Sports funding surge – Autonomous markets – Behavioural health & gamified wellness – A sporting conglomerate – Clean-ingredient food – Return of the SPAC
Week 9
Skin In The Game is a weekly newsletter dedicated to the art of sports investing. We reveal 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.
And sometimes, we write about the mythology of startups.
Confessions
Venture capital is now simply, capital.
That’s the chat on Twitter, where lots of very peeved VCs are moaning about Tiger Global and other so-called “public market investors” who are encroaching on their silicon-infused turf. It seems that direct investing is no longer about prophetic vision, fundamental analysis, rigorous due diligence, and good ole fashioned hand-pumping… it’s about speed, firepower, and brand. It’s all rather depressing.
The crossover between public and private markets is an established narrative that’s going to run and run… until the music stops. Low rates, excess liquidity, and the ubiquitous presence of the tech unicorn in a culture that venerates outliers, all make startup investing impossible to ignore for institutional investors seeking boatloads of decorrelated alpha.
Certainly, the commoditisation of capital has practical implications for venture funds and angels further out the funding curve. As money from institutional behemoths and retail aggregators pours in, it’s going to be harder for late stage funds to get a seat at the table. Valuations are going to become detached from reality (in truth, they already are) and the economics of venture investing might break down completely. Founders will be deprived of expertise, network effects, and the type of support that comes from investors who have owned, operated, and sometimes rescued businesses time and again.
That’s why I’m so interested in early-stage investing, where risk is harder to quantify, people are everything (well, almost), and imagination means something. It feels insulated from disruption precisely because it deals in disruption. I believe that investors, like founders, are confronted with a choice; to scan the room and imitate the other mammals, or to look out of the window and embrace strange, uncomfortable visions that “normal” people won’t entertain, let alone back. At its heart, my memo on The Founder’s Journey is about that choice.
That’s why SportsTech is so exciting. The data-rich, investment-heavy, attention-abundant landscape of sport is the perfect incubator for technologies and therapies that seem hopelessly niche but have long-term mass market potential. These are the economic equivalent of Matryoshka dolls, markets within markets that give the sports specialist an edge over mere generalists – an opportunity to achieve the impossible and predict the future.
Technology transfer is real. If you're an investor in SportsTech, you're an investor in a host of innovations poised for mass adoption – advanced materials, AI, The Metaverse, NFTs, robotics, smart pills and implants, quantum computing, psychedelics, regenerative medicine, additive manufacturing… the list is not practically endless, it is endless. Such is the nature of disruptive innovation.
The sneaker started life as a highly specialised piece of athletic equipment. Now we wear them to work. And the same machine learning algorithms used to predict injuries in elite athletes could one day enable companies to optimise their “human resources”, and those human resources to improve their health and longevity. By engaging with innovators in sports we can identify game-changing opportunities in healthcare, corporate wellness, defence, entertainment and a host of other markets
I just took part in Sports Loft’s fairly brilliant webinar on “Investment In High Growth Tech Companies In Sports & Media” and everyone present (investors and founders) was pretty skeptical about making investment decisions based on Total Addressable Market – whilst TAM is always going to be a factor, it’s notoriously hard to size. At best, it’s a line item on the investor’s checklist. At its worst, this top-down approach to understanding the potential of a product is reductive and ineffective. It’s a static measure that ignores the autonomous quality of markets that grow, overlap and diverge over time.
Autonomous markets. Now that’s a scary, beautiful, exciting thought.
Deal flow
🏏 It’s Still Early Innings, But Investors Are Looking For Home Runs Among Sports Tech Startups – Data has affected everything from how we shop to how we work to even how we manage our email inboxes. Now startups – and more importantly investors – are looking at data to find ways to build a better athlete.
💵 Dream Sports sets up $250m corporate venture fund – The parent company of online fantasy gaming startup Dream11 has set up a corporate venture arm called Dream Capital with a pot of $250m as it seeks to become a sporting conglomerate.
🇱🇺 CVC Makes Another Big Investment in Sports – The Luxembourg-based PE firm made inroads into European soccer with its $3.2bn investment in Spain’s La Liga. The deal gives CVC a reported 10.95% share of the league over a 50-year term and values the league at $28.8bn. Barcelona and Real Madrid have publicly voiced concerns.
🏎. McLaren Racing to acquire stake in Arrow McLaren IndyCar team – The transaction will see McLaren Racing take a 75% stake in the IndyCar team.
🎽 Fanatics valued at $18bn as Roc Nation and Todd Boehly invest – The licensed sports merchandise giant has reached a valuation of $18bn after securing a new $325m funding round.
💰 SportsTech Investments Continue to Surge – SportsTech venture capital funding rocketed to $1.4bn last year, according to Crunchbase. This year’s sum – $787m through early August – is already higher than any year from 2017-2019. The SportsTech sector is estimated to reach $30bn by 2024.
📼. Carlyle confirms acquisition of live video streaming company LiveU – The seller is Francisco Partners, another PE firm that acquired LiveU just two years ago for $200m. Sources suggest the deal is worth more than $400m.
🧊 Hyperice Acquires Core, Enters $4.2bn Meditation Apps Market – The deal creates a new division that looks at opportunities beyond physical wellness. No details on the deal but prior to the acquisition Core was in the midst of a funding round at a post-money valuation of $40m.
✍️ Sports SPAC boom anniversary finds deals and pipe fund aligning – It was a year ago that sports SPAC mania sparked, as Gerry Cardinale and Billy Beane brought their RedBall blank check company to market. Since then, another 143 special purpose acquisition companies with a sports focus, or led by a sports figure, have formed.
🐅 Palta closes $100m Series B funding round led by VNV Global – The health and well-being technology company raised $100m in a Series B funding round led by Per Brillioth at VNV Global, with participation of Target Global and other investors. In case you’re wondering, Palta does consumer-centric health products, with more than 100m active users over the last 12 months and 2.4m active paid subscribers across apps like Flo.Health, Simple Fasting, Zing Fitness Coach and more.
🗣 Talkiatry lands $20M Series A to go all in on in-network psychiatric care – Talkiatry raised a $20m Series A to scale a strategy simple in theory yet potentially challenging in execution: bring psychiatry services in-network with insurance providers. The round, led by Left Lane Capital with participation from the founder and former CEO of CityMD, Dr. Richard Park.
👟 Footwear company Wolverine Worldwide buys Lululemon competitor Sweaty Betty for $410m – The company behind Merrell, Saucony, Sperry, Stride Rite and other shoe names is adding premium women’s activewear brand Sweaty Betty to its portfolio. Wolverine Worldwide bought the 23-year-old digitally native Lululemon competitor for $410m from L Catterton, a consumer-focused private equity firm.
🌱 Ex-Amazon and Glossier exec aims to help people live longer, healthier with new startup Modern Age – Modern Age recently closed a $6m seed funding round led by Juxtapose, a NYC-based venture fund that’s backed other health startups such as care/of and Tend.
🧠 SonderMind Raises $150m – The behavioural-health startup that matches patients with therapists raised $150m in a funding round co-led by Drive Capital and billionaire Azim Premji’s Premji Invest, vaulting the company to so-called unicorn status.
🇨🇭 Planted raises another $21m to expand its growing plant-based meat empire – Swiss alternative protein company Planted has raised its second round of the year, a CHF 19m “pre-B” fundraise that will help it continue its growth and debut new products.
👾 Revery raises $2m pre-seed funding – Gamified wellness company Revery raised $2m in pre-seed funding led by Sequoia Capital India’s Surge, while EdTech startup Flying Cape has raised $1.5m Series A funding from Start-up O and EduSpaze.
🌳 The New Primal lands $15m Series B investment – US “clean-ingredient” food brand The New Primal has secured a $15m investment from private equity firm Manna Tree.
🍔 Actual Veggies Closes $2.8m Financing Round To Expand Refrigerated Veggie Burgers In Retail – The NYC-based company, which offers a line of chef crafted, colourful veggie burgers, has just closed a $2.8m financing.
🤾♂️ Playo raises $500K as part of its ongoing pre-Series A round – SportsTech startup Playo has raised $500k as a part of its ongoing pre-Series A round from ah! Ventures High Tables platform and other angel investors. Playo is a platform for sports enthusiasts focusing on building micro-communities, with 1.5m users.
🚀 Midway Through 2021, Digital Health Startups Sprint Past 2020 Records – The first half of this year saw $14.7bn invested in digital health companies, which surpasses the total for the entirety of 2020. At this pace, 2021 will be the most-funded year ever for digital health startups.
🧃 Rootine Is Improving Health Outcomes With Precision Nutrition – Rootine raised $3m in seed financing to empower members to improve their health and human performance with precision nutrition. Investors in the round include Novogenia GMBH, DSM Venturing, Duro VC, Launch TN Impact Fund, Cleo Capital and 20+ Angels including founders, executives, and clinicians who have worked at Havenly, Eterneva, Facebook, SoFI, Eight Sleep and more.
🚣♀️ Aviron raises $4.5M to Drive Gamified Rowing Experiences via their Best-in-Class Rowing Machine – The experience-driven connected rowing machine built on an advanced gaming platform has raised $4.5m from Samsung Next, Formic Ventures, GFC, Y Combinator and others
🏋️♂️ Defiance Ventures Announces Investment In Latin American Gym Management Platform Boxmagic – Boxmagic is a software platform for gym and sports facility owners that helps manage day-to-day operations, field reservations, enables online payments and e-commerce sales, and allows gyms to stream classes to their members.
🏀 San Antonio’s NBA team is spurring on a gaming startup – Spurs Sports & Entertainment, owner of the NBA’s San Antonio Spurs, has bounced into the arena of investors in Austin mobile gaming startup Tribe Gaming.
🇮🇱 Israeli startup raises $2m to develop the next-gen academy platform for Esports teams – Edge Gaming has just announced its pre-seed round, raising $2m to develop an Academy platform for Esports clubs and gamers. Leading the round are AnD Ventures and Stardom Ventures, two early stage Israeli VCs focusing on consumer and media.
🏃♂️ Mirthy raises $1.1m pre-Seed funding to build out platform for sprightly Boomers – Mirthy’s platform allows over 60s to host or participate in free or affordable activities, socialising online and eventually offline as well. It’s now raised $1.1m pre-Seed funding led by Ascension’s “Fair By Design” fund, with participation from Ada Ventures, Redrice Ventures and True.
💧 Why tennis pro Andy Roddick invested in Cure Hydration – Now retired from the sport, Roddick focuses his time on the Andy Roddick Foundation, his nonprofit dedicated to enriching the lives of children outside of school, and investing in health and wellness companies like Cure Hydration.
Some tweets
Messi’s in Paris. Grealish’s in Manchester. Romero’s in London. Football’s coming home to our screens after a brief but pleasurable hiatus in favour of skateboarding, karate, and surfing. And it’s going to be glorious.
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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