Market meltdown – Precision sweat patches – Smart dumbbells – Sound therapy – Bioelectronics – Revolutionary fitness machines – Hormonal health – Lewis Hamilton’s vegan burger empire
Week 44
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Confessions
Yesterday I had lunch at a naughty little Argentinian bistro in Marylebone with a seasoned investor who has seen his fair share of corrections and indeed, crises. He provided some much needed perspective on recent developments in capital markets.
Everyone tends to notice when stocks takes a tumble. Big name tech companies are the proverbial canary in the mine. The toxic fumes then begin to register with Private Equity, growth investors, and late-stage VCs. The impact on early-stage venture is slower to percolate and harder to read.
The mood is certainly grim on Twitter. There’s a bit of a reckoning going on, with lashings of I-told-you-so’s, some raging against the dying of the light, and a sprinkling of gallows humour. Warren Buffett’s famous quip springs to mind:
“Only when the tide goes out do you discover who’s been swimming naked.”
It feels like skinny-dipping is very much back in fashion, with founders joining investors in the shallows.
The startup press is awash with stories of founders pre-emptively raising, trying to get ahead of something that is already here. Flat is the new up (meaning that raising “extension capital” at a flat valuation to a previous round has suddenly become socially acceptable amongst panic-stricken unicorn founders). Give it a few more weeks, and down will be the new up.
It’s all a bit overdone (the reaction, not the market move). Many founders, investors, and commentators are yet to encounter the dark side of capital markets. Being 37 and therefore neither young nor old, I feel well placed to weather the apocalyptic version of TechCrunch as someone who has lived and worked through a couple of cataclysmic market crashes (I began my banking career in late 2007, when the world ended (apparently), and indeed ridden the wave of a 15-year bull market in which some decidedly non-brilliant people have become brilliantly wealthy (some smart ones, too).
This was always going to happen. Markets are cyclical. The laws of finance are laws of nature, and what does up must come down. The question is, how quickly?
Over a whistle-stop prix fixe menu (the highlight was a very juicy chimichurri beef and bone-marrow burger) my older, wiser companion told me that he thought it unlikely that this correction will develop into a full on crash – more a protracted grind downwards, which to me sounds equally ghastly and potentially even more damaging, since it will prolong the agony of zombie startups and cash-strapped VCs taking write-downs on their portfolios.
What happens next? There will be a retrenchment of risk whereby investors stop trying to do everything and return to their core competencies. Growth funds will stop playing in seed rounds and focus their resources on shoring up pre-IPO investments. Hedge funds will cease investing in startups full stop. Many angels will pack up and go home to their ISAs and SIPPs.
Valuations will fall (but not collapse), deal sizes will shrink, investors will become more rigorous with due diligence and more aggressive with their terms, founders will be more accommodative and flexible, there will be a flight to quality, in all things – towards established entrepreneurs, truly differentiated offerings (with defensible IP), solid unit economics, and startups that actually have traction. Does any of this sound like a bad thing?
Scott and I have been trying to figure out what this means for our business and indeed our clients. It’s going to make it harder to onboard angels to our Investment Club, since their wealth and risk appetite will be materially impacted by macroeconomic factors. But our investment community is diverse and deep enough to withstand another crisis. And less liquidity will make it easier to get allocations in great startups at attractive valuations.
We may have to adapt and embrace different investment philosophies and styles. If the future plays out how the media is suggesting (by no means a given) there will be a rotation away from growth towards value investing. This will bring “Micro Private Equity” into play as a strategy (buying majority stakes in small companies rather than minority stakes in large companies). There will be distressed assets (and founders) looking for a home and we should be well placed to benefit by leveraging our expert network to identify mis-priced (i.e. cheap) assets and optimise (i.e. grow) them by bringing in capital and operational expertise. This is very different (antithetical, in fact) to classical “Power Law” venture investing, but equally reliant on access to capital. Cash is king, as they say.
Ultimately investing in startups – and building them – is about managing uncertainty. The world is unpredictable, beautiful, and painful. The best way to navigate the future isn’t actually to create it – it’s to create optionality. That way we can benefit from disorder:
“Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.”
― Nassim Nicholas Taleb
So, in addition to fashioning tin foil helmets and bulk buying toilet roll, Scott and I will be drawing upon the wisdom of seasoned investors in our network who “have been there, done that, got the vintage Patagonia vest” (and cyclical investment expertise to boot). We’ll be working with them to scan the horizon for antifragile companies and investment strategies that are negatively-correlated to the seemingly inevitable financial market meltdown and recessionary real economy.
That’s obviously as hard as it sounds. And it sounds good to us.
Deal Flow
This week we have 40 sports & health deals across Health & Wellness, Web3, Esports & Metaverse, Sports Betting, Fitness, Apparel & Merch, Psychedelics, Nutrition, Funds & Accelerators, Fertility, Media, and Sports Venues.
Fitness
🦾 Smart dumbbells? Why not? – Smart dumbbells maker Kabata is announcing a $2M round, featuring a bunch of names from the sports and VC worlds including Courtside Ventures, Detroit Venture Partners (VC fund of Cavs owner Dan Gilbert), Tribe Capital, Zaza Pachulia (Golden State Warriors), Kirk Lacob (EVP of Basketball Ops, Golden State Warriors), Naval Ravikant (Founder, AngelList), Jordan Nathan (Founder and CEO, Caraway Home), Andy Dunn (Co-Founder and CEO, Bonobos), Sam Parr (Co-Host of My First Million podcast) and pro soccer player Daniel Sturridge.
💪 Speede Fitness oversubscribes seed round and signs NFL, NBA and UFC stars as equity holders – Speede Fitness, a Chicago-area strength training startup that is launching a revolutionary fitness machine in summer 2022, raised $2.5M in funding in its seed round – oversubscribed from $2M – and signed on new partners from the NFL, NBA, UFC and the business world.
🇳🇱 Amsterdam’s fitness tech provider Virtuagym bags €3M to bring about sustainable and healthy lifestyle changes – The investment came from Icecat, an Amsterdam-based technology company which invests in innovative technology organisations.
🇩🇪 EGYM acquires French market leader Gymlib – The Munich-based fitness-tech company is now acquiring Gymlib, by far the biggest player in the French corporate fitness market, for a high double-digit million purchase price.
🏠 OxeFit home workout startup raises funds from celebrity athletes – OxeFit has raised money from a few more celebrity athletes to support its tech-based home workout equipment. Professional golfer Dustin Johnson and football player for the Los Angeles Rams, Jalen Ramsey, have joined other athletes who have invested in the Plano, Texas-based company.
Wellness
🎧 Therabody Acquires So Sound, Announces Launch of TheraSound – Therabody has acquired leading sound therapy company So Sound and will be rebranding to TheraSound, a new division focused on creating sound therapy technology and scientifically calibrated content.
💦 Epicore Biosystems Acquires IP for Precision Sweat Patches – Epicore Biosystems, creators of the Gx Sweat Patch, acquired assets and IP from Eccrine Systems, makers of a patch measuring stress, pain, and more from human sweat. Despite raising $20M over its history, Eccrine ceased operations in 2020. Now, Epicore is reviving its IP, complementing its own sport-specific patch with Eccrine’s focus in precision medicine.
🇮🇳 Health And Wellness Startup FlexifyMe Bags $ 300,000 In Seed Funding Round – FlexifyMe, one of India’s fastest-growing health and wellness platforms has raised $300K in a seed funding round. The round saw participation from prolific investors including Ravi Bhushan, Founder & CEO, BrightChamps, Amit Ratanpal, Founder, Blinc Management, Sachin Anand, Sales Director APJ, Intel, and Dipen Shah, Managing Director, VAG-group, amongst others. The newly raised funds will be used to acquire talent, boost technological capabilities, and train top-certified Yoga, Meditation, and Nutrition instructors.
Health
⚡️ Bioelectronic start-up raises £3.8m in seed funding – The new funding, involving Icehouse Ventures, The Development Bank of Wales, Parkwalk Advisors, Business Growth Fund, and a consortium of Angel investors, will be used to commercialise its cardiology technology and commence the first-in-human clinical study of Ceryx’s cardiac rhythm management device, Cysoni.
🏴 Glasgow health tech startup secures £1.7m investment – The funding will support Nebu-Flow to further the commercialisation and delivery of next generation respiratory pharmaceuticals. The oversubscribed funding round was led by Edinburgh-based investment service Foresight Group via its Foresight Williams Technology joint venture between Foresight and Williams Advanced Engineering, Science Creates Ventures, Ascension Life Science Fund, and SIS Ventures.
😴 XII Medical Completes $30M Series A Financing – Ajax Health led the financing, with co-lead Broadview Ventures and participation from founding investor Cleveland Clinic, as well as Aperture Venture Partners, JobsOhio Growth Capital Fund, CincyTech, and an undisclosed strategic investor. Funds will be utilised to advance the development of a proprietary, state-of-the-art, patient-centric solution for the millions of people suffering from obstructive sleep apnea.
🤰 Ruth Health Secures $2.4M Seed Round Led by Giant Ventures to Reimagine Comprehensive Prenatal & Postpartum Care – The progressive telehealth and comprehensive care platform built for women by women, is proud to announce its $2.4M seed funding round led by Giant Ventures, with participation from Citylight VC, Cleo Capital Scout Fund, Crista Galli Ventures, Duro VC, Emmeline Ventures, Gaingels, Global Founders Capital, Pentas Ventures, SOMA Capital, Techstars, Torch Capital, YCombinator, and various strategic angels.
🇮🇳 Noida-based health startup FirstCure Health raises $350K – The startup plans to expand its presence strongly in North India and enter the Southern region of India by the end of the year.
👨⚕️ Arsenal and McKesson back OncoHealth – Arsenal, advised by Evercore, took a majority stake in OncoHealth, with McKesson assuming a significant minority position.
🧠 Osmind raises $40M for emerging mental health treatment EHR and more digital health fundings – The Series B funding round was led by DFJ Growth. Other participants include Susa Ventures, General Catalyst, Future Ventures, Tiger Global, Pear VC and angels Lachy Groom, Brent Saunders, Helena Goodman and Ariel Katz.
🇺🇸 Redcliffe Lifetech raises $61M in funding led by LeapFrog Investments – Omnichannel diagnostics platform Redcliffe Lifetech has raised $61M in its Series B round, led by LeapFrog Investments, and participation from Healthquad, Schroders, LC Nueva, Growth Spark Ventures, as well as existing investors Chiratae Ventures and Alkemi Venture Partners.
🇫🇷 Valued at €2.7B, French digital health insurance platform Alan raises €183M – The current round was led by Teachers’ Venture Growth (TVG), the venture fund of the Ontario Teachers’ Pension Plan Board.
Web3
⛓ DeGods DAO snaps up $625k of NFTs to secure stake in Big3’s Killer 3s outfit – Decentralised autonomous organisation (DAO) DeGods has acquired a significant stake in Big3 team Killer 3s by purchasing NFTs that promise a stake and considerable influence over any of the 12 franchises that comprise the Ice Cube-backed three-on-three basketball league.
Esports & Metaverse
🏌️♀️ PGA Tour Gets Equity Stake in AR Startup Quintar in Expanded Deal – The PGA Tour has acquired a minority equity stake in augmented reality startup Quintar as part of its new expanded partnership with the company. Quintar will serve as the official mobile augmented reality developer for the PGA Tour over the next three seasons through 2024.
🎮 Generation Esports secures $19M in funding – Generation Esports (GenE), the founder of the High School Esports League, has secured $19m from its Series B funding round. The funding was led by Altos Ventures, which also led the platform’s Series A in May 2021.
⚽️ Munich-based The Football Company raises €2.5M to connect football fans with fantasy gaming in metaverse – The round was led by Dreamcraft Ventures, a Danish venture capital firm founded by Jesper Søgaard and Christian Kirk Rasmussen. Dreamcraft invests in tech startups in the Nordics and Germany, and helps them achieve the next rounds of funding.
Sports betting
🎲 $5.3M Seed Round for Social Wagering Startup Stakes, Specializing in NFTs, Web3 – Social wagering startup Stakes, which specializes in NFTs and Web3, has raised a $5.3M seed round. The funding was comprised primarily of several institutional investors: Digital Currency Group, FBG Capital, CMS Holdings, LD Capital, Cadenza Ventures, Matrixport Ventures and Sterling Select Group.
Advanced materials
🏎 Porsche Leads $400M Investment in Lithium-Silicon Battery Developer Group14 Technologies – The pursuit of new battery technologies by the world's automakers has prompted Porsche to lead a $400M investment round in Group14 Technologies, a global manufacturer and supplier of advanced silicon-carbon technology for lithium-silicon batteries. Porsche Ventures is the venture capital arm of the sports car manufacturer.
Apparel & Merch
👕 Endur Apparel Rebrands to Outway, Unveils all-new Brand Identity Powered by $3.2M Investment – The company's new brand positioning will be fuelled by the investment led by Andrew Wilkinson of Tiny. Other powerhouse investors include Shane Parrish, Jason Warner, Jonathan Becker, Rasool Rayani, Ben Moore, Tobyn Sowden, Janene Scordo, Tina Swinton, Rajiv Khaneja, and Carla Matheson.
Nutrition
💊 Wile closes £3M seed round – Serena Ventures is joined by Springdale Ventures (Better Booch, Judy), angel investor Sara Bright and Coyote Ventures in this raise. WILE's supplements can be mixed and matched for overall hormonal health and its many unpredictable symptoms. That includes stress, which impacts "aging," health and perimenopause.
🍋 Beyoncé Named As 'Significant' Investor In Lemon Perfect's $31M Series A Funding Round – Fellow investors in the lemon water brand include Beechwood Capital, Goat Rodeo Capital, Melitas Ventures, NNS Capital, and Trousdale Ventures. With the new funding, Lemon Perfect’s value currently stands at over $100M.
🍔 Leonardo DiCaprio Joins Lewis Hamilton’s Vegan Burger Empire – The company announced the start of a $30M Series B fundraise to fuel growth, naming DiCaprio as a strategic investor.
🥜 Jay-Z-Backed Food Platform HUNGRY Buys NatureBox – HUNGRY, a tech-enabled food catering and delivery platform backed by Jay-Z’s Marcy Partners amid others, has acquired NatureBox.
Funds, Accelerators & Venture Builders
💰 RedBird Files to Start New Fund, Likely Targeting $2.6B – RedBird Capital has filed paperwork with the SEC to launch its fourth fund. The Gerry Cardinale-led investment business has a robust sports practice, including investments in Fenway Sports Group, On Location Experiences and the XFL.
🏀 From MVP To VC: NBA Player Launches A $50M Fund And Brings His A-Game To The Entrepreneurial Arena – Veteran NBA Star Omri Casspi launched a unique, early stage VC fund and officially joined this A-list of athletes. He has co-founded Sheva, a $50M early-stage investment fund together with veteran early stage investor David Citron.
💵 HCF announces cornerstone investment in sportstech VC fund XT Ventures – Private health insurer HCF is the cornerstone investor for venture capital (VC) fund XT Ventures. XT Ventures invests in a portfolio of companies in the sport, fitness, wellness and health sectors that leverage emerging technologies including Web3, blockchain, NFTs, the metaverse, AI, ML and 5G.
Fertility
🧫 Frame Fertility raises $2.8M seed – Looking Glass Capital led the seed round. Flare Capital Partners, Great Oaks Venture Capital, Healthworx and Brand Foundry Ventures joined. Individual investors from a crop of other digital health startups also participated in the round, including Headspace Health chief marketing officer Christine Hsu Evans, Everly Health CEO Julia Cheek, and Giovanni Colella, the founder of Castlight, OODA and Brightline Health.
Media
🎤 Playmaker acquires New York-based sports media company The Sports Drop – Toronto-based Playmaker has acquired The Sports Drop, an American sports media company that focuses on NFL, NBA, MLB, and collegiate sports coverage.
🇺🇸 Jomboy Media Pulls in $5M Amid Plans for Multisport Expansion – Jomboy Media, founded by Jimmy O’Brien, closed a $5M raise. The WWE, C.C. Sabathia and Dwyane Wade are among new investors in the company, joining a round led by Connect Ventures, an investment partnership between CAA and New Enterprise Associates.
Sports venues
🏟 $62.5M Series B Funding Round for Self-Checkout Kiosk Company Mashgin – Mashgin, whose self-checkout machines are used at more than 30 sports stadiums, has raised $62.5M in Series B funding to now value itself at $1.5B. Venture capital firm NEA led the funding, which will accelerate Mashgin’s expansion and help the company scale internationally.
🏏 Knight Riders Group to help fund $30m MLC stadium in LA area – Knight Riders Group, the owners of Indian Premier League franchise Kolkata Knight Riders, has announced plans to invest in a $30m (€28m), 10,000-capacity Major League Cricket stadium in Irvine, just outside of Los Angeles, California.
Some Tweets
Did you see 19-year-old Henry Arundell’s 98-metre wonder-try? He seemed genuinely shocked at what he just done. A star (with monster quads) is born…
Yours in sports,
Ed
—
Ed Rhys
Co-Founder / Skin In The Game
www.skininthegamegroup.com
Join our Investment Club
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It’s free to join and members get access to live investment opportunities, insights on investing in sports & health from our community of industry experts, and access to our private LinkedIn group and events.
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.