Sports tech is a rapidly growing industry, but not many sports startups are taking full advantage of the sports sector’s growth opportunities and investments. Here are five tips that could be used by founders of any industry looking for funding.
February 6, 2020. $12.6 billion were already spent in funding sports technology startups between 2014-19. With the 2020 Tokyo Olympics just around the corner, the sports industry is rapidly transforming itself with new technology and investments. Currently, the top sports technologies for investment are platforms for media and content, e-sports as well as measurement platforms for data, analytics and biometrics.
Many experts, including Inga Stasiulionytė, an Olympian and a coach of the Olympian mindset at Ofounders, believe that the growth of sports tech is inevitable.
“For many years sports has touched the depths of our hearts, crossed borders and rose above all politics. Sports means the world for many. For example, Christian Seifert, CEO of DFL GmbH says that when Germany won a World Cup in 1954, it gave a nation so much more than a trophy – it gave its pride back, and that’s why soccer in sacred in Germany and much bigger than NFL in the US,” explained Stasiulionytė. “And now this industry, with all its emotional power, is prepared to grow in all directions thanks to the new technology.”
New technology also means a rapidly growing flood of investments into the industry. Sports has become the only place where viewership is skyrocketing and fans’ live engagement is soaring – which makes it an extremely attractive industry to participate in.
The biggest problems arise when sports startups – like any startups – are not prepared to get the funding they deserve. They might not be prepared for a meeting with investors or investors are feeling spammed. “Startups don’t do their homework on investors’ focus and expertise before pitching. Often founders are not specific about what they need and why they are looking to raise money from a particular investor,” says Joey Brander, President and Managing Partner at First Serve Partners.
Investors shared advice on how to approach them to obtain financing for the sports startup.
1. KNOWING THE SPORTS INDUSTRY INSIGHTS. Many startups dream to secure their sports industry entry being sponsored by big sports teams, but they just don’t know how the industry works. “If you want to work with Manchester United F.C., you have to pay upfront for their name usage. Also, the life cycle of the contracts is 3-4 years, so you have to be aware of timing and available possibilities,” explained Michael Broughton, Senior Advisor of Business Technology, Innovation & Investment Strategy at FIFA. The industry is highly fragmented, all sports have to be treated differently and even the same sports are called and run differently in different countries. The sports business environment has major peculiarities that startups have to know when they organize their business models.
2. PRESENTING “PROOF OF CONCEPT” NUMBERS. Startups have to have their customer feedback before approaching investors, but founders often overfocus on raising money without building a product or at least a prototype. Investors stress that the products don’t have to be perfect but they have to solve consumer problems and bring measurable value. “Market sizing and monetization assessing the revenue potential of sports tech start-ups can be challenging for investors as companies are struggling to determine which stakeholder they are actually targeting with their product (team, clubs, media, sponsors, the fan),” according to Deloitte report.
3. SCALING STRATEGY OUTSIDE SPORTS MARKETS. The sports industry is an amazing springboard for new companies to be launched. It provides countless benefits, such as opportunities for brand exposure, recognition, image, signups, loyalty, engagement, and reputation building. However, the sports market has its clear limits, therefore, investors are asking that startup business models already show the stages of how they will be transitioning to other markets to capture the scale.
4. WORKING ON YOUR MENTAL TOUGHNESS SKILLS. More than caring about specific ideas or business plans – which can always be improved – investors care to know if founders have mental skills and support to handle a demanding startup life. Such abilities as plan execution, pressure handling, strategic problem-solving, good listening, advice-seeking, and skillfully leading a team are highly valued. Often investors see the potential for the presented idea, but founders’ inflexibility due to the “inventors syndrome” – that results in product obsession – prevents an opportunity to receive financial support. “Founders are the same as Olympians who are competing in the field of innovation. Due to the fast-paced startup life and overwhelming task-load, founders need dedicated attention and support if they are to achieve their potential in the startup world. We all are capable of lifting bigger weights or achieving higher goals, but we need to train to be able to handle new challenges. Mental toughness is achieved through strategic training,” says Inga Stasiulionyte, an Olympian and founders’ coach.
5. BEING CONNECTED IN THE SPORTS INDUSTRY. Nowhere else as in sports the network of industry connections is needed to succeed in it. The sports industry is a fragmented one, a “boys club” with many roadblocks for those who are not on the inside. However, sports tech is an opportunity to bring this scattered community together, and to inspire future growth where inclusion becomes the new norm. How can anyone start to be connected within the sports industry? Join the Sportstartup Slack group and Sports Startups Twitter list to be a part of the sports industry community. Sign up for the Ofounders mailing list to increase your possibilities to succeed through support and knowledge sharing while new opportunities in the sports industry are being unveiled.
OFounders was founded by Inga Stasiulionytė – a former Olympian and executive mind coach. Whilst developing as a professional athlete, she competed at the 2008 Summer Olympic Games and simultaneously pursued a career in business. Inga has co-founded and exited two startups related to mental training and fitness. She also serves as an advisor to a number of startups. Her other business interests include consulting several startups on performance-focused technologies and innovations, as well as sports business development. Ofounders led by Inga specializes in mind coaching that helps startup founders, teams, and professional athletes achieve superior results by using Olympic-standard mindset development techniques. For more information, visit www.ofounders.com