Rise of Sports Venture Arms (NFL's 32 Equity Making Big Moves)

What it means for companies, athletes, and even the college landscape.

With the NFL playoffs currently going on, an announcement the league recently made has slid under the radar.

$160 million in additional funding million for 32 Equity, the NFL’s venture arm.

And the first investment with the new capital — a stake in the apparel and footwear brand NOBULL.

This brings the total amount invested by NFL owners in 32 Equity upto $256 million.

Over the last few years, we’ve seen the rise of organizational venture firms in sports.

It’s going to have a major impact across sports (in many different ways).

Let’s Dive In 👇

In-House Sports Venture Funds

As I’ve mentioned before, there’s never been a better time in history to build a sports company.

The main reason for that…

Powerful sports entities creating their own venture arms (which means capital availability, resources, and most importantly…distribution).

I’ll highlight a few examples here:

Sports League Venture Arms

• 32 Equity (NFL)

• NBA Equity (NBA)

• Launchpad Program (NBAPA)

• AO Startups (Australian Open)

The NBA’s equity portfolio is approaching nearly 20 companies, with the total value of those stakes worth nearly $1 billion.

While the NBA has been investing in companies for about a decade, roughly half of those deals have come over the last year.

Team Ventures

And even within the leagues, teams have their own innovation labs.

• Minnesota Twins (MLB)

• Sixers Innovation Lab (NBA)

The premise behind these initiatives usually revolves around the saying “we are more than just a sports team”.

But it doesn’t stop there…

Corporate Venture Funds

Some of sports most powerful corporate entities are shaping up their own venture arms.

• Drive by DraftKings

• DSG Ventures (Dick’s Sporting Goods)

These companies have put in decades of work to get to where they are today — they are using capital injection to stay on top of the newest trends.

And when you see all of that happening…

Athletes in Venture Capital

Players have naturally followed the progression of this investment phenomenon.

• Play Time VC (Lionel Messi)

• LRMR Ventures (Lebron James)

• Serena Ventures (Serena Williams)

• Symphony Ventures (Rory McIlroy)

• Rx3 Growth Partners (Aaron Rodgers)

Star athletes will continue with this trend, especially as being an investor continues to become “cooler”.

League, Team, Company, or Athlete?

The biggest advantage for teams, leagues, and companies is they don’t have LPs or a time frame hanging over their head.

They can sit back and wait for the best opportunities.

Rory McIlroy and Whoop CEO Will Ahmed

Whereas athletes are typically operating under the traditional 5-10 year model with other people wanting a return on their money.

This is why I think we’ll see more “athlete family offices”, compared to venture funds.

The NFL’s Venture Arm: 32 Equity

Launched in 2013, 32 Equity is named after the 32 teams that make up the NFL.

The fund is mainly focused on investing in companies within:

• betting

• fitness/apparel

• fan engagement

• media and streaming

• player health and safety

The league started with a $1M contribution from every team and recently collected another $5M from each organization.

The goal?

To find and support innovative technologies that can improve the sport for players, teams, and fans alike.

The fund works closely with teams and league officials to understand the challenges and opportunities facing the sport, and provides valuable insights and connections to the companies in which it invests.

32 Equity Investments

The fund has gotten behind “mostly” successful companies…

I’ll highlight a few:

In 2017, 32 Equity purchased a 3% stake in Fanatics for $95 million — an online sports apparel and memorabilia retailer — which valued the company at $3.17 billion.

That’s now worth 10x as Fanatics’ December raise valued them at $31 billion.

In October 2021, 32 Equity invested in Hyperice, a pioneer in athlete recovery technology.

Hyperice also has over 20 athlete investors including:

• Ja Morant

• Virat Kohli

• Naomi Osaka

• Patrick Mahomes

• Fernando Tatis Jr.

By aligning financial interests with companies like Fanatics and Hyperice, the NFL can leverage their partnership for equity — eventually capturing some of the financial upsides they inherently helped create.

It's an interesting example of how a traditional industry can leverage technology to stay relevant, and how sports organizations can benefit from venture investing.

And it’s only going to increase from here…

Going Forward

I think the natural progression is downstream.

How long until Ohio State Athletics has its own venture arm? How long until agencies have their own venture funds?

But for me, the main question remains…

Are there enough sports companies being built?

Q4 of 2022 saw nearly $1 billion in capital head towards PE and venture firms throughout sports…but that money needs to go somewhere.

There are so many opportunities in new fields:

• AI

• NIL

• Web3

• VR/AR

• Esports

• Data Analytics

And the coolest part…

All of these verticals have a heavy presence in the sports industry.

If you’ve ever thought about building a sports company, now is the time.

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Thanks for reading today!

Peace,

AP

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