10 years ago, athletes were labeled as “dumb jocks” who made poor business decisions.
Today, athletes are becoming some of the world’s most successful entrepreneurs and investors.
10 years ago, sports were seen as good entertainment, but not a great investment.
Today, the true value of sports is being recognized and many are flocking to put money into its growth.
And interestingly…
We’re starting to see this take place in sports through crowdfunding.
Let’s Dive In 👇
Sports Crowdfunding
So what is crowdfunding?
“Raising money by getting small amounts of capital from a large number of people”.
The 4 Types of Crowdfunding
1. Rewards Crowdfunding
In the early days of crowdfunding, the only legal incentive for attracting money was to offer some form of reward.
For example, an athlete releasing a book might have reward tiers such as:
- $10 donors receive a signed sticker
- $50 donors receive a signed book
- $100 donors receive previous tiers, plus an exclusive T-shirt
Meanwhile, the money raised would go towards costs such as shipping or marketing the book’s release.
2. Donation Crowdfunding
Donation crowdfunding operates exactly how it sounds…
Donors do not receive anything for their money other than the feeling of doing good in the world.
The perfect example is when Damar Hamlin’s charity raised over $8M following his injury.
3. Debt Crowdfunding
Debt crowdfunding is when companies sign a legally binding agreement with investors to pay back investments with interest.
And interestingly…
The concept of businesses accepting crowdfunding is still relatively new.
4. Equity Crowdfunding
In 2012, the JOBS Act was approved — allowing non-accredited or retail investors to invest in pre-IPO companies (therefore earning equity).
Prior to this legislation, only venture capital firms, hedge funds, and certified angel investors were legally allowed to invest in private startups.
And we’ve recently seen crowdfunding pick up steam in sports.
Aaron Rodgers Company Crowdfund
A few years ago, Jets QB Aaron Rodgers and co-founder Ryan Rottman launched Online Sports Database (OSDB).
The platform provides information about players — including their position, height, weight, jersey number, and college.
And a few weeks ago they announced an interesting initiative…
With current funding of $4 million, Rodgers and Rottman are turning to a “crowdsourcing campaign” in the hopes of raising an additional $1.25 million.
“I like the idea of giving fans the opportunity to invest and get behind something they feel connected to, like OSDB,” Aaron Rodgers said in a statement.
Two things are either happening:
- Rodgers and Rotman believe fans being involved financially will create more engagement and excitement for the product
- OSDB is struggling to raise institutional money and is trying to close out the round with “dumb money” a.k.a. retail investors
Whatever the truth — OSDB has only raised ~$50,000 from fans so far.
Jamaica Crowdfunding World Cup
Funding for Jamaica’s preparations for the Women’s World Cup has seemed so uncertain that a player’s mom took it upon herself to fundraise for the team.
Two GoFundMe pages were set up:
- “Reggae Girlz Rise Up” was set up by the mother of midfielder Havana Solaun
- “Reggae Girlz Foundation” was set up by fans
Both sites aim to help Jamaica’s women with the costs associated with the World Cup, including training camp, travel, food, and staff support.
The pages have raised about ~$50,000 each.
Athlete Investing
We’ve seen the ability to bet on an athlete’s career take shape thanks to web3 technology.
I touched on this extensively in a past article “Investing in Athletes” (along with the companies trying to make it a reality like Fantium).
The gist of this is …
Athletes can offer up a % of their future earnings to fans — who crowdfund the athlete’s current playing expenses.
NIL is Crowdfunding
When you think about it, NIL through college collectives is crowdfunding as well.
College athletes get paid through fan/booster campaigns:
- either small reward-based subscription services from fans
- or large donations from wealthy boosters
And it’s somewhat ironic that…
Despite how much money these athletes, teams, leagues, and federations make — many of them still turn to ordinary fans for donations/crowdfunding.
Future of Sports Crowdfunding
Donations and rewards have been around for a very long time…
But the emergence of debt and equity crowdfunding is only a decade old.
As the worlds of sports and business get closer each day, I expect to see:
- More athletes launching campaigns to get fans involved with financial upside
- More sports-based companies (or those with savvy athlete investors) to have crowdfunding allocations for fans, creators, and loyal customers
- More low-budget teams opening up crowdfunding through the use of storytelling
With millions of eyeballs on teams, athletes, and companies through social media — crowdfunding can be a very viable option when done right.
Fans are already familiar with sports betting, what’s the difference between putting $100 into an athlete’s career or a new sports startup?
