Sports & Media VC’s Priorities for 2022
After sharing our own perspectives and those of our member companies, our final trends for 2022 piece sees our network in the venture capital ecosystem discuss what they’re looking for from the year ahead.
Our thanks to:
Jasmine Robinison, Partner, Causeway Media Partners
Lance Dietz, Partner, KB Partners
Konrad von Moltke, Investor, WISE Ventures
Cordero Barkley, Partner, Titletown Tech
Chad Stender, Partner, SeventySix Capital
Brandon Janosky, Managing Partner, Stadia Ventures
Antonio Cacorino, CEO, APEX Capital
What were your biggest learnings / takeaways from 2021?
Lance, KB Partners: We realised pretty quickly that we were going to have to spend a good amount of 2021 thinking more about the growing intersection of Web3 x Sports, and how to approach that space as an early-stage fund. The market was on fire with Dapper Labs & NBA TopShot, Sorare, Candy Digital, DraftKings x Autograph, Blackhawks etc., but if we are going to be investing, then we need to really understand it. The sports ecosystem seems to be a fantastic proving ground for the web3 value chain, but a big takeaway from 2021 was that with all the different ideas and approaches, we are still at the very earliest stages.
Cordero, Titletown Tech: The biggest takeaway from 2021 was how much capital was coming into the early stage space and that is only going to continue as the world adjusts to “the new normal”. 2021 really showed how start-ups are going to spearhead much of the innovation to solve problems at the pace that is going to be required.
Brandon, Stadia Ventures: We learnt that we can make investments without ever meeting an entrepreneur in person. We have always believed that face to face interactions are one of the most important elements of the relationship with CEOs, and it's still true, but we broke through the Zoom fatigue and managed to build trust and rapport with mentors, investors, and founders from across the globe in a virtual setting.
Jasmine, Causeway Media Partners: 2021 presented a lot of macro challenges for startups—pandemic impacts, supply chain impacts, hiring challenges, and privacy tech changes among others. I think one of the biggest learnings (and inspiring things too) was that in spite of all these challenges, if you back really good companies they can still scale revenue and build great teams. A challenging macro environment doesn’t mean that you shouldn’t still invest.
Antonio, APEX Capital: The biggest learning has been how important it is to be patient when investing in private companies. No matter how many deals come along and how quickly things are moving, it is important to keep your head and be patient for the right opportunities - whether that’s valuation, the team you are investing in etc. If things are done properly, with the right people, the results will come in due time.
How do you think the ways that fans will engage with content, their teams and their sports will further change in 2022?
Konrad, WISE Ventures: COVID has driven home the point that humans are inherently social creatures. Social commerce will take off in 2022 and technology offerings with interactive chat and other community-building functionality will continue to be a differentiator for teams, leagues and media companies. Fans will keep looking for authentic experiences and will want ways to demonstrate their differentiated and deep fandom of both players and teams.
Chad, SeventySix Capital: In 2022 we expect the proliferation of AR/VR/meta and the adapting landscape of streaming to change fan engagement and behavior quickly and for the better. Professional sports teams are going to put more energy into engaging their fans differently - that means directly and on a 1:1 basis. We expect teams to do this across everything from social interaction, ticketing, F&B, merchandising, NFTs and proactive communication.
Jasmine: Personalization and interactivity of the sports content experience will only increase looking forward. We already have the technologies to enable personalization and interactivity at scale but there’s a big opportunity to bring that together with the right user experience - but it also requires having the right platforms in place. I think the leading sports and media properties will figure that out in 2022 and create some very compelling new content experiences.
Brandon: Fans will be able to own fractional shares of moments and memorabilia without so much friction. They won't have to be savvy about crypto or wild about NFTs to be able to casually enjoy having access to unique engagements.
What should we expect from your firm this year?
Antonio: Our aim is to triple the number of athletes onboard our platform and to increase the number of investments we are making. To do that, we’ll be hiring 5 or 6 people, which is a big focus for the moment. We won’t change our focus though - we are still targeting the best VC and growth equity deals in the sports, media and entertainment space.
Lance: We will be announcing the final close of our second fund in the first half of the year, which we are really excited about. As a result, we will have substantially more capital to continue investing in and supporting founders at the Seed to early Series A stages across the sports/tech ecosystem. We’ll also be expanding our operational capabilities as well.
Brandon: The Stadia Growth Fund will be fully deployed in a matter of months, and in order to keep up with the growth of the portfolio itself, and the trajectories of the companies within it, we will launch Fund III right away. We will also be adding at least a couple of new teammates in '22.
Konrad: We are going to be active on new deals and will loyally support our existing portfolio companies as they raise follow on rounds - we did some follow on rounds before the holidays and that will continue. We will look to opportunistically bring on additional headcount. We’ve also got a number of highly strategic real estate assets across the United States, so we will also look to grow our exposure to the PropTech sector.
Chad: We think the sports investment category is a very hot space and will continue to be disruptive over the next 5+ years. We recently launched our latest fund and are 5 investments in with a few additional term sheets out, and we will continue to invest, fundraise, engage and push in ‘22.
What do you think is the most over-hyped area in the industry?
Lance: Web3 has its naysayers and some consider it ‘over-hyped’ — valuations last year for NFT-related projects were eye-popping compared to development/traction, and utility for certain use cases is still TBD. There will be significant boom and busts over time within this market, as we’ve seen with other technological innovations in the past. That being said, I think we still remain long-term bullish on the overall opportunity that exists for web3 across sports and adjacent markets.
Konrad: NFTs such as CryptoPunks that are merely valuable because they are scarce and do not have any other tangible rewards or benefits associated with them will struggle to hold their value, especially as interest rates rise.
Brandon: The NIL landscape feels supersaturated. Without lazer focus on differentiation from the many other businesses focused on this space, it will be almost impossible to compete with established brands and trusted names. Also, I think Peloton usernames that incorporate "wine" in them have run their course.
Chad: I think the focus on trying to commercialize Virtual Reality has peaked. We are focused on Augmented Reality and what is quickly blending into “meta.” We believe that VR is an incredible application for home engagement and “short bursts” but AR and the ability to engage through glasses, lenses and connected devices is the future of the in-person and at-home viewing experiences. From an investment perspective, AR has the hyper-growth potential.
Cordero: Many of the companies that sprung up during Covid were way over-hyped. They ended up trying to solve short-term issues for venues and fan engagement.
How do you expect the Seed / series A / Series B investment market to develop in 2022?
Cordero: It’s really easy for founders to get pulled into raising overly large rounds - and that temptation is going to continue to be there in 2022. I believe the founders that are disciplined enough not to price themselves out of their next raise by taking more than they need on their current raise, will be rewarded in the long run.
Jasmine: I expect private capital will continue to be abundant for early and growth stage investments in 2022. With that, I think we’ll see more dollars invested and higher relative valuations than 2021, even if the public markets pull back a bit.
Lance: With the Fed’s recent comments on interest rates spooking the public equities and crypto markets, and the uncertainty that remains with COVID (omicron), we could see some of that negatively impact valuations in the private markets. However, given the increasing appetite of larger funds (e.g. Tiger Global, Coatue, etc.) to invest earlier and earlier, there will continue to be more competition at the A/B stages, putting upward pressure on valuations.
Antonio: I think the fact that there is more and more liquidity out there, combined with the traditional institutional investors coming more often into early stage VC rounds, means the typical rounds/valuations will increase. The competition between investors will boost the valuation of early stage companies. The power will be with the entrepreneurs/ideas, and not on the money side.
Chad: We are able and willing to do pre-Seed deals. At the moment, this investment stage remains collaborative and we see it providing the best opportunity to identify and analyze the industry trends.
Konrad: Early stage investors will continue to travel earlier in the investing spectrum to capture value for their LPs. I’m expecting more and more venture capital firms to set up incubator and accelerator programs to help with differentiation in what is becoming a crowded environment.
And finally, give us your boldest sporting prediction for 2022!
Lance: Season 3 of Ted Lasso drops this summer and Ted leads AFC Richmond to a championship this time around!
Jasmine: NFL fans were somewhat underwhelmed with the rookie quarterback class this year, but I think we’ll see 2 or 3 of them emerge as top-10 QBs in the 2022 season.
Brandon: I've been saying this every year since 1999, and one of these days I'm going to be right. The Gonzaga Bulldogs will win an NCAA Championship.
Antonio: Portugal qualifies and wins the 2022 World Cup.
Konrad: New York Rangers win the Stanley Cup.
Cordero: Super Bowl Champions will be the Green Bay Packers. Written in with a Sharpie!
Chad: USA will make the semi-finals of the World Cup in Qatar…bet on it!