The D-word – Early-stage sports funds – VR meets psychedelics – Digestive healthcare – Sleep fitness – Crowd monitoring software – Esports nutrition
Week 12
Skin In The Game is a weekly newsletter dedicated to sports investing. We highlight 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
Driving down the M4 on Sunday morning en route to a garden party, tanked up on scolding-hot coffee from a drive-thru Starbucks, squinting into the anaesthetic haze that passes for summer these days on the Wiltshire/Somerset border, I pitched the concept for this week’s newsletter to my wife.
I wanted to write about disruption – how venture capitalists hack statistical power laws by placing multiple bets on big ideas; startups that invent new categories and monopolise them, rather than incrementally improving the status quo. Like Peter Thiel, the legendary founder-investor who dabbles in libertarian philosophy and builds luxury survivalist shelters for End Times, I subscribe to the belief that “Monopoly is the condition of every successful business.”
Emily seemed to think this rather obvious, even boring. This annoyed me greatly, but after another fifty miles, a boozy lunch, and a friendly game of rounders that almost turned ugly, I acknowledged that she was indeed right.
It’s become toe-curlingly cliché for founders and investors to talk about disrupting industries, revolutionising customer experiences and changing the world. And yet, the venture capital industry depends on these overused verbs to raise, deploy and grow capital.
So, rather than stating the obvious, let’s explore mechanics. How precisely do we uncover the next Google/Facebook/Uber etc, when founders are self-consciously appropriating the language and cultural cues of Silicon Valley to extract capital from investors desperately seeking 1,000x returns?
Thomas Edison famously said that:
“Opportunity is missed by most people because it arrives dressed in overalls and looks like work.”
I feel the same way about disruption. It doesn’t come wrapped in pretty paper and tied with a bow. We have to go out and look for it. And when we do encounter things of great value, they tend to appear strange, unsettling, even repulsive at first glance. The next big thing implores us to look away, move along, seek out “proper” opportunities that have been validated by others, derisked by endorsement from journalists, thought leaders, and other so-called experts. The problem for angel investors is that if you must insist on waiting for companies to be rubber stamped by the global startup community, it’s already too late to invest in them.
True disruption is improper. It doesn’t hang out on LinkedIn, or attend conferences in Austin – at least in its infancy. Secrets (an expression lifted from Mr. Thiel’s superb book Zero To One) are more likely to be found in obscure places. As Thiel observes:
“The best place to look for secrets is where no one else is looking.”
That’s the bad news. The good news is that as secrets are self-evidently hard to find, when you come across them as an investor it’s easier to get access (and economic exposure) to them, as there are less people milling around.
How do we find secrets? Investing doesn’t come with a map, but it does come with a compass. We must march towards the sun, ditching our comfort zones and working hard to diversify the things we consume. Read, watch, and listen eclectically; socialise with people we don’t know; visit new places that are off the beaten track; listen more, talk less; try not to judge people, products, and ideas so quickly (or so harshly); push ourselves to choose the road not taken.
Specialist angel syndicates (good ones, at least) help investors do this. They provide deal flow, ideas, and a forum for people to recognise potential within the parameters of a well defined industry. They also promote accountability, a form of self-imposed leverage that those of us with expensive gym memberships know all about – “I’m paying for this, so I’m going to get my money’s worth.”
You’ve probably come across Robert Frost’s canonical poem at some point (GCSE English anyone?). It’s about the benefits of choosing to do things differently, and it has a lot of teach us as investors:
The Road Not Taken
Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I couldTo where it bent in the undergrowth;
Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;Though as for that the passing there
Had worn them really about the same,
And both that morning equally lay
In leaves no step had trodden black.Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.
I shall be telling this with a sighSomewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.
We cannot “Travel both / And be one traveller.” We must make difficult choices as to how we spend our time, money, and attention. And we cannot expect to spend them in the same way as others and get different results.
Investors win big when they’re prepared to do what others are not. If we’re not willing to look beyond the well-trodden paths of TechCrunch, Y-Combinator and the big crowdfunding platforms, how can we expect to build a truly disruptive portfolio? How can we hope to escape the yellow wood?
A multi-disciplinary approach to a well-defined investment universe is the secret sauce that enables us to uncover “things hidden”. By combining different intellectual and vocational disciplines we can identify opportunities that others miss through over-specialisation, otherwise known as blinkers. We can discover secrets. And doing this in a social context, alongside fellow travellers, is a force-multiplier.
Back to the infamous D-word. For all their talk of disruption, most startups are tinkering with the status quo, optimising what already exists. There is much to admire in that, and decent returns to be had. But for investors looking to create generational wealth and impact over the long-run, it is not enough.
Disruption is not incremental; it’s all or nothing. Next week I’d like to explore this by delving into the concept of paradigm shifts and how they relate to sports. And I will... if my wife lets me.
Deal flow
💰 Private Equity Has Definitively Entered the World of Professional Sports. Here’s What Comes Next – For years, as sports franchise values have exploded, industry participants have been saying that private equity ownership is coming to major sports teams. And now it is happening.
🦅 Atlanta Falcons owner creates early-stage sports tech investment fund – The fund’s verticals will be fan engagement, sports performance, live event operations, emerging categories such as esports and betting, and tools for media and sponsors to better engage with supporters.
🧠 TRIPP Acquires PsyAssist to Empower Psychedelic Therapies with Virtual Reality – Digital psychedelics company TRIPP has acquired PsyAssist to empower psychotherapists and patients to safely and effectively use TRIPP’s VR, AR, and mobile experience platform for psychedelic-assisted therapies.
🏀 NBA All-Star Chris Paul joins digital media startup Greenfly’s growth round – Paul’s investment is part of an $8.4m strategic growth round that also includes Verance Capital, Higher Ground Labs, DD Venture Capital, SW19 Ventures, LinkinFirm and Allievo Capital, as well as existing investors Go4it Capital, Elysian Park Ventures, Alpha Edison and Iconica Partners.
👟 Sports-focused startup Sporjo raises $2M in pre-Series A funding – Sporjo aims to become a one-stop destination to help people build a successful career in the sports industry. The startup has raised a $2m pre-Series A funding round, and tennis champ Leander Paes has come on board as a strategic advisor and brand ambassador.
🇮🇳 Dream11 in talks to raise over $400 Mn at $8.5 Bn valuation – Dream Sports, the company that runs fantasy sports platform Dream11, is in talks to raise at least $400m.
🧫 Dieta Health raises $1.2M to Personalize Digestive Healthcare – Dieta Health closed a $1.2M pre-seed funding round led by Tom Williams of Heron Rock Fund with participation from Techstars Ventures, Cedars-Sinai, and Verissimo Ventures.
🥛 ITV announces investment in Feel – ITV has concluded an investment in Feel Holdings Limited, a UK-based digital health startup on a mission to clean up and disrupt the dietary supplements space. ITV has agreed to subscribe for up to £3m convertible loan notes in three tranches. Feel will commence its media campaign across ITV’s channels later this year.
🎥 Crowd Flow Scanner Armored Things Raises $12m – Armored Things raised $12m to expand its computer vision platform into more sports arenas, colleges, and corporate campuses. The Series A was led by Nimble Ventures, with new investment also coming from Gutbrain Ventures, PBJ Capital, and Micromanagement Ventures.
🇩🇪 Glanbia presses start on e-sports nutrition firm deal – The performance nutrition giant acquired a 60% stake in LevlUp, a Germany-based company that sells energy and nutrition powders to gamers and e-sports athletes.
💆♂️ Headspace and Ginger are merging – Meditation app Headspace plans to merge with on-demand mental health service, Ginger. The new organisation will sport a combined value of $3bn and a headcount of more than 800.
😴 Eight Sleep raises $86M as its smart mattress and ‘sleep fitness’ technology approaches $500M valuation – Valor Equity Partners – the firm that has backed the likes of Tesla, SpaceX, GoPuff and many other big tech firms – is leading this latest investment, with SoftBank, Khosla Ventures, Founders Fund and General Catalyst also participating, along with some high-profile individuals who are also users of the product: athletes Alex Rodriguez, Kris Bryant and J.D. Martinez; celebs Kevin Hart; and tech figures Sophia Amoruso, Naval Ravikant and Kyle Vogt.
👨🍳 Celebrity chef Michael Chernow whips up new lifestyle brand – Chernow raised $2.2m to launch Kreatures of Habit, a lifestyle and wellness brand, with the goal of helping people establish healthy habits.
👩⚕️ Breathe Well-Being raises $5.5m in funding led by Accel – Digital therapeutics company Breathe Well-Being has raised $5.5m in its Series A round, led by Accel NSE. General Catalyst, 3one4 Capital and Scott Shleifer, the global managing director of New York-based investment firm Tiger Global also participated in the round.
🇮🇳 Sports brand Elevar raises Rs19 cr in Series A funding – Sports brand Elevar raised ₹19 crore as a part of its Series A round of funding led by Kalaari Capital. Dream Capital, the venture capital arm of gaming unicorn Dream Sports also participated.
🥊 Jake Paul’s New Fund Invests in Sports-Gambling Firm – Simplebet, which allows bettors to place wagers on individual moments during games, is raising $30m. The investment is being led by Paul’s Anti Fund and former UFC executive Nakisa Bidarian, who now runs talent advisory firm Bavafa Sports.
🥤 Russell Westbrook, Chainsmokers join group pouring $13.5M into prebiotic soda brand Poppi – The prebiotic soda brand, closed $13.5m in a Series A2 round and is on a mission to lead in the new category of “functional soda” by offering a better-for-you product that also tastes good.
🎲 Betsperts closes $6m Series A funding round – Sports betting and fantasy startup Betsperts Media & Technology Group has closed a $6m Series A founding round, welcoming a number of new investors including HBSE Ventures and Verance Capital. HBSE is the venture capital arm of basketball franchise the Philadelphia 76ers, ice hockey’s New Jersey Devils and English Premier League club Crystal Palace.
🦄 Champions Round, A Fantasy Sports Platform Targeting Young Consumers, Raises $3m In Seed Funding – Champions Round recently completed a $3m seed funding round led by Quest Venture Partners. Other investors include Band of Angels, a group of angel investors; IeAD Sports and Expert DOJO, two startup accelerator programs; and Jay Schottenstein, the chief executive and chairman of American Eagle Outfitters Inc.
🖼 MakersPlace raises $30M for NFT digital art marketplace – MakersPlace has raised $30m for a digital art marketplace that uses NFTs. Investors include Acquavella Galleries, Sabrina Hahn, and Bill Ruprecht in the arts; Eminem, Paul Rosenberg, and 3LAU in music; Larry Fitzgerald and Shari Glazer in sports; and Eric Baker, Julia and Kevin Hartz, Vinny Lingham, and Tobias Lütke in tech.
🕶 ForeVR Raises Another $7M for its VR Studio Focused on Bringing Popular Games to Life – ForeVR, launched by two early Zynga employees, is a VR-focused gaming studio looking to bring popular games to the virtual reality universe. The company’s first title, launched in the Spring, is a bowling game that combines real gameplay with stunning visuals.
🙅♂️ WHOOP Looks to Acquire Tech Companies After $200m Raise – The wearables company raised $200m at a $3.6bn valuation, roughly doubling its previous fundraising total and tripling its valuation from a round in October 2020. The Series F was led by Softbank Vision Fund 2.
👩⚖️ Maven Clinic becomes the first US ‘unicorn’ dedicated to women’s and family health – Maven Clinic has raised a $110m Series D. Maven says the new funding values the company at more than $1bn, making it the only US 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.
👩🎓 Marketpryce raises $2m seed round to connect athletes and brands – Launched in 2021, MarketPryce is one of many startups targeting the 500k college athletes now able to profit from their likenesses. There are already 18 companies focused on fostering brand partnerships.
🧉 LifeAID Raises $20m in Series C Round – LIFEAID raised $20m in an oversubscribed Series C financing round.
👕 Wilt Uniform nets $2m pending approval of 1,000 fractional owners – Fractional shares of the 1959-60 full uniform – tank top and shorts together – have been trading on Collectable since this spring, rising from an initial value of roughly $1.25m to more than $1.6m this weekend. Collectable itself has capitalised on the surge in interest, netting a $5.5m Series A funding round in May.
Some tweets
The transfer window is closing... Private jets are taxiing for take off. WhatsApps are flying. Deal sheets are landing. And I’m spending far too much time watching it all unfold on Twitter!
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.
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