The world of sports is experiencing a highlight reel of disruption — from streaming content to legalized betting to digital collectibles like the NBA’s Top Shot series.
How are established companies supposed to keep up? One way is by tapping into the startup world to understand some of the emerging trends there.
And that’s exactly what a group of well-known brands, including the Indianapolis Colts, the National Collegiate Athletic Association, and the Indiana Pacers, are doing with the Techstars Sports Accelerator. Based in Indianapolis, it seeks to attract promising startups, make a small investment, and provide mentorship and opportunities to collaborate. It has been running since 2019, and plans to return to in-person activities in 2022.
Jordan Fliegel, a serial entrepreneur and professional basketball player in Israel and Europe, runs the accelerator. He spoke with InnoLead about some of the trends he’s seeing, and how the accelerator works with startups.
Key Trends in Sports
One of the trends of the pandemic era, Fliegel says, is the rise of connected fitness products for home use, like Peloton bikes and the FightCamp boxing trainer. The first class of Techstars Sports Accelerator startups included Ergatta, the maker of a $2199 rowing machine that tries to gamify exercise. Recent financing rounds have lifted the startup’s valuation to $200 million. “That’s a great kind of early win, and a success story for Techstars in general,” Fliegel says.
This year has also seen changes, in the US, around rules that will increasingly permit college athletes to profit from their own name and image. Fliegel sees that leading to new ways for college players to start building their brand, creating content that they own, and generating revenue, before they go pro.
“We have been early in capitalizing on the new possibilities for college athletes to monetize via video and merch, by backing Pwrfwd and Curastory in our most recent 2021 accelerator, both backed by more than $1 million dollars in seed funding,” Fliegel said.
He highlights other trends that will impact athletes, teams, media companies, and consumers, including: the rise of streaming media; wearable fitness monitors like the Whoop wristband; increasingly detailed sports data; technologies to enhance athletic performance and wellness; and online betting.
Fliegel also pointed to “athleisure,” an increasingly-popular clothing style among the work-from-home set, which combines athletic performance and performance with comfort.
“Leading brands like Nike, Lululemon, VRST, and many others saw tremendous lifts during the pandemic, as work from home and at-home fitness merged together,” Fliegel says. “Those are trends which we imagine are here to stay, and which accelerated our thinking on the category and put wind behind the sails of our 2019 portfolio company, Pistol Lake, which has grown rapidly and bootstrapped to profitability, on the heels of just $1 million in pre-seed financing.”
Helping Sports Startups Move Down the Field
The Techstars’ acceleration model is designed to provide startups with a shot of early capital — $120,000 — along with advice, mentorship, and connections. Techstars’ corporate partners help cover the costs of running the program, and also take an equity stake in each startup that participates. One goal is to help them hone their offering, find early customers, and increase their valuation. According to Fliegel, companies coming into the Techstars Sports Accelerator are generally valued at “a $3 to $5 million valuation,” and generally leave the accelerator at around a “$6 to $12 million” valuation range. Startups also get access to roughly 200 mentors “that we’ve handpicked,” Fliegel says, including “founders of companies like Whoop and Fanduel, who have had great success in the space.”
Fliegel, who participated in a Techstars accelerator earlier in his career, said that in-person mentorship programs were invaluable to him as he grew his company, a marketplace for private coaching services called CoachUp.
Other services that the accelerator offers include discounts for Amazon Web Services; dedicated office space; participation in one-on-one meetings and fireside chats with executives at established companies; fundraising connections; and help expanding their team with new hires.
But Fliegel says those new hires need to surround a founder with a big vision. Using basketball as an example, he says, “I know that no matter how good your coaching is, if you have the best players, you generally do pretty well,” Fliegel said. “If you start with really great founders, we can make up for a lot of potential mistakes, or market issues, over time.”