New Wave Investors Talk Emerging Strategies Around Sports
A panel of new wave investors at the '19 Dealmakers in Sports conference talked about their strategies and catering to changing consumer habits. Teall Capital Partner & Chief Strategy Officer Wes Day said his focus is "pretty much exclusively on sports." Day: "The bulk of our leadership team are in and around sports, which is pretty different from a typical private equity or venture fund. We look for deals that span from very early stage startups to late-stage, buyout-type deals." He added, "We really think of ourselves as cooperators and strategic partners in addition to being capital investors. ... We make fewer, larger investments and really lean into our companies and focus on them to help them grow. We want companies that are more similar than different that can work together and actually benefit each other."
GETTING SPECIFIC: Serent Capital VP Steve Marks explained his company invests in "vertical-focused, B2B software companies that are in the scaling stage." Serent wants to partner with the founders to help them accelerate growth. Marks said, "We focus on software companies that are focused on a specific vertical and market. I think sports is a great example of that. Obviously there's a ton of money in the ecosystem, but if you have a venture capitalist look at the opportunity for software, I think a lot of them would tell you the market size is too small. ... We actually really like that we find that in those sorts of markets, you can build really nice-sized businesses that by the way are far more profitable than a bigger market where you have more competition and you don't have all your customers who know each other."
FOUNDATIONAL THINKING: Inner Circle Sports works with team investment, and the firm has begun to shift its focus to more than just the prestige and allure of investing in a franchise. Inner Circle VP Kyle Charters said, "Our business has historically been rooted in M&A and capital raising around professional sports teams both in the U.S. and Europe. And as we've evolved over the last few years, I've spent almost exclusively all my time to market to guys in tech services and tech vertical. ... What we're seeing is sports is becoming more institutionalized and an investable vertical." He added, "There are businesses that can actually generate purely financial returns. And I think that's what's driving a lot of this institutional interest."
LOOKING AHEAD: Overtime co-Founder & President Zack Weiner has received a number of prominent investors in his company, including NBA Commissioner Emeritus David Stern, Carmelo Anthony and Kevin Durant. He realized that Overtime was connecting with an audience which had not been tapped into yet. He said, "When we started Overtime, I wanted to think about the demand side and what was missing in the ecosystem," Weiner: "It was obvious that there was this macro-trend of this next generation of consumer and that they were not consuming as much live sports. They did not have an affinity for legacy sports media companies. Every single day, we talk to our 110 employees to think about what we can create for Gen Z that they are going to love and how do we become their sports media brand. We think that unlocks a lot of opportunity for us."