Investing in Pelé – Finance-speak – Rugby à la Private Equity – DeFi's poker face – Social listening – Youth sports – Beverage tech
Week 11
Skin In The Game is a weekly newsletter dedicated to sports investing. We surface the the startups and investors shaping the future of sports and its adjacent markets.
We also run a regulated angel syndicate connecting investors with visionary SportsTech startups – a platform for investors, founders and execs to collaborate and co-invest.
Confessions
Like baseball, refills and James Corden, angel investing is huge in America. But it’s still in its infancy here in the UK.
Private markets used to be obscure and impenetrable for anyone who didn’t work in venture capital, private equity, or Silicon Valley. But then along came crowdfunding. Suddenly startups could access capital from “ordinary investors”, who could collectivise to overcome investment minimums and play in the perceived nirvana of private markets.
But picking winners from crowdfunding platforms is always going to be tough due to a lack of domain-expertise and industry context. And the harsh reality is that the very best startups don’t need to list – they’re inundated with incoming fire from investors competing for allocations.
It might sound extremely obvious, even facetious, but startup investing only really works if the startups in question are absolutely fantastic. You live (and more often than not, die) by the quality of the people and products in your portfolio.
So, rather than aimlessly surfing crowdfunding platforms it makes sense to club together with experts within a given industry (e.g. sports, health, entertainment) and leverage the collective intelligence of the group to drive value creation. That why I believe that verticalised angel syndicates are so compelling.
It’s important for everyone to understand what I am, and what I’m not. I’m not an expert investor who can predict the future. I’m simply a person who is creating a platform for collaboration, experimentation, and growth. And I’m willing to do the heavy lifting for people who want help accessing things that are hard-to-reach.
What does this actually mean, on a technical level? How can different people, with different perceptions of value, find a way to work together and benefit from the economies of scale that come with collaboration and co-investment?
A friend and investor messaged me this week asking if “the fund” is EIS registered. It’s an important question, and one that lots of people (at least, those with UK tax liabilities) will want clarifying.
The answer is that Skin In The Game is not a fund. We’re an angel syndicate, which means that rather than raising committed capital from Limited Partners and having full discretion to deploy it in startups (like a traditional VC fund), we curate interesting sports, health and entertainment startups for members of the syndicate and simply ask if they would like to find out more with a view to making an investment. We then help with due diligence, execution, and post-trade monitoring.
If investors decide to move forward, their money is pooled into a Special Purpose Vehicle (SPV) – finance-speak for a standalone company incorporated to facilitate a specific deal. The SPV serves as an interface between the syndicate and the startup, aggregating several small tickets into one large investment. Investors now own a piece of the SPV, which sits on the cap table of the startup as a single entry. Skin In The Game charges an upfront fee to make this process sustainable and monitor the investment going forward. Just as investors proportionally own the SPV, they split the third party costs required to structure it. And yes, they can benefit from SEIS/EIS if the startup is a qualifying investment and the investor is a UK taxpayer.
This approach might sound a bit convoluted, but it’s actually very elegant. The advantages are plentiful, for everyone:
Founders are happy because they get a nice, clean cap table with fewer entries and less admin. And they increase demand for what they are selling by enabling investors to club together.
Investors are happy because they get the flexibility to look at deals on a case-by-case basis. They can get allocation in deals that would otherwise be inaccessible, and post-trade monitoring via a platform that productises legal work, driving down costs.
Syndicate leads are happy because they have a robust and transparent solution for leading deals over their full life-cycle, with the opportunity to participate in long-term upside via a share in carry (typically 20-30% of profits). This aligns interests and incentivises good governance.
I’m looking into platforms that make this process simple and transparent. AngelList, Odin, and Vauban are all options. And I’m sure others will emerge as the barriers to angel investing disintegrate.
There is no “right” way to invest in startups. Private markets are inefficient, which is how they’re able to generate returns that can outstrip public markets by orders of magnitude (can being the operative word). In an over-optimised and fragile world, it’s exciting to embrace inefficiencies and explore ways of making them work for us, rather than against us. The angel syndicate is a vehicle for doing just that.
Deal flow
🧢 Topps Staying Private After Losing MLB Partnership – Days before it was set to go public, Topps and a SPAC (Mudrick Capital Acquisition Corporation II) called off their merger. The news caps a dramatic week for the iconic trading card company, with Topps losing its 70-year partnership with MLB and MLBPA to Fanatics.
⛓ Despite slump, sports NFTs aren’t going away – McKinsey estimates that 0.5% to 1% of US adults have bought a sports NFT so far, and another 5% are highly interested. If all of this segment were to spend $205 per year, the sports NFT market would reach $2.5bn from US buyers alone.
🩸 HAGAR Secures $11.7m Series B Funding to Advance Non-Invasive Blood Glucose Monitoring Technology – The developer of GWave, the world’s first non-invasive continuous glucose monitoring technology that uses RF waves to measure glucose levels in the blood, raised a $11.7m Series B funding round led by Columbia Pacific.
🇦🇺 At A Standstill with NZ Rugby, Silver Lake Could Turn to Australia – With the All Blacks threatening to block a proposed deal with Silver Lake Capital, the PE firm could strike in neighbouring Australia. Rugby Australia, the sport’s governing body in the country, has the buy-in of its players union on a framework to bring in private equity, selling a 10-15% stake in its commercial assets.
🚴♀️ Velocity Cycling App Acquires PerfPro Software – Vision Quest Velocity, a performance-driven cycling app, has acquired PerfPro Software Suite. PerfoPro Software Suite is one of the most established and respected software solutions for indoor cycling.
🇮🇱 Intel Is Selling Off Its Sports Group– After five years, Intel Sports (which developed 3D viewing for football and basketball) is shutting down.
⚾️ Giannis Antetokounmpo buys stake in Milwaukee Brewers – One month after leading the Milwaukee Bucks to their first NBA title in 50 years, Giannis Antetokounmpo added another line to his resume: MLB owner. The “Greek Freak” is purchasing a minority stake in the baseball team.
👂 Social listening app Earbuds raises $3m in Series A funding – Most startup origin stories don’t begin on an NFL field, but that’s where founder, CEO and offensive tackle Jason Fox conceptualised the idea behind Earbuds. As he watched first overall draft pick Cam Newton warm up before a game in 2011, dancing to music, Fox couldn’t help but wonder what the future NFL MVP was listening to – and he bet that the crowd of 85,000 fans were curious too.
⛓ RealFevr earns $1.5m in revenue via sale of exclusive NFTs featuring iconic moments from international football stars – RealFevr, a Portuguese startup specialising in fantasy football, made history by earning $1.5m in revenue through the sale of exclusive NFTs featuring the best moments of several world-class footballers.
🇮🇳 Zupee raises $30m in funding led by WestCap Group, Tomales Bay Capital– Skill-based online gaming platform Zupee has raised $30m in its Series B round, led by Silicon Valley-based WestCap Group and Tomales Bay Capital. Existing investors Orios Venture Partners and Matrix Partners India also participated in the round. Following the funding round, Zupee’s valuation has jump 5x to $500m from its previous round earlier in the year when it and existing investor Matrix Partners India.
👕 WHP Global Acquires Lotto Sport Brand – WHP Global may have lost out on its bid to buy Reebok, but it was able to snag another high-profile sports brand: Lotto Sport Italia.
🍄 Beckley Psytech raises £58m to advance psychedelic medicines pipeline – UK-based Beckley Psytech has completed an oversubscribed Series B financing round, raising £58m from VCs to fund its research programmes on the novel application of psychedelic medicines for neurological and psychiatric disorders.
💻 TeamGenius Secures $1.1m in Oversubscribed Seed Round – With participation from Great North Ventures, MATH Ventures, and Groove Capital, the seed round will help TeamGenius accelerate further into athlete development. Founded in 2016, TeamGenius is the largest provider of youth sports evaluation software, serving more than 500,000 athletes, coaches, and volunteers with its platform for managing tryouts, camps, and player feedback programs.
📺 Genius Sports to acquire Spirable, growing ad tech offering – Genius Sports, the sports data company looking to expand its relationships with leagues, bookmakers and media outlets, has agreed to acquire advertising tech startup Spirable.
🧓 HeyRenee is the next home health care startup for Heal founders – HeyRenee has raised $3.8m for a personal health care concierge – the latest home health care business from the founders of Heal.
🏃♀️ Ironman Group’s expansion continues with Haute Route acquisition – The Ironman Group has continued its recent expansion with the acquisition of multi-day amateur cycling events organiser Haute Route and the Gravel Epic, a soon-to-launch gravel race series.
⚽️ Crystal Palace get ‘£87.5m’ investment from US businessman John Textor – John Textor has acquired a stake in Crystal Palace. Textor, the founder and CEO of Facebank, a virtual entertainment company, has joined Parish and fellow joint-owners Josh Harris and David Blitzer as part of the board at the south London side.
📱 Dream Sports acquires Rolocule Games for undisclosed amount – Dream Sports, India’s renowned sports technology startup, has acquired Rolocule Games, a Pune-based mobile game developer. Dream Sports also manages Dream 11, FanCode, DreamSetGo, DreamPay, and Dream Capital. Rolocule was backed by leading investors such as Blume Ventures, Mumbai Angels, as well as CIIE (IIM Ahmedabad).
🍶 Beverage Tech Company Cirkul Raises $30M in Series B Funding – Cirkul, a beverage technology company, raised $30m in a Series B. The round was led by AF Ventures and also saw participation from SC.Holdings, Siddhi Capital, and other private investors.
💰 HumanIPO Lets You Buy Shares of Pelé – HumanIPO allows users to invest in people with shares that traders can buy, sell, or redeem for personal access to creators. The ability to meet those one invests in is a large part of the draw. “The first problem we solve is how to invest directly in people. The second thing we solve is the problem of access to successful people,” says CEO Kirill Goryunov.
💵 Meet Melanie Strong the Oregon-based partner of Next Ventures – Melanie Strong left Nike in June 2019 after 17 years at the company. She was a VP and had run brands that include global skateboarding, NikeWomen and women’s training. Next Ventures has a $50m fund that it is investing in tech startups – both hardware and software – working in the areas of sports, health and wellness.
🍎 Food conglomerate Starday raises $4m – Starday, a healthy and sustainable food products company, raised $4m in seed funding to take on “big food” incumbents – Equal Ventures and Slow Ventures co-led the round and were joined by Haystack, Great Oaks Venture Capital, XFactor Ventures, ABV and a group of angel investors.
🍝 ParaFit acquires Bluefit – Health and nutrition company Parafit said it has acquired Keto diet delivery service Bluefit.
🃏 Former Professional Poker Player Helms New $50m DeFi Fund Backed By Billionaire Alan Howard – Lippel’s fund is backed by hedge fund billionaire Alan Howard, who Forbes estimates is worth $2.8bn, financial services giant, Macquarie Group, and the venture capital arm of trading firm DRW Group.
🍄 Mushroom-based meat alternative startup Fable Food raises AUD 6.5m, will launch in the US – Sydney-based Fable Food, which uses mushrooms in its meat alternatives, has raised AUD6.5m in a seed round led by Blackbird Ventures, the Australian venture capital firm whose portfolio also includes Canva, Culture Amp and SafetyCulture.
🇦🇺 Mars Growth, a Liquidity Group Fund, Provides Fusion Sport with a $5.5m Facility – Mars Growth Capital, a fund division of the Fintech company Liquidity Capital and MUFG Fund, closed a $5.5m financing agreement with the Australian-based sports performance tech company Fusion Sport.
🙍♀️ Elektra Health funnels new $3.75m round into helping women navigate menopause – The New York-based company’s seed funding was co-led by Alexis Ohanian’s Seven Seven Six and Flare Capital Partners, with participation from City Light Capital, January Ventures, Human Ventures, The Fund, Community Fund and a group of angel investors, including Hannah and Guy Raz, Claire Diaz-Ortiz and Jenny Fielding.
👩⚖️ Maven Clinic becomes the first U.S. ‘unicorn’ dedicated to women’s and family health – Maven Clinic has raised a $110m Series D round. Maven says the new funding values the company at more than $1bn – making it the only U.S. unicorn in the women’s and family health sector. The round was co-led by Dragoneer Investment Group and Lux Capital. The Bond firm and existing investors Sequoia, Oak HC/FT, and Icon Ventures participated, and Oprah Winfrey also joined the round.
🍉 S-Ventures continues nutrition investment spree with Pulsin acquisition – UK-based investors S-Ventures has acquired the sports nutrition snack company Pulsin in a deal that continues its health and wellbeing interests following the purchase of probiotic food specialists Ohso Chocolate.
🧃 Health-Ade Announces Acquisition and Growth Financing – Longstanding partner First Bev has acquired a controlling stake in the pioneering kombucha beverage company. The deal is also backed by powerhouse investors including Manna Tree, a Vail, Colorado-based investment firm committed to improving human health through nutrition.
🏀 Slam dunk millionaire: How Bogut is growing his wealth – He’s one of Australia’s basketball legends, but Andrew Bogut is also shaping up as a force to be reckoned with in the business world.
🧉 LifeAID Raises $20m in Series C Round – LIFEAID Beverage Co. raised $20m in an oversubscribed Series C financing round.
⛹️♀️ The WNBA scores innovative streaming deal with a sports startup backed by Michael Jordan and other stars – Though it was only founded last year, Buzzer has already raised $20m in funding and is backed by some of the biggest names in sports, including Michael Jordan, Wayne Gretzky, Naomi Osaka, Patrick Mahomes, J. Cole, LaMelo Ball, and Devin Booker, as well as Ionescu and WNBA player-turned-owner Renee Montgomery.
🇸🇬 Tech Investor Darren Yaw Announces Investment into GCG Asia Games Esports and Gaming Company – Yaw's Singapore-based venture firm Guardian Capital will make a sizeable investment into gaming and esports company GCG Asia Games.
Some tweets
Another week, another Test Match. Cricket might not be the most lucrative of sports, but for me at least, it’s the most persistent. The great sports all have an uncanny ability to reach us, wherever we are hiding; to make us stop and look. No matter how busy we are with work and relationships, they find a way into our lives. Thank goodness!
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.