In this episode of Fundraising Radio Steve Gera, Partner at Hickory VC explains what's going on in the sport-focused startup world right now and what he sees coming. This episode is for anyone in the sports field who thinks/currently works on creation their own startup.
Steve Gera's LinkedIn: https://www.linkedin.com/in/stevegera/
For those who want to see ideas turning into fundable companies - Student Startup Battle: https://www.eventbrite.com/e/student-startup-battle-tickets-105973058270?aff=ebdssbonlinesearch
This is fun reason where you and today's a guest speaker, we have Steve partner at, and this episode will mainly talk about what's going on in the sports field.
And specifically, what do the startups focused on the sports fields are doing right now during the current of hours and what can people expect from this fields sometime soon? So, Steve, unless he come by, you giving us some value on yourself and on.
Yeah, thank you very much constantly for having me on first and foremost. Yeah, so so I am I am a partner at I can tell you a little bit more about that and I'm here in just a second, but I'm also the chief executive of gains group.
And so what we do is we,
a couple of years ago,
when we looked at the entire sports space,
my background is,
I'm a former Marine Corp team commander,
joined a couple of days after nine eleven did a couple of deployments to a rack came back in two thousand,
six ended up getting my MBA and then found my way on the coaching staff for the San Diego chargers and the National Football League and I was extensively a data guy.
So I was a Moneyball guy first.
And so my role and responsibility was to help the club figure out ways to to maximize the way that it was signing players at the time and using data and then thinking about how we transition.
Some of the knowledge from analytics to on field decision making. I was with the team for about seven years, and part of my role agreement with the club eventually became.
and we were making investments in the sports media technology space and but one of the things that we really wanted to provide was real strategic value for early stage startups and gains group,
the chief executive at gains group was essentially the vehicle to do that so we had a fund and then we had a companion consultancy on top of the fund,
that essentially would work with the different portfolio companies do everything from helping them hire people bridging them from their seed to their around,
helping them grow helping them get product market fit, helping them with introductions to professional sports teams,
or just giving them some inside knowledge on the entire sports ecosystem.
And so we need to put capital into about eight different companies over a two year time, period, over the last, three years.
I've really concentrated more of my work on on games group with my partner, Dave Anderson there. And so, what we've been doing is we've been essentially building.
Build new value and new products around the human performance space. So that's how we spend a lot of our time and we're really, really focused in on sports. We're really, really focused in on human performance.
We do fan engagement and we do a lot of different things around the fan experience from ticketing to digital properties,
such as otitis or,
different types of fan and fan facing digital properties.
So so we work on. We work on a very wide field, but in a very niche industry.
Absolutely, yeah, so a big part is is is taking in all the deal flow from as many different startups and as many different you know, we, we work with a lot of different investors.
We work with a lot of different clubs, and we are a place where we're essentially clearing house for startups who started can come to us purchase their idea.
Tell us what their their product does tell us what their situation is and what we're really great at doing is finding the right sports property for them to go partner with.
Because not all sports properties are created equal and not perfect for a specific product. Some some startups that come to, this might be might be really great for MC Barcelona. Some might be better for the Dodgers.
You know, everybody always wants to work with the Golden State Warriors or the, or the Dallas Cowboys.
But but sometimes your product is not actually a good fit for those specific environments,
you may be better off doing something with with a lower level sports team,
or with a different sports team that has a little bit more of a vested interest in working with great.
Okay, yeah, I got it now. That's really interesting. And the question is, how do you find those deals to how do you source them actually where do you bring them in usually to reach out to them? Or do they usually come to you.
It's, it's a little bit of both, so it's, it's definitely a lot of push and pull and so we're constantly looking at, you know, all the, all the trade magazines and, and we've got a lot of different sources in Silicon Valley.
We've got a lot of different sources, you know, in Boston, a lot of sport really great sport. Technology, though, is, is always looking for a home.
And so we do find a lot of the companies by talking to some of our friends,
their VC friends,
and some of the other firms who are kind of looking at looking at partners,
but looking for companies who are then bringing them to us and asking us so we have a number of top forty top top tier VC firms who come to us when they get a pitch around either human performance,
or around elite sports,
and they'll ask us essentially to validate it. It will just ask us.
does this actually sell inside of the professional sports realm or will this do you really believe that this is really great human performance product that either elite athletes or youth athletes will end up using so we do a lot of that vetting and because we,
because we do that for,
for a lot of top tier VC we've got some unique relationships that kind of funnel us deal flow on a regular basis.
And then we're also constantly does mining mining the field ourselves and really trying to look at different.
Different universities, different, kinda sports hotspots and looking for folks who are, who are trying to build unique things in, and around the sport space. That's super interesting.
By the way, if I run into someone building something in that field, I'll definitely let, you know, now it was jumps straight to the major topic of today's episode to what's going on with that field during the current virus.
So, visually sports are really uncertain. I think they started doing again, right?
Yeah, so sport sports really hit like a huge shutdown. Right? So, they're on March eleven, the MBA stopped playing and then followed suit. Majorly. Baseball was getting ready to launch their season.
They stopped European football, soccer, European soccer, stop, playing, you know, and and so there was there was, you know, about a three to four month, just like complete shutdown where people are trying to figure out what was gonna happen.
And and then you started to see some of the European soccer league started to come back online and started to play with fabulous venues.
And with a lot of protocols around the team here in the United States, the MBA just started up with with the bubble.
And they have a bubble down there where all the players are basically seconded on a daily basis from outside activities and outsiders trying to keep the current of virus at bay from penetrating the bubble.
Is just finishing their tournament in the bubble and now they're looking to restart their season in home
And then you have major league baseball here, who they have, they, they've, they've started playing in their home markets in their home stadiums again, and are traveling in the teams are doing a really great job of actually, like, when they are traveling.
So like a major league baseball club, they're doing a really good job of of traveling and kind of keeping everything in its own little travel bubble if you will.
So so, what's happening right now is there are a whole lot of new problems and have essentially been identified for teams.
And then also for broadcasters and everyone else who was in the, in the pro sports, kinda value chain because now with families with fabulous crowds.
Our family stadiums now, you're seeing things like an MBA where you now have a technology integration where you have these, these big D boards CT side, and you can as a fan of the Los Angeles Lakers, or as a fan of the Sacramento Kings.
You can actually put your face. I'm sorry the Philadelphia seventy Sixers you can put your face into your avid avatar in some in some respects in crowd. Right?
So you have these virtual crowds that are being created a number different startups kinda, really headlong into that space. There's a number different start ups who are trying to solve problems around audio. I don't.
Have you been watching any of the sports consultation over the last couple of weeks? Absolutely not. It's never in my life thing. Okay.
But if you, if you, if you go, so now, if you go and you watch a game right now, they are a lot of the broadcasters are actually pumping in artificial crowd noise, because there is no crowds. So there's no crowd making crowd.
No crowd noise is a big part of the game TV experience at home. You know, if you, if you have something happened, that's exciting. In the middle of the game. The crowd that's watching it.
Their live reacts and you hear that, and that's part of the excitement as a TV viewer back in your house.
And and that's not happening right now. So now you have some startups and you have some older companies that have now built, basically technology integrations to try and enhance audio for fabulous television broadcasts.
So there's a litany of issues around, like, how you train athletes right now, and how you train athletes is, you know, a lot of times.
And unless you, you're, you're sure that nobody has covet in on a field. And at specific time, you're trying to keep them separated from one another, which means that coaches have to be a little bit more personalized and how they train their athletes.
And a lot of them are using different pieces of technology to do that. You have a lot of distance learning right now for for NFL, international football.
They're getting ready to get ready to start playing are getting ready to get their training camps going here and hopefully play in the next two months.
And they're still doing a lot of zoom calls in on the zoom calls, you're trying to teach players plays and
you're trying to get them to work out and you're trying to do all that digitally. And so what that is creating is there's a real environment, right?
Now, for people who are not in sports to create different.
Products and services for professional sports teams, or for use athletics that allows them to get hopefully the same level of training or if you're a fan, the same local experience as you're used to, in in the Pre code era.
Yeah, imagine how tough it is for those people for those scores and then, you know, to do everything via zoom I can't even imagine two guys but let's talk about how tough life is for start founders in this field.
So, what do you see going on in terms of, you know, as you mentioned you know, a lot of people are working, specifically on creating special, sound trout that will substitute the real crowd, et cetera, et cetera. So, where do you see this field going?
Do you think it's going to come back to the normal in in six months once the current embarrasses over or do you think those startups actually have a chance so the only been gone for ten plus years?
it's a big it's a big question, Ryan,
the only frame of reference we really truly have is over some almost a century ago, you know,
what happened in the post nineteen eighteen Spanish flu pandemic is there was a lot of innovation actually,
in sports and there were a lot of new leagues,
and there were a lot of new clubs that were actually founded right after World War one.
And, and when the Spanish flu started to subside, the big question is, is that when when is when will the crone a virus, you know, knowing full?
Well, that's probably never going to go away, but when will we have it underneath.
We only have a control enough to where fans will start to feel comfortable to go back in mass to sporting venues. Alright. And this, this applies to concerts.
This applies to any sort of entertainment industry, and the projections look like, you know, that could be upwards of, you know, a year to eighteen months from now I think six months is in some states.
And in some areas, you know, you're looking at probably in six months, trying to get to twenty five or thirty percent capacity in some of these stadiums.
So, with that comes, you know, I think an opportunity, if the roadmap for getting fans fully back in the stadiums is, is, you know, a hundred percent capacity is still about a year to eighteen months away.
There really is an opportunity for people who are building digital products that enhance fans, appreciation and fandom in the middle of a game.
It is a true opportunity and what we're going to end up seeing and we're already seeing this inside of sports.
And I think you're seeing this broadly and across all industry is nineteen is not acting as as much of a it's definitely disruptive, but it's really in accelerate. So you have all these.
All that is now gonna speed up and so these companies that are answering some of the issues that are kind of arising to, to covet. I do think that they're gonna have lasting power for the next decade to two decades.
Because, frankly, you know, we were just kind of moving in that direction to begin with and it's really accelerating. Right right. Yeah. That's actually a valid, very valid argument before you started speaking.
I was pretty sure that,
in my mind,
it's kind of useless to develop those things because, you know,
and once the current viruses over once,
as you said,
it's under control those new tools will become obsolete,
but you might be right so great.
Great point. Sure, and let's talk about fundraising now, back to the very, very most popular topic of today's podcast. What's going on in terms of fundraising for those companies.
So, do you see investors in those fields becoming active again? Or are they still waiting to see what's gonna happen? Once the cronies under control so it's a little bit of both right now. It's a little bit of both to be honest.
So, you know, I think when you look at the, the way that we reference it with our partners is that, you know, the, the vintage of, you know, when you think of.
Startups in any specific year, or any specific two year, period, you can almost like, label them as vintages. Right?
I think back to the two thousand, eight, two thousand nine timeframe, and all the companies coming out of Silicon Valley, that that did really, really well, Facebook, et cetera, et cetera, everyone who just kind of blew up and kind of, et cetera. That was a great vintage, right?
And I think that the way that we viewed in sports, we think that the next two years is gonna be a really great vintage for sports startups specifically.
And the reason being is because the problem sets are so dynamic. Right now you need dynamic founders and dynamic teams to go solve those.
And so it's going to essentially you're gonna have to bring your a game is going to end up, I think, eliciting a lot of really great solutions that some will pivot in.
But as they pivot over time, and they were going to end up seeing a lot of really great companies, kind of come out of the next two year period.
Now, with that said, when it comes to investors, how they're actually investing right now, those who kind of view in that light are unafraid, and are still making deals and are still closing deals. I know a number of different.
Venture firms out there, who have we're still closing deals. One of our partners will Ventures is still closing deals. We have other partners such as lead in park who are who we're still actively looking and building out new value in the space.
Now, there are some in sports who were kinda sitting back and waiting and taking a more of a wait and see approach.
So so the,
the hard part right now is that if your startup is going to find,
you gotta be very,
very patient and very disciplined as you do this and it is kind of finding the right partners right?
Capital Partners in this moment. And for for a lot of different startups in this space, it might actually, depending on how early are two great time to take.
You know, do do do angel rounds and family friends around right and if you can, if you can, if you can get some traction and hold on for the next year.
you'll be in a much better position from a evaluation standpoint to when you,
when you raise either a second series seat,
or you raise a series A,
because what's happening right now is a lot of the valuations on support startups have actually kind of pulled back quite a bit,
but as they pull back,
that's now actually cause some a lot of different to actually kind of come into the space.
So, but there are still some who are who are relatively who are pretty nervous. And so it really is a mixed bag. And it's a really tough time to be raising. I don't think there's any doubt about that.
It's a really tough time to be raising your startup in the sports space. You gotta find the right investors who are still putting money and are still being thoughtful. You gotta go out and find them and but they are out there, right? Yeah, absolutely.
And what's your advice? So last two questions, one of them is was for advice in terms of find those investors that you said are out there, having money and being pretty thoughtful about their investments.
How with founder identify that investor is actually investing money or even, you know, at least ready to deploy money or are they just seeing? They're in waiting.
To instead of, you know, to basically be very disciplined in your cash flows, be very disciplined in a way that you are spending money and growing your company build, you know, either a mini, whatever your product this alright.
Try and get it piloted or in front of team and, or and do that either through an accelerator support specific accelerator or through one of these sports innovation Labs or sports innovation hubs.
And how you do that is, is you just gotta go find them and anyone listening here can certainly contact me. And I'm happy to discuss it with them. And, and.
Demonstrate the power of your product. Alright. And then use that success as a way to then kind of start building up your, your ability to go, then, go. Do do you raise?
It's honestly, it's just kind of like a strange moment where there's so much variance in the way people are looking at either seed rounds a round, or B round that that you really into sports. Basically.
And I'm speaking mainly the support space, is that there's no, there's no one size fits all answer. It's a lot of experimentation.
A lot of conversations, and it's a lot of just putting your head down doing a little bit of work for free, probably trying to trade your product for either data trade your product for getting some publicity or something like that around it.
And then using that as, as a way to then solidify and get some stability around your race.
Absolutely, yeah, that's that's definitely good advice. And for sure, I'll leave your LinkedIn and the description of the episode. So people, if you want to get in touch with Steve definitely check out the description of this episode.
And here we're moving onto the last question after day's episodes. It's a call to action. So, what's that one thing that you would like the listener to do? As soon as the episode is over?
Because I am hopefully none of your other guests have recommended this. So, this is what I'm going for this one.
What I would do is, I would go back and I would look at all the business activity that happened post World War, one, Spanish flu, go look at all the new businesses that were founded new industries that were launched.
How they were launched kind of.
There's some of the different ways that what were the effects of the Spanish flu and World War one on the next two to three decades of global,
cause the nineteen twenties and nineteen thirties. Like,
seeing the human form was still so raw because of,
because of the Spanish flu,
because so many people were dying and potentially upwards of fifty million people died of the Spanish flu and and humanity just kinda needed to move on to a certain degree.
And and need a new way to express itself, whether or not. That's true. I mean, I think you can kinda we can debate that and we can have a nice philosophical discussion.
But the point is, this is that if you go back and you look at the timeframe post Spanish flu, you will learn something about the way that the world reacted about the way humans reacted.
And that will be useful in the way that you are in, in helping guide, either the products that you're thinking about building the life, you're thinking about building and in guide hopefully, the next, you know, two decades of your life.
Right that's actually good advice. And now them starting to think about it, America is kind of remind me that Germany off post World War one. We have inflation coming up and we have a weird racist rule in our country.
So I hope, I hope the outcome is going to be better, but we'll wrap it up here. My personal call to action would be go to the description of this episode check out the links that I'm gonna leave there.
One delete is gonna make saves LinkedIn and learn history. It's a great vice history. Definitely does help Brule your sell through future. So do that and.
Have a good day.