Decoding the Market Size Dynamic in Sports
Is sports big enough? What have successful B2B or D2C companies done? Where's it headed?
Everyone wants in.
After spending a week in Miami at Art Basel — that is my conclusion surrounding sports.
The long outstanding question is:
“Are the addressable markets in sports large enough to generate meaningful returns”.
I believe so (but there’s still a lot of nuance to understand first). Let’s Dive In 👇
Today’s Newsletter is Powered by Airscreen.
Say goodbye to the frustration of being stuck at your computer during crucial games!
With Airscreen, turn your desktop into a full-screen video that’s visible behind your open applications.
Watch playoffs, championships, and epic showdowns while conquering your email or other tasks — forget the hassle of resizing or ALT+tabbing between windows.
And guess what?
Airscreen isn’t just about sports; it’s a game-changer for entertainment, relaxation, or staying updated with news.
The Push to Sports
An influx of founders are at the gates of teams, leagues, VCs, organizations, and university athletic departments wanting to be let in.
For a considerable time, sports existed within a confined space — and the tech remained archaic.
But now, tech founders have the opportunity to get in the game thanks to the merging of:
These dynamics make sports the ultimate litmus test for founders.
Entrance into the space is validation that their company promises transformation to sports, media, performance, fan engagement, and beyond.
However, communicating that value proposition requires identifying broader appeal beyond athletics.
Understanding Market Sizes
One of the first things investors look at when evaluating an opportunity is…
“How big is the market?”
While I’m only part of the investment decisions we make at Profluence Capital, I’ve come to learn exactly what our “Ivy League, Goldman Sachs, 30-year IB and PE finance professionals” look at.
The first slide they jump to is the market sizing. If you’re a founder, don’t overlook how important your calculations are for this.
Business models are in flux — at the early stages is the market big enough for it to matter?
Let’s take it a step further…
Lessons for Building in Sports
Success within sports has followed a similar playbook over the years (you either start in sports or at some point try to capture that market).
Minute.ly sold exclusively to sports properties for several years before extending their services to other media outlets.
Dust Identity, which just raised $40m, started authenticating memorabilia in other industries before entering sports.
Let’s look at some other examples:
Pedialyte started promoting their drinks to help with hangovers and eventually found its way into sports locker rooms — this helped them market to consumers and dispelled the notion it was unaffordable.
Athletic trainers once used kitchen tongs for deep muscle manipulation — now we have Theragun and HyperIce.
Athletes embraced cryotherapy for individual recovery before its introduction to professional locker rooms, companies, and eventually the wider public.
Load management tracking by soccer teams has been a longstanding application of the wearables industry, sparking a revolution that led tech companies such as Whoop, Garmin, and Fitbit to create devices enabling fitness enthusiasts to monitor workouts.
Sports provide a training ground for companies — but their larger marketing strategy has to extend further.
So where do you go next?
Essentially, all companies born within the sports industry begin as B2B.
Founders are selling their products, services, and technologies to teams, leagues, and rights holders — which are businesses.
I talked about this in deeper detail in “Building a Unicorn in Sports”.
Two ways to go:
remain a B2B company that grows beyond sports
Making the sports industry an "endorser" of technology to stimulate widespread adoption is a sound strategy (albeit rarely the lone route chosen).
This week’s guests included:
Kyle Plaffenbach - Advisor to Brooks Running and LumosTech (listen here)
Kyle is a high-end performance nutritionist, who helps athletes and founders optimize their performance (and sleep).
Mike Sutcliff - Co-Founder Mobeus (listen here)
After a 30-year career at Accenture where he led digital efforts, Mike has taken his talents as a co-founder in the sports & media industry.
💵 Business of Athletes
Matt Rhule says a good college QB costs $1-2M in the transfer portal.
Nick Kygrios joined OnlyFans to share tennis content.
NCAA President proposed a new tier for paying college athletes.
Shaun White is part of the We Are Camp $10m acquisition.
Kyrie Irving invested in the shoe marketplace, KICKS CREW.
🏟 Sports Business
Castore received a $180M investment to expand its performance brand.
NOVA PrimeFund invested in NeuroTrainer.
DAZN is reportedly looking to raise $1B.
AI platform nVenue received an investment from the NBA.
Fenway Sports Group was chosen to lead the PGA Tour investment.
Ackerley Brothers formed a group to buy sports teams.
African-based Sportable closed first round of $15M Series A.
Arctos Partners bought a stake in PSG.
$3M seed round closed by FTN Network.
Belgium startup Raw Stadia raised €1.5 million.
QUT received $2.27M to train sports data scientists.
Thanks for reading today!
Feel free to share this briefing with others who may find it interesting or insightful.