Founders as investors – UK's largest ever seed round – Porsche's latest acquisition – Mission-driven systems biology – Better-for-you alcohol – A Multi-Trillion Industry
Week 24
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 startup investment club connecting investors with visionary sports, health, and entertainment startups – a platform for investors and founders to collaborate and co-invest.
Get in touch if you want to find out more.
Confessions
Last week I wrote about athlete investors.
But I’m also seeing tonnes of founders investing in startups. This isn’t a particularly revelatory insight, or anything particularly new, but it is an important theme for angels, VCs, and founders themselves to consider.
The trend is intensifying as more and more founders have successful exits. The tech boom of the past 20 years has created a lot of wealth, and a lot of interest in investing in startups. Money is being recycled into disruptive technologies by disruptive technologists.
And founders don’t have to exit fully to generate considerable wealth – increasingly, they’re selling down valuable equity stakes via later stage funding rounds and secondary transactions.
This used to be seen as a bad thing. Selling a chunk of your startup before acquisition / IPO was interpreted as a sign of weakness and dis-alignment. It was anti-skin-in-the-game. As I see it, this has changed for a couple of reasons:
There’s greater understanding about the financial and personal challenges facing founders as they build and scale startups. Just because you’re running a startup doesn’t mean you don’t have bills to pay, people to take care of, and a life to live.
The economics now stack up, thanks to sky-high valuations that mean even small secondary transactions can generate life-altering cash flows. Even the most obsessive founder would find it hard to argue with the logic of selling down 1% of a startup in order to generate tens of millions in private wealth.
I’ve always assumed that Skin In The Game should be working with athletes and celebrities to leverage mimetic desire and build an engaged investor base. But founders are also an important part of the picture. In fact, this community is fertile ground for building a startup investment club.
Teaming up with founders as investors has a number of massive benefits:
Founders love startups (and I believe you have to love them to invest in lots of them and build a diversified angel portfolio over the long run).
Founders are early adopters and anti-perfectionists who understand the concept of shipping product and iterating to product-market fit rather than getting bogged down in the dangerous Field of Dreams (“build it and they will come”) fallacy.
Founders have operational expertise – portfolio companies can learn from founders’ mistakes, rather than making their own (as Warren Buffett has observed, this method of learning is highly attractive).
Founders have tech industry contacts, including access to elusive engineering and marketing talent.
Founders are risk tolerant. Actually, they are risk hungry. Like Zorba the Greek, they know that success sometimes means looking for trouble.
Founders are connected to other startups, which comes in handy when sourcing investment opportunities. Warm intros are an important part of deal sourcing. Founders beget founders.
Founders are well connected to other investors, which is helpful for standalone co-investments and building out the investment club over the long-term.
Founders understand the rollercoaster nature of startup building and investing, which means they have the stamina to see investments through testing times and long time horizons. Their hard-won emotional maturity is valuable and underrated.
Founders offer more than just capital. Much more. So it makes sense to spend time thinking about the founder experience and collaborating with entrepreneurs on a practical level.
As a founder myself, there is much to learn about my own business from talking to others who have been there / done that. And I have a hunch that delving into the founder-investor mindset could yield spectacular results for Skin In The Game.
Deal flow
🎰 Former FanDuel executives have launched a new company, BetDEX, positioned to be the world’s first decentralized sports betting protocol, while securing the largest ever seed investment round by a UK startup – Set for launch in the first half of 2022, BetDEX combines blockchain technology with sports betting, with the aim of transforming the consumer sports betting experience. The $21 million investment round is led by San Francisco-based crypto investment firm Paradigm and Bahamas-based cryptocurrency exchange FTX, which was recently valued at $25 billion after its own Series B-1 round was disclosed in October. Multicoin Capital, Hack VC, Lightspeed Venture Partners, Sino Global Capital, Solana Ventures, and Everblue Management also participated in the round.
🏃♀️ AllTrails Raises $150M in Fresh Capital – AllTrails, a fitness and travel app used for hiking and outdoor recreational activities, has raised $150 million in fresh capital from the growth fund of Permira, a London-based investment firm. AllTrails will use the fresh capital to expand its business across international markets and grow its workforce. Spectrum Equity will retain its majority stake in AllTrails following the investment, which it bought in 2018 for $75 million.
🏎 Porsche acquires majority stake in e-bike maker Greyp – Porsche is acquiring a majority stake in the e-bike manufacturer Greyp Bikes. The sports car manufacturer’s venture capital arm, Porsche Ventures, has held a stake of around 10% in the Croatian company since 2018. It invested in Greyp at the same time that it invested in its sister company, Rimac Automobili.
🎮 Talon Closes $5MN Series A Round Led by Animoca Brands – The Hong Kong headquartered competitive gaming, entertainment and culture brand, secured $5M in equity capital in its Series A financing round. The raise was led by leading digital entertainment, blockchain and gamification company Animoca Brands, which participated in Talon's seed round investment in 2018, and other investors including Hana Digital Transformation Fund and HZL Capital. Amongst the new investors joining Talon include AK Partners, Token Bay Capital, Foxmont Capital Partners, Arete Capital Asia, BlackPine, Yieldly, PAC Capital amongst other family offices.
💰 SportsTechX releases latest SportsTech Venture Capital Report, 2021 record breaking year – Till September 2021, more than $8.3B has been invested in SportsTech making it the biggest year for the industry by far and already more than the previous two years combined. Projected to cross $12.7B before the year ends, 2021 is a landmark year for the industry. Average and Median deal values of $30.9m and $3.1m are at unprecedented levels.
📰 Slate gets additional TitletownTech and Wise Ventures investment – Slate, the sport-focused social media content creation platform, has secured further seed funding from the NFL’s Green Bay Packers and the Wilf family, owners of the Minnesota Vikings and Major League Soccer’s Orlando City.
🧫 Ro is in talks to acquire at-home sperm storage startup Dadi – Ro, a direct-to-consumer health company valued by its investors at $5 billion, is nearing a deal to acquire at-home sperm storage upstart Dadi, per multiple sources familiar with the unicorn’s business. The deal would be Ro’s fourth acquisition in the past 12 months, along with Workpath, Kit and Modern Fertility.
💄 igniteXL Ventures Closes Female-Led Fund to Transform the Beauty and Wellness Industry by Backing Diverse, Undernetworked Founders – igniteXL Ventures, a global beauty and wellness-focused venture capital firm in Silicon Valley, has raised a debut $10M fund to back disruptive products, services and business models in beauty and wellness. Formed at the start of the COVID-19 pandemic, the fund has attracted a global profile of prominent VCs and strategic LPs, including Han Kim of Altos Ventures Management, Perry Ha of Draper Athena, Allen Miner of SunBridge Group, CTK USA Holdings and the world’s leading cosmetics ODM Cosmax.
🏋️♂️ D1 Training Receives Strategic Investment from Princeton Equity Group – Princeton is partnering with D1 Training to accelerate the brand's nationwide expansion and secure its leadership position in the fitness industry. D1 Training has 61 locations open with more than 125 locations in development. The brand's 5-Star Training Program is derived from Division 1 strength & conditioning programs, maximizing results for athletes ages seven and up. D1's programs can be tailored to any goal, from maximizing performance for professional athletes to beginners seeking a healthy lifestyle. D1 has trained over 100 NFL Draft picks, 3,000 collegiate athletes, and 100,000 scholastic athletes per year.
🌯 The Naked Market flashes some new capital to create better-for-you food brands – Food and beverage startup The Naked Market bagged $27.5 million of Series A investment, led by Integrated Capital, to continue developing its line of healthier food brands. The company was founded in 2019 by Harrison Fugman, Alex Kost and Tim Marbach, who created a “fast fail” method to develop new foods that includes an end-to-end infrastructure that can go from idea to market in about three months. The company also handles distribution. Joining Integrated Capital in the round are Great Oaks Venture Capital, Pacific Tiger Group, Sope Creek Capital and Clearco. The Naked Market has raised over $33 million, which includes an earlier $6 million seed round.
💪 Gym Chain Equinox Nets Financing to Ease Potential SPAC Deal – Equinox Group LLC has obtained $255 million in new financing commitments from some of its lenders and owners, as the cash-strapped gym chain seeks to bolster its liquidity, according to people familiar with the matter.
🔬 Viome Life Sciences Raises $54M To Accelerate Development of its mRNA Platform for Prevention, Diagnosis, and Therapeutics for Chronic Disorders, Cancers, and Aging – Viome Life Sciences, a mission-driven systems biology company aiming to help individuals improve their health, raised $54M in a pre-series C convertible funding with participation from existing investors and new investors. This raise follows a $56M series B round in November 2019, bringing Viome's total funds raised to date to over $125M. Returning investors for this round include Khosla Ventures, West River Group, Glico, Physician Partners, and Bold Capital Group, showing their continued support and confidence in the company's growth and success. Ocgrow Ventures also participated in this round as a new investor. Harish Consul, Founder & CEO of Ocgrow Ventures will be joining as a Board Observer.
🧃 JuneShine Closes $24 Million In Series B To Accelerate Hard Kombucha Business – Hard kombucha company, JuneShine, has raised $24 million in a series B round to accelerate its business with plans to venture into new better-for-you alcohol categories in 2022, and initiate a series of passion projects through celebrity partnerships. The latest round, led by JuneShine’s existing investors including Amberstone and Litani Ventures (launched by RXBar’s founder Peter Rahal after selling his business to Kellogg K for $600 million in 2017), was closed after JuneShine saw its revenues triple between 2019 and 2020, and double during the following year.
🧉 Startup Daily Harvest Reaches Unicorn Status With $1.1 Billion Valuation – Daily Harvest, a company that specializes in frozen-food products, including ready-to-blend smoothies, is valued at $1.1 billion after its latest round of funding, said founder and Chief Executive Officer Rachel Drori. The New York-based startup reached so-called unicorn status by raising $77 million in an equity-funding round led by Lone Pine Capital LLC that included participation from Lightspeed Venture Partners, an existing investor.
🌎 Epic CEO: Metaverse Could Be ‘Multi-Trillion’ Industry – Epic Games CEO Tim Sweeney sees himself in a race with companies like Meta, Microsoft, and Roblox. The goal: 1 billion metaverse users. “Whoever brings on a billion users first would be the presumed leader in setting the standards,” Sweeney said.
🎲 Ladbrokes Owner Entain Bids $1 Billion for Baltic NBA Betting Partner – British betting firm Entain Plc is pursuing a takeover of Olympic Entertainment Group, one of the Baltic region’s largest gambling companies.
📺 FuboTV acquires computer vision startup Edisin.ai – US-based sports streaming service FuboTV has acquired Indian AI startup Edisn.ai to strengthen attempts to generate non-subscription revenues and deepen engagement with its viewers.
👴 Liberty Media’s Buffett Deal Opens Door for Braves or F1 Spinoff – Liberty Media has the potential to create a spinoff of its sports assets, thanks to a string of recent moves. The parent company of the Atlanta Braves and Formula One gained financial flexibility after selling 5.3 million of its Class A Liberty Sirius XM Group shares of trading stock to Warren Buffett’s Berkshire Hathaway earlier this month. Buffett’s holding company increased its stake in the $267 million deal and now owns nearly 20% of Liberty Sirius XM Group.
🇫🇷 AI-assisted biotech startup Owkin becomes latest French unicorn – Owkin, a startup applying machine learning to medical research, has become France’s latest unicorn after a $180m investment by pharmaceuticals company Sanofi. In addition to its investment, Sanofi signed a three-year partnership agreement — which includes a $90m upfront payment — to use Owkin’s technology in the development of treatments for breast cancer, lung cancer, mesothelioma and multiple myeloma. Owkin’s predictive AI can be used to detect predictive biomarkers for diseases and treatment outcomes, making clinical trials more efficient.
💡 PORTL raises a neat stack of cash to teleport your likeness all over the world – PORTL currently employs a team of around 40, half of whom are on the engineering side. The company has sold around 100 full-size PORTLs and has a number it is renting out for more ad hoc installations and campaigns, as well. True Capital and Tim Draper invested.
👩⚕️ Health-tech startup K&L Wellness Technology raises from angel investors – K&L Wellness Technology provides therapeutic health solutions to lifestyle diseases such as diabetes, hypertension, heart disease and obesity, among others using natural, sustainable and traditional methods of yoga and meditation.
☘️ Plant-based startup closes £1.4m in seed round – Founded in 2020 by former YouTube personality Mikey Pearce, as well as Made in Chelsea’s Verity Bowditch, the duo have raised the money with a view to expand the brand into locations across the UK. The lead investors in the round include Clive Sharpe, ex-chairman of Quorn, and Grace Beverley, a fitness influencer and business owner of sustainable activewear brand Tala, which has reached more than £10 million worth of sales since launching in 2019.
🇦🇺 Aussie non-alcoholic spirits startup Lyre’s raises a glass to $37 million in fresh funding – Aussie non-alcoholic spirits brand Lyre’s has raised $37 million in funding in a bid to ramp up global growth, and founder Carl Hartmann has his eye on becoming the fastest independent drinks brand to hit unicorn status. The latest round have it a valuation of $500 million, just two-and-a-half years after it launched in 2019. The funding round was led by D Squared Capital and Morgan Creek Capital Management, a repeat backer and early investor in the likes of SpaceX, Lyft and Allbirds. DLF Venture, VRD Ventures and Maropost Ventures also contributed to the round, all with repeat investments.
🇬🇧 Edge Investments holds first close of second venture fund at GBP85m – Edge’s Create the Future has attracted investment from a stellar group of entrepreneurs, business and creative leaders who have a deep understanding of technology and intellectual property. Investors include Tim Steiner, Founder of Ocado plc, sports and outdoor brand powerhouse Pentland Group, leading independent live music promoter Simon Moran, “Paw Patrol” and “Bob the Builder” creator Keith Chapman, musician Gavin Rossdale, former Airbnb Head of Creative James Goode, Google/YouTube International Head of Kids, Family & Education Greg Dray, Snap France co-founder Emmanuel Durand, former BILD Editor-in-Chief Tanit Koch, eLearning specialist Andrew Brode, and ITV chairman Sir Peter Bazalgette.
🤝 Sports Marketing Legend Brandon Steiner Partners with Jeff Burton's All Entertainment Media Group for Multimedia Joint Ventures – Iconic sports marketing trailblazer, Brandon Steiner CEO of CollectibleXchange and The Steiner Agency and Jeffrey Burton, CEO of All Entertainment Media Group (AEMG), a multimedia company comprised of three divisions including The Podcast Business News Network, EMG Music Group and Terry D Films have created a joint venture to merge the world of sports with podcasts and music festivals.
♟ VCs Back ‘Pawn Shop of the Metaverse’ With $3M Raise – The latest company looking to enter this futuristic market is Pawnfi, an alternative-asset lender that just raised $3 million in a funding round led by Digital Currency Group and joined by NFT heavy hitters Animoca Brands and Dapper Labs. (DCG is the owner of an editorially independent CoinDesk.) Pawnfi uses a smart contract escrow system to allow its customers to take out loans using their NFTs as collateral while also offering appraisal and liquidation services.
⛓ BetaBlocks raises $1.5M seed round to build digital asset marketplace – The startup's seed funding round was led by Brazil-based venture capital firm, E3 Negócios, Miami-based Ocean Azul Partners and SaaS Ventures, an investment firm headquartered between Miami and Washington, D.C. BetaBlocks reports it has helped companies like Plantation-based Magic Leap navigate digital asset and privacy issues.
🎽 After A $400M Investment, Vuori Is The Active Wear Brand To Watch –Venture capital fund SoftBank Vision immediately saw the potential in Vuori’s growth as a brand, and recently made one of the largest investments ever recorded for a private apparel company. Investing $400M to support the brand’s next phase of growth, the team at Vuori is now geared up for “international expansion next year, launching an omni-channel business in key markets throughout Western Europe and Asia Pacific and an innovation centre in Taiwan. While growing its global distribution, Vuori will double down on retail expansion in the US with more than 100 store openings slated for the next five years.”
Some tweets
Did anyone else think that Ole Gunnar Solskjær was actually waiting for the board of Manchester United to fire him? Regardless of his status as a club legend and an undoubtedly excellent human being, I was surprised at how slow they were to act, considering the not inconsiderable commercial risks. I can’t remember a season with so many managerial comings and goings. The Premier League is a proper soap opera right now… A painfully acted one, without a script.
Cheers,
Ed
—
Edward Rhys
Founder / Skin In The Game
www.skininthegamegroup.com
🙏 A favour
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Skin In The Game is a startup investment club connecting investors with visionary sports, health, and entertainment startups. We provide a regulated platform for investors and entrepreneurs to collaborate and co-invest.
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