Sapphire Sport enters VC game with decorated limited partners
Backed by a virtual Who’s Who of the sports business, Bay Area venture capital firm Sapphire Ventures has amassed a $115 million fund called Sapphire Sport that is devoted to investing in technology startups. The new fund combines resources from many of the sports industry’s most powerful team owners and brands as well as every major North American sport.
Investments will range across the sports, media and entertainment industries, and the fund’s nine-figure size makes it an immediate player in the space. Five companies have become the initial members of the portfolio: Fevo, a social commerce solutions firm; Mycujoo, a live soccer streaming platform; Overtime, a digital sports media network; Phoenix Labs, a gaming studio; and Tonal, a connected home fitness system.
While Sapphire, which spent almost a year in development, will be competing in a crowded space of venture capital firms, it will veer sharply away from many other sports investment vehicles that are tied to a specific player, team, league or union. Sapphire Sport’s powerful roster of limited partners includes Adidas; Anschutz Entertainment Group; City Football Group, owners of defending English Premier League champions Manchester City; Major League Baseball; and WISE, the family investment fund run by Minnesota Vikings owners Zygi and Mark Wilf, among many others (see graphic).
“Nobody has put together these types of partners like this toward a single goal,” said Michael Spirito, Sapphire Ventures’ managing director. “Sports remains a massive addressable market with a lot of change and innovation happening, almost in real time, and we intend to make a sizable impact upon the market.”
Unlike many other smaller sports funds that are focused on early-stage companies and seed round investments or at the buyout stage, Sapphire Sport saw a market opportunity to concentrate on the less-crowded growth-stage fundings and Series A and B rounds. No specific dollar amounts for investments in the individual companies was made available, and while there is no high or low limit, investments are expected to often land in the mid-seven-figure range.
Spirito will co-lead the fund along with Sapphire Ventures Co-Founder Doug Higgins. They will be based in the Bay Area, and both have extensive histories in investing in technology startups. Higgins’ background includes a stint working in business development for famed production company Lucasfilm. Spirito joined the firm last fall after a lengthy run in business development and digital media with 21st Century Fox and the YES Network.
Tonal, a next-generation fitness system based in San Francisco, had multiple offers for its recently completed Series B funding round before aligning with Sapphire Sport.
■ Anschutz Entertainment Group
■ Bank of Montreal
■ City Football Group
■ Indiana Pacers ownership group
■ Intersect Ventures
■ Major League Baseball
■ New York Jets
■ San Francisco 49ers’ investment fund
■ San Jose Sharks
■ Sinclair Broadcast Group
■ Jeff Vinik
■ Jeremy Jacobs Sr.
“It’s really rare that you see a situation like this where the principals really understand startups and building a business but also are deeply connected across the sports and media businesses,” said Aly Orady, Tonal chief executive and founder. “And having access to the group of [limited partners] they put together has already begun to expand what we’ve been able to do in getting our product into the hands of elite athletes.”
City Football Group, which also owns a majority stake of Major League Soccer’s New York City FC among many other soccer clubs, joined Sapphire Sport first as the anchor investor and will also serve as the head of the fund’s advisory group. In addition to representing an attractive investment vehicle for startups, City Football Group chief executive Ferran Soriano said Sapphire Sport will help expand his own group’s entrepreneurial desires.
“This provides the opportunity for a closer perspective of emerging technology and allows us to be ahead of our competitors,” Soriano said.
In addition to reviewing potential funding investments, the Sapphire Sport limited partners will also have opportunities to work directly with portfolio companies on various projects and deploy intellectual property.
Sapphire Ventures began as the venture capital arm of global software giant SAP SE before spinning off into an independent entity in 2011 and rebranding to its current identity in 2014. But the firm remains affiliated to SAP, which is the sole limited partner of Sapphire Ventures. It has more than $2.5 billion in assets under management, and its prior investments include Fitbit, LinkedIn and Ticketfly, a ticket distribution service.