Investing
European athletes should start investing in sports tech: here’s how
Global Banking & Finance Review®
Company
By Antonio Cacorino, CEO of APEX
Sports tech investment is on the rise. In the second quarter of 2023 alone, sports technology firms raised US$1.6 billion in private funding, and M&As hit US$14.5 billion. As more elite athletes like Serena Williams and LeBron James actively invest in startups, there is growing interest from both athletes and sports leaders in how to allocate capital in this space. But European athletes are lagging behind US ones. As World Cup winner Blaise Matuidi recently said: “When I arrived in the US, I saw a difference between European athletes and US athletes. European athletes are entirely focused on their sport, while North American athletes learn how to do business.”
I’ve worked with 70+ athletes over the past two years, supporting them with their first foray into investment. Using this experience, I wanted to share guiding insights for those who are thinking about becoming investors, but don’t know where to start:
The right time is now: Historical data shows us that the sports tech industry has been consistently growing year after year. Currently, the market landscape is such that it provides investors, especially athletes, with lower entry points, making sure they receive substantial ownership for their investments. So if the current economic conditions contributed to making you risk-averse, rest assured that there’s probably never been a better time to invest in sports specifically.
Recognise the value of your experience, but seek collaboration: The journey of elite athletes is similar to that of business founders in many ways. The grit, determination, and perseverance that athletes demonstrate on the field are attributes that founders need when leading a company. These shared qualities make athletes particularly good at identifying potential and calling out ventures that don’t have the right amount of drive. This doesn’t mean you have nothing to gain from traditional investors’ experience: choose deals where you can learn from a diverse group of people who’ve been doing this for a long time. And talk to other athletes who have invested, as well as athletes from other sports than yours – find investment setups that give you that “locker room outside of the locker room” opportunity. But also know you’ll bring insights they don’t have.
Leverage your insider knowledge – with pragmatism: Athletes have an inside track into the needs and challenges of the sports sector, particularly when it comes to issues surrounding nutrition, recovery, mental health etc.. They should use it. LeBron James’ investment in Ladder, a sports nutrition company, is a good example of that. LeBron co-founded Ladder along with Arnold Schwarzenegger, Cindy Crawford, and Lindsey Vonn as a result of his personal experience during the 2014 NBA Finals when he faced cramping issues. He teamed up with his trainer, Mike Mancias, and other experts, to develop a line of clean performance products tailored to his exact needs. This doesn’t mean you should start your own business, but you can certainly use your experience to identify the ones that resonate with it. Simply be aware that just because a tech solution addresses a personal challenge doesn’t automatically make it a sound investment. While it’s great to relate to an investment, make sure you’re not distracted by it: sometimes it’s more suitable to be a user of the product rather than an investor in it.
Don’t over-think your investment assessment: When assessing startups, especially early-stage ones, the primary focus should be on the founders and the market they’re targeting. Are the founders passionate, driven, and have a clear vision? Is the market they’re addressing substantial enough to ensure growth and scalability? Has the product gotten market validation? At APEX, we’ve seen that if these elements align, other facets like the business model are more likely to succeed.
Don’t over allocate to a specific sector: As an investor, it’s tempting to heavily invest in a select few businesses that resonate personally, neglecting a portfolio view. But history and experience suggest diversification is a much safer route. Picking winners is extremely hard and even the best investors in the world are more often wrong than they are right. So focus on a portfolio of investments rather than investing in a handful of deals in the same sector.
In short, sports tech offers a unique opportunity for European athletes thinking about their impact outside of the field/pitch/court – something their US counterparts have realised for some time already, so there are plenty of inspirational stories and learnings to tap into. With informed strategies, smart collaborations, and a willingness to learn from others, I think they can both find the process incredibly rewarding and make a real impact on the sports innovation landscape of tomorrow.
Investment diversification is a risk management strategy that involves spreading investments across various assets to reduce exposure to any single asset or risk.
Early-stage startups are newly established companies that are in the initial phases of development and often seek funding to grow and scale their operations.
Market validation is the process of testing a product or service in the market to confirm that there is demand and that it meets consumer needs.
Insider knowledge refers to information that individuals have about a specific industry or market that is not widely known, often gained through personal experience.
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