Time flies.
The first full year for Profluence is now in the books.
Sports tech had an eventful year.
And both, using a baseball analogy, are still in the early innings of growth.
Let’s Dive In 👇
Fundraising
While the last month has exploded with deals (hopefully a sign of what’s to come in 2024), most of 2023 was pretty slow on the startup side.
Profitability and sustainability are again favored as the macro hype cycle shifted from web3 to AI.
M&A continues to stay hot — outgaining most other industries.
A few noteworthy stats:
- $31B in announced deal value in 2023, sports tech continues to outperform the broader markets in terms of deal activities and consolidation. The WWE and UFC merger was the largest in sports history at $21.4B.
- Qatar Investment Authority acquired a 5% stake in Monumental Sports & Entertainment for $200M at a $4.05B valuation (the first wealth fund to own a major four US sports team).
- 2023 was the lowest year for sports tech investment since 2015, according to Drake Star.
- Over $7B announced in new funds — but far less than that was actually raised and ready to be deployed to sports startups.
Crowdfunding showed some promise this past year with teams (Oakland Roots) and companies (BlueWire) successfully raising from retail investors/fans.
Ownership of pro sports teams, often through PE firms, has continued to rise in popularity (especially around European soccer clubs).
Athlete Investing
A major trend in 2023 was the evolution of how athlete investing is taking place.
Angels ➔ Institutional Funds ➔ Syndicates ➔ LP backed athlete funds
The benefits of athlete investors? Their influence, reach, network, business development, and marketing ability.
Saying you want athletes as investors is too broad anymore — you have to narrow your focus on what that means.
The right model should be viewed from the lens of a founder…
What are your goals for the raise? What strategic investors do you want? Are you prioritizing hands-on investors or the power of an athlete collective?
Creator Economy
We’re seeing a rise in B2B content creators.
For example, athletes are no longer just targeting fans on their TikTok or Instagram, but also founders/investors by showing their passion for other industries on LinkedIn and X.
Large droves of creator-founded brands and media companies continue to hit the market (e.g. Logan Paul’s PRIME).
120 pro athletes now have their own production companies, according to Forbes.
Some of the main questions continue to be…
- How many tools do creators really need?
- Are all the marketplaces, software integrations, and technology needed?
- Are the social platforms (rented audiences) sustainable over time?
Another big development was the introduction of creator programs by pro sports leagues/teams in an effort to garner the attention of GenZ.
College Sports / NIL
Something I learned about the audience here at Profluence is that there’s a die-hard fanbase wanting more content on this topic (and there are many people with absolutely no interest in it at all).
Nonetheless…
We’re starting to see early indications that college sports are headed toward a superconference structure (especially in football and basketball).
The current “free agency model” is not sustainable.
Donor-backed money won’t last forever, so schools/collectives are beginning to search for alternative methods to monetize.
House of Victory (USC’s NIL collective) just signed an interesting deal with Athletiverse — I expect to see more collectives partner with them for social content.
Globalization
We’re starting to see sports money circulate across the globe in record numbers:
- The Middle East continues to lead the charge with Saudi Arabia, Qatar, and UAE spending billions.
- Asia is slowly starting to pick up where they left off nearly a decade ago.
- Money from Indian Premier League (IPL) owners is starting to look to the Middle East and North America.
- Africa is starting to come up in conversations more and more.
It feels as if North America won’t be the only one leading the charge in sports going forward – Sports 3.0.
Sports representation and marketing agencies continue to consolidate as acquisitions span globally (and are happening at record rates). CAA’s $7B acquisition portrays this.
Emerging Leagues
As traditional leagues go through transformation, the market has shown an interest in more alternative sports.
Tied in heavily with the athlete marketing opportunity…pickleball, for example, had over 40 publicly announced athlete investors.
But major questions remain…
- How do you raise the profile of the athletes competing in these emerging leagues?
- How many pickleball, padel, cycling, volleyball, softball, etc athletes can you name?
- What is the path to athlete stardom?
- How long does it take for leagues to be successful? How much capital?
Professional leagues are starting to look downstream as well…
The NFL’s flag football initiatives are the perfect indicator.
Women’s Sports
Another year of record growth portrayed by:
- Media coverage increased from 4% to 15%, Wasserman
- Market to exceed $1B in 2024, Deloitte
- 50% of the 50 most marketable athletes, SPM
The dialogue surrounding women’s sports continues to change.
We also saw some of the first women’s-sports-focused funds launched (e.g. Mercury 13 and the Monarch Collective).
Technology
An influx of talented founders continues to enter the industry.
Every new vertical releases experienced consultants to the market — who gradually fall back to jobs (very evident in NIL and web3).
Artificial intelligence resurged with the potential to re-imagine how video, data, and operations look in sports.
It seems as if archaic solutions (and ways of thinking) are slowly starting to be broken down…as innovation is becoming a need, not a want.
Sports teams/leagues are continuing to lean more into technology — as new revenue streams are needed to keep pace with record valuations.
Youth Sports
Downstream movement is in the early innings of growth as seen by the latest deals.
Maybe the biggest opportunity in all sports (also the hardest) is capturing youth athletes in countries outside of the United States and Europe.
Whether that’s tech products, AI scouting, grassroots academies, or something in between the market is showing the demand.
This begs the question…how do we balance the beauty of youth sports with the commercialization opportunity?
Profluence in 2023
Our first full year of operation has proved to be a fruitful one.
- Brought on several talented members to the team.
- Received two acquisition offers from notable sports media brands.
- Successfully got Profluence Capital off the ground — the first media-propelled investment flywheel in sports.
- Made 3 tech investments, 1 league investment, and are in the process of buying our first pro sports team.
- Lots of other good deals in the pipeline as we continue to raise money to capitalize on the amazing opportunities across sports.
Next article, I will touch on Profluence’s plans for 2024 and highlight the main themes for sports tech in the new year.
Ten Most Popular Profluence Briefings of 2023: 💭
- India Will Be The Next Sporting Capital: Here’s Why
- Venture Studios Find Their Way to Sports: Here’s What That Means
- Building a Unicorn In Sports: The 3 Common Themes
- Why Emerging Sports Leagues Stand a Chance
- The State of Athlete Investing
- The Big 4: AI Sports Cameras (and the race to market domination)
- The Inevitable Rise of Women’s Sports
- Private Equity & Its Impact On Youth Sports
- Athletes in Venture (And Why So Few Are Females)
- Rapid Transformation of Sports Agencies (And Where It’s Headed)
