The top 4 sports and sports tech VCs are ready to open their checkbooks. Here’s what they’re looking for.
Deepen Parikh remembers 2016 when his firm, Courtside Ventures, raised its first fund.
The basic premise among venture capitalists at the time: “Sports was interesting, but not really an area of interest for investment,” he recently told Insider. “They all said, ‘We love sports. But we don’t invest in sports.'”
Fast forward eight years, and Courtside is among the firms now steering hundreds of millions of dollars to sports and sports tech companies. And while the economy is uncertain, several of them are ready to write big checks.
Courtside Ventures in January closed a $100 million fund, its biggest yet. KB Partners late last year closed a $127 million fund, also its biggest yet. In addition, accelerator programs, including those run by Comcast NBCUniversal and REI continue to hunt for the industry’s next big thing.
Over the past few weeks, Insider spoke with Parikh and his industry peers at KB Partners, Comcast NBCUniversal SportsTech, and REI’s Path Ahead Ventures about what they’re looking for in investments and accelerator participants this year. While the economy is uncertain, each expects a busy year.
Several factors are driving the surge in venture capital for sports and sports tech companies, including a boom in the number of professional athletes who want to invest and, like other investors, prefer to invest in what they know.
“You’re seeing more and more athletes who are becoming investors themselves, who come from those sports, who understand that world,” Jenna Kurath, vice president of startup partnerships and head of Comcast NBCU’s SportsTech accelerator, told Insider.
Other factors driving the surge: the Great Resignation and the wave of tech layoffs. In the past two years, a lot of people with technical skills, and high-paying jobs, decided to try something new.
“We’re seeing this tidal wave of creativity and investment and focus,” Chris Traeger, executive director of Boomtown, Comcast’s accelerator partner, told Insider. “How do we make the experience for fans better? How do we make the viewing experience better? How do we make the athlete experience better?”
Insider spoke with Parikh and others for this story before the Silicon Valley Bank meltdown added a new layer of uncertainty to the economy. But even before the latest bank crisis, Parikh said Courtside expected markets to “continue to be choppy.”
“We’re telling all of our founders the same thing, which is to preserve cash, because the only thing we know is we don’t know how long this is going to last,” he said.
But he still plans to write a lot of checks this year. And more than anything, like others interviewed for this article, he said founders who can clearly explain a problem, and how they plan to solve it, will have the best odds of getting one.
“The founders who can tell the best stories and execute against their vision, even in the earliest stages, are still getting funded, and will continue to get funded,” Parikh said.
Here’s a fuller breakdown of each of the above venture options and how to best get its attention.
Comcast NBCU’s SportsTech accelerator
The Comcast accelerator, in partnership with Boomtown, works to find young companies that can plug into Comcast’s various businesses. Those businesses include NBC and Comcast Spectacor, a sports and entertainment provider, and NASCAR, WWE, and the PGA Tour.
The program accepted its first class in 2021. It recently accepted its third class of 10 companies. The class spent a week in Orlando and participated in fireside chats and on-the-ground looks at everything from the Arnold Palmer Invitational to the WWE training center and Universal theme parks.
Given the breadth of the portfolios of Comcast and its partners, Kurath said the accelerator looks for companies that are “enterprise ready,” meaning they can plug into numerous businesses.
Companies in the accelerator typically have a product, revenue, and some customers. Most are in media and entertainment, including fan engagement and venue and event innovations.
The program is accepting applications for its fourth class. The application window closes in August.
Courtside invests in sports, lifestyle, and gaming companies. If you’re not in one of those lanes, don’t bother reaching out, even though the firm has the new $100 million fund to dole out.
“If the next Uber comes along, we probably won’t be investing in it, as much as I’d love to,” Parikh said.
“Our view is that sports is much more than simply just teams leagues,” Parikh said. “It’s sports and the way in which people consume content and create content.”
The firm’s portfolio includes, for instance, StockX, a platform for reselling athletic footwear.
Courtside has already invested in companies in India, Europe, Africa, and in Brazil and Mexico. Parikh expects a third of the new fund to be invested in international companies.
“Whether you play video games in the US, or you play in India or China or Europe, people play games, people watch sports, people buy sneakers,” he said. “That is not singular to one economy or one country.”
Parikh expects fewer investments in media companies out of the new fund, but more investments in gaming. The firm’s also interested in collectibles and wellness.
Courtside reads every pitch that comes in and it’s invested in companies that came in cold, but Parikh encouraged founders to work their networks to get a warm introduction.
Courtside typically invests in seed rounds, but it also invests in pre-seed and Series A rounds. It writes checks between $500,000 and $5 million, but usually around $2 million. It prefers to work with companies that already have a product in the market.
KB Partners wanted to raise $100 million for its second fund. It raised $127 million.
“A lot of people are believing and seeing real significant potential for what sports tech can be,” partner Lance Dietz told Insider.
Like Courtside, KB Partners has a broad definition of “sports.” It prefers to invest in companies at the intersection of sports and technology. Recent investments include Tixologi, which eliminates the “pain points” of the ticketing experience, Asher Weiss, Tixologi founder and CEO, told Insider last year.
Dietz said KB Partners likes to invest in companies with less than $2 million in revenue. He expects investments from the new fund to range between $1 million and $3 million and be made in seed and Series A investment rounds.
The new fund is the firm’s second. The first had just over $40 million.
“The pipeline has been quite strong,” Dietz said. “People are becoming a lot more interested in this category. We are seeing a lot of interesting categories. It feels busier than ever.”
REI’s Path Ahead Ventures
In 2021, outdoor brand REI announced Path Ahead Ventures, which has $30 million to invest in founders of color in the outdoor industry. It’s doling out the money through two accelerator programs and an investment fund.
“We’re looking for founders of color, which we classify as those who self-identify as Black, indigenous, Latina, Latino, Latinx, or Asian and Pacific Islander,” said Director Dan Kihanya. “We’re looking for folks who are building businesses focused on the outdoor space. It’s mostly gear and apparel, but also experiences and services.”
“These are folks that basically are aspirational.” Kihanya told Insider. “They don’t have a business completely formed yet.”
The application window for this year’s class of the Navigate program recently closed. The program works with companies that haven’t received venture funding and have between $75,000 and $2 million in annual revenue. The program worked with six founders last year. Kihanya expects to work with around that many this year.
Each company gets a $25,000 grant for participating. There’s also an opportunity to get a $100,000 equity investment from REI.
“Some founders are not ready for investment,” Kihanya said. “And we want to respect that. But if you’re in the program, it indicates our intention to want to invest.”
The program also makes direct investments. It recently completed its first in Alder Apparel, which makes outdoor apparel in more inclusive sizes.
“We’re getting the word out now, and we’re getting more awareness,” Kihanya said.
(Note: This article originally appeared in Business Insider).