Investing in people – Kohli's portfolio – The scholastic sports community – Synthetic biology – Virtual care for women – World’s first home gym console – Social prediction platforms
Week 15
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
By now most people interested in sports are familiar with fractional ownership and the concept of tokenising assets. But what about tokenising people?
I recently had a fun conversation with my friend Ben Mercer (of Fringes and Our Race fame) about a bloke who raised $20,000 by tokenising himself, with investors able to vote on his life choices. Alex Masmej (otherwise known as $ALEX) is clearly a genius, and his experiment either represents the birth of a bold new business model, or it’s a cleverly disguised piece of performance art – a postmodern commentary on ubiquitous commercialism that reduces people to products.
Once you get your head around the idea of weird, innovative people selling themselves, you start to wonder why more aren’t doing it. Then you realise, like a complete bozo, that people have been at it for years. They’re called athletes.
Sports (and entertainment in general) is an industry that’s very comfortable marketing people. Clubs acquire “talent” (people) in the hope that they will deliver results on the field – but also accrue financial value that can be sold at a profit. Like bucolic barn conversions in West Wiltshire, cryptocurrencies, and classic cars, professional football players have both utility and financial value. This value fluctuates on the open market based on recent performances (a good World Cup), brute economics (supply/demand), and exogenous factors (injury, regulation, COVID etc). Volatility exposes players to enormous, existential financial risks.
Not everyone has the negotiating power of La Pulga. So it’s not surprising that some athletes are exploring ways of monetising their talents that go beyond wages and sponsorship revenue – via personalised social content, NFTs, brand ambassadorships, and quid pro quo partnerships with startups.
Some are going even further. Brooklyn Nets guard Spencer Dinwiddie – who describes himself as “Just a Tech guy with a Jumper” – was all over the Internet last year with a plan to convert his employment contract into a tradable financial asset. This gave me flashbacks to my days in the bond market. People could invest in Dinwiddie’s three-year, $34 million contract, just like they can invest in treasuries or corporate bonds. In monthly instalments, investors would be paid back their principal, plus interest. By receiving investors’ funds upfront, Dinwiddie would be paid earlier than he’d be paid by the Nets. He could use those funds to invest in other ventures, ideally earning enough to payback investors and take home a healthy profit for himself. Like all conceived fixed-income deals, the plan creates the most valuable thing of all for the issuer – more time to grow the business.
I’ve been unable to establish whether this ever happened, as apparently there was pushback from the senior levels of the league (for obvious reasons). But Dinwiddie did recently raise $7.5 million for his startup Calaxy (a mashup of “Creator’s Galaxy”), which allows creators and celebrities to raise money with tokens, and fans to interact with them through video messages, online classes, video calls and fan club subscriptions.
Then there’s HumanIPO, a startup I featured in the newsletter a few weeks back with the headline, “Investing in Pelé.” Co-founders Kirill Goryunov and Vlas Lezin (ex-google, ex-Goldman) came up with the idea after a conversation about how the best asset at any company is the people. Both agreed that there was untapped potential in the business of “human capital” and they launched a business to “issue, trade, and redeem human equity backed by time.”
The inescapable and somewhat obvious conclusion from these experiments in self-monetisation through fractional ownership (not to mention the recent media pile-on around Messi’s unusual employment contract at PSG) is that sportspeople are assets – some of the most valuable assets in the world. And like any asset, they can be optimised, monetised and traded for profit. They can also be leveraged and stripped of value by incompetent managers and unscrupulous middlemen.
In the context of the stock market, we think about investing as the practice of buying ownership in companies (Warren Buffett tells us to “Buy into a company because you want to own it, not because you want the stock to go up”). When you acquire shares in a publicly traded company, or units in a fund, you are getting economic ownership of assets – not people. You are certainly exposed to the talents and frailties of the people who manage those assets, but your exposure is mediated by a host of idiosyncratic factors.
Angel investing strips these barriers away. It gives us an opportunity to get exposure to people more directly and intuitively, since it is people that have the greatest impact on startup performance – much more so than in listed companies. If you want to invest in startups as a way to create generational wealth, hedge the future, create a lasting impact, or simply because you love technology and want to learn more about how it’s shaping our collective future, then you need to get comfortable with meeting and filtering lots of people. This requires time, patience, optimism, and skepticism (in equal measures). It’s not for everyone.
Joining an angel investing syndicate like Skin In The Game makes it easy (or easier, I should say) for investors to source compelling opportunities that have been filtered by someone with the time, inclination, and expertise to find signal in the noise.
Those investing in startups better be a good judge of character – or at least committed to managing down the cognitive biases that lead to bad decisions about people (translation: developing a good bullshit radar). I go into this in some depth in my memo on The Founder’s Journey, but for those of you who are busy getting stuck into the week (and perhaps even a glass of wine on a sunny Monday evening in late summer), the index-card version is that a people-centric approach to investing must integrate “improper” pursuits like psychology, mythology and history with “proper” disciplines like maths, economics, and finance.
“Investment in people” might be a toe-curling corporate platitude, but the sentiment is actually quite interesting. We’re all betting on people; our families, friends, colleagues, clients, competitors – ourselves. Success depends on backing the right people, at the right time, for the right reasons. For me, when you strip away all the financial jargon and theory, that’s what investing is.
Deal flow
🐉 Sleeper More Than Quadruples Valuation to $400m – Fantasy sports startup Sleeper received a $400m valuation following a $40m funding round. Andreesen Horowitz led the round that included investments from Golden State Warrior Klay Thompson’s Thompson Family Foundation, General Catalyst, Birchmere Ventures, Miami Dolphins cornerback Byron Jones, and former NBA player Shane Battier.
💬 Discord Doubles Value With $500m Funding Round – Discord raised $500m at a $15bn valuation in a round led by Dragoneer Investment Group. Baillie Gifford, Coatue Management, Fidelity Management and Research, and Franklin Templeton joined the round. Discord now has over 150m monthly active users, as it works to expand beyond gamers.
🏀 LeBron James’ Media Company Nears Major Investment – SpringHill Company, the media venture created by LeBron James and Maverick Carter, is nearing a major investment from RedBird Capital. The deal would reportedly value SpringHill at $650m to $700m. Nike and Fenway Sports Group are expected to join the investment. Nike has a $1bn lifetime endorsement deal with James.
🎽 Fanatics closing in on sports betting company acquisition – Sports merchandise giant Fanatics is close to acquiring a sportsbook operation, according to Action Network. Florida-headquartered Fanatics has reportedly held talks with Rush Street Interactive (RSI) and Swedish-based Betsson over a potential deal.
👟 On’s Value Rockets After IPO – On, the shoe brand backed by Roger Federer, lifted its expected value by 33% on Tuesday by raising its share price and shares issued while going public. The company issued 31.1m shares at $24 each, well above a previously reported plan to sell 25.4m shares at $18 to $20. The optimism was justified by the market: On’s shares jumped around 50% from its opening price.
🤝 Spring Media announces Future Sports Agency merger – Spring Media has announced a merger with fellow Stockholm-based agency Future Sports, as well as an investment from Swedish investment firm Helix Kapital. The move is designed to see Spring Media solidify its position within the Scandinavian market, but also continue to grow internationally, aiming to expand on the more than 30,000 hours of live sports coverage it manages and distributes annually.
💻 Asics Ventures invests in Deportare – ASICS Corporation is pleased to announce that its investment subsidiary, ASICS Ventures Corporation, has invested in Deportare Technologies, which operates an online fitness academy to develop fitness trainer specialists.
👖 Cotopaxi Secures Growth Investment Led by Bain Capital Double Impact – Cotopaxi, an outdoor gear and apparel brand and Benefit Corporation, today announced that it has secured funding led by Bain Capital Double Impact, the impact investing strategy of Bain Capital.
👩⚖️ This Startup Raised $100m To Turbocharge Women’s Health – Tia, a four-year-old startup that combines in-person and virtual care for women, announced a $100m Series B on Tuesday led by Lone Pine Capital. Existing investors including Threshold, Define Ventures and Torch Capital, among others, participated in the round, which values Tia at $600m, according to a person familiar with the deal.
🙍♀️ Flo Announces $50m Series B Funding Round; Bringing Company to $800M Valuation – Flo, #1 OB-GYN-recommended app for period and cycle tracking1, today announced it closed $50M in a Series B financing, bringing the total capital raised to $65m and company valuation to $800M. VNV Global and Target Global both led the round, with previous investments in Babylon Health, Lyft, Delivery Hero, and Bird.
🚀 Partnering with Numan to Close the Men’s Health Engagement Gap – White Star Capital led Numan’s $40m Series B round, alongside Novator, VNV Global, Anthemis and Colle Capital. You’ve no doubt seen the TV ads.
📱 Dyaco Announces a Strategic Investment into STUDIO To Make Connected Fitness Accessible To the Masses – NYC-based STUDIO, the creator of the world’s first home gym console and a leading provider of connected fitness content, will receive a strategic investment from Dyaco; a world-leading fitness company that manufactures home fitness equipment and distributes its brands globally.
🧫 Thorne HealthTech Announces Launch of IPO – Thorne HealthTech, a leader in developing innovative solutions for a personalised approach to health and wellbeing, today announced the launch of its initial public offering.
👩🔬 Ginkgo Bioworks, valued at $15B, begins trading today: Here’s how their business works – Ginkgo’s market debut is one of the largest in biotech history. It’s expected to raise about $1.6bn for the company. Ginkgo was founded in 2009, and now bills itself as a synthetic biology platform. That’s essentially premised on the idea that one day, we’ll use cells to “grow everything,” and Ginkgo’s plan is to be that platform used to do that growing.
🏏 Cricketer Virat Kohli Invests In Wellness Startup Hyperice, Joins As Global Brand Ambassador – With this investment, Virat Kohli joins Hyperice’s global brand ambassador list which includes tennis player Naomi Osaka, footballer Erling Haaland and NBA player Ja Morant, among others. Kohli, who will step down as India's T20I captain after the T20 World Cup in the UAE next month, has previously invested in insurtech unicorn Digit Insurance, mobile gaming unicorn Mobile Premier League (MPL) and fashion startup Universal Sportsbiz.
🎾 Maria Sharapova on why she invested in home fitness startup Tonal – Beyond her investment in home fitness startup Tonal, Sharapova has put money in wellness brand Therabody and wearable weights company Bala Bangles.
⚽️ Ukrainian startup raises $900,000 to create mobile apps for football clubs, esports athletes – Blocksport counts 20 esports businesses and seven traditional sports teams among its clients, including Ukraine’s most famous football club Dynamo Kyiv, Serbian rugby club Red Star, Swiss volleyball club Volero Le Cannet and cycling leagues in Belgium and African countries.
⛓ RECUR Announces $50M Series A Raise at $333M Valuation – RECUR, the technology company that designs and develops on-chain branded experiences allowing fans to buy, collect, and re-sell digital products and collectibles (NFTs), today announced its Series A raise of $50m at a $333m post-money valuation, making it the largest Series A in the NFT space. DIGITAL, a metaverse investment platform led by Web3 gurus Mark Daniel and Benjamin Milstein, with financial backing from Steve Cohen's family office, was the lead investor in the financing.
📹 Curastory Raises $2.1m to Help Athletes Monetize Social Video – As athletes embrace their roles as content creators and influencers, Curastory hopes to help them monetize their video output. Tuesday, the adtech startup announced a $2.1m seed round of funding, which followed a deal with the National Basketball Players Association.
🎮 Esports Startup MPL Turns Unicorn With $2.3bn Valuation – Mobile Premier League (MPL) has raised fresh capital in Series E round from Legatum Capital with participation from Sequoia, SIG, RTP Global, Go-Ventures and others.
🎲 Pickup grabs $3m to turn fans into prop makers – Months after announcing a $1.5m seed round, PickUp has brought in another $3m to build its social prediction platform. The company allows publishers, some of whom have equity in the startup, to embed prop-like prediction challenges in their content. Guessers with a profile are then able to track and compare their accuracy, and earn prizes from affiliates, including sportsbooks. Drive by DraftKings, Connetic Ventures and KB Partners reinvested in PickUp and were joined by new investors SuRo Capital and Lloyd Danzig’s Sharp Alpha, among others.
🇫🇷 Colizey raises EUR8m in Series A funding round – Colizey, an online French marketplace dedicated to sports goods, has secured EUR8m in a Series A funding round, led by Cathay Innovation, which brings together historic investors Aglaé Ventures, Cassius Family and Tony Parker, as well as new investors including Teddy Riner.
👨🎓 Press Sports Raises $1.5m, Launches New Android App – Sports social media app Press Sports closed a $1.5m fundraising round led by General Catalyst. Press Sports was founded in response to changing NIL rules, which generated a wealth of business opportunities for student-athletes and brands. The app is designed to share sports-specific content among athletes, coaches, and fans.
⌗ Silver Lake and Endeavor Invest in Tempus Ex Machina, a Sports Data Firm Backed by the NFL and Larry Fitzgerald – Tempus Ex Machina, a sports tech and data company that has partnered with the NFL, completed its Series B funding round led by Silver Lake and Endeavor. Existing investors Andreesen Horowitz, General Catalyst and Will Ventures joined the new round as well. Future Hall of Fame wide receiver Larry Fitzgerald also has invested in Tempus Ex and joined its board.
💪 Rewire Fitness Secures Funding Round – Rewire Fitness, the online fitness training platform, has closed its pre-seed funding round, led by Under Armour, former NBA player Kyle Korver, and 25madison, a consumer and software venture studio. The round also included other notable venture capital and angel investors.
🍊 $30m sports tech fund launched in Lake Nona – Tavistock Group, parent company of Lake Nona developer Tavistock Development Co., and German sports startup accelerator Lead Sports partnered to launch the Lake Nona Sports & Health Tech Fund. The fund will make between six and eight investments each year.
👩🎓 Aktivate raises $7m in seed for school sports platform – Aktivate announced the closing of a $7m seed financing round, led by Will Ventures, that will help the development of the startup’s administration platform for the scholastic sports community.
🧀 A New Chapter for Cheese – Formo secured the largest Series A FoodTech funding round in Europe, $50M. The company makes milk proteins using microorganisms instead of cows, combining precision-fermentation made dairy proteins with artisanal, age-old techniques to make “unbelievably decadent cheese”.
🧃 Cove Kombucha Raises $4.5m – Canada’s fastest growing kombucha brand announced a multi-million-dollar equity funding round raised through Canaccord Genuity, with debt financing provided by CIBC and Atlantic Canada Opportunities Agency (ACOA). The company attracted the Vancouver based investment bank in 2019 when they raised 1.2M for their equity seed round. Less than two years later they have quadrupled their funding and reached a valuation high of 50M.
Some tweets
Premiership Rugby is back, and so are Saracens. What with the surprisingly bold law changes, return of beered-up crowds, and elimination of downside risk (relegation has again been suspended thanks to COVID), it’s going to be a fun season. After a tough period for the game that looks set to get tougher, rugby needs it.
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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