free NYT articles).
🧮 Your CAC doesn’t matter – In a market where starting an online business is easier than ever, acquiring customers has become more expensive and competitive. To win, brands of the next decade – from venture-backed companies to long-tail merchants and SMBs – must lead with loyalty. Good piece from Forerunner Ventures’s Jason Bornstein.
🇮🇱 These Israeli startups are scoring big in sports-tech – Israel has introduced over 200 successful sports startups to the SportsTech arena. Here’s a selection of them.
🎧 What Rory Sutherland thinks about when he thinks about sport– Rory is everyone’s favourite ad man and author of “Alchemy, The Surprising Power of Ideas Which Don’t Make Sense” (which I found through Nassim Taleb, which is some endorsement). Here he talks with Richard Gillis at Unofficial Partner, a sports business publishing consultancy with a brilliant newsletter and podcast.
Some tweets
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Euro 2020 final ⚽️, NBA finals 🏀, Wimbledon finals 🎾, the Tour 🚴♀️, shedloads of rugby 🏉 (Argentina vs Wales, NZ vs Fiji, England vs Canada, Ireland vs USA), England vs Pakistan cricket ODI 🏏, British Superbikes 🏍, Formula E ePrix 🎮, Scottish Open ⛳️, Cubs vs Cardinals ⚾️, Copa America final ⚽️, Poirier vs McGregor 🤼♂️, Love Island 💘.
Cheers,
Ed
—
Edward Rhys
Founder / Skin In The Game
www.skininthegamegroup.com
🙏 A favour
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Skin In The Game is an angel investing group connecting investors with visionary SportsTech startups. We provide a regulated platform for fans, athletes, entrepreneurs and brands to collaborate and co-invest. By investing in SportsTech we can unleash the full potential of sports, enriching the lives of people everywhere.
SKIN IN THE GAME LIMITED is registered in England and Wales under Company Number 13200102 and with the FCA as an Appointed Representative with FRN 946089. SKIN IN THE GAME LIMITED is an Appointed Representative of Finex LLP which is authorised and regulated in the UK by the Financial Conduct Authority (“FCA”) with firm reference number 507537.