It’s Still Early Innings, But Investors Are Looking For Home Runs Among Sports Tech Startups

Data has affected everything from how we shop to how we work to even how we manage our email inboxes. Now startups — and more importantly investors — are increasingly looking at data to find ways to build a better athlete.

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“There’s a huge amount of interest in it right now — it’s just exploded,” said Brian Moore, CEO of Orreco, an Ireland-based sports performance and data science company that secured a $3.6 million investment in January. “We still get inbound (investor) interest constantly.”

Investment in sports tech — technologies involving data, analytics, fitness and biotechnology to help athletes play and perform better — has picked up in the last year.

This year’s numbers alone likely will not eclipse the record $1.4 billion the industry saw in 2020, but already have surpassed any other previous year. Through the first eight-plus months of 2021, $786.8 million of venture capital has been invested in the industry in 103 announced rounds, per Crunchbase data. Many of the largest rounds have occurred in the last 12 months.

Some of the largest rounds in the last 12 months include:

• Long Beach, California-based indoor cycling and running platform Zwift raised a $450 million Series C last September.
• China-based sports and fitness company Fiture closed a $300 million round in April.
• San Francisco-based AI-enhanced strength training company Tonal closed a $250 million Series E in March after receiving a $110 million Series D last September.
• San Francisco-based online runners and cyclist network Strava closed a $110 million Series F in November.
• Boston-based performance optimization developer WHOOP raised a $100 million Series E in October.
• Belgium-based video and analytics company Atrium Sports closed a $70 million round in December.

There likely are a myriad of reasons why those larger dollars are rolling into the industry, but most of the sources we spoke with agreed it has to do with better availability of datasets that can be analyzed, plus a greater acceptance of what that analysis means.

More of the general populace is also looking for ways to live a healthier lifestyle, say those in the sector.

Data is king

Data is not new to sports. Baseball has been ruled by statistics for decades, and many sports and leagues have kept player stats since their inception. However, the datasets being kept have become more robust — and the belief of what they can foretell has become increasingly accepted.

“From the sports side, we’ve seen a dramatic change from ‘data is cool’ to ‘we have to do this now,’” said Tal Brown, CEO and co-founder of Palo Alto, California-based Zone7. The company — which closed a $8 million Series A led by Blumberg Capital last month — has developed an AI-driven platform that analyzes disparate datasets, uncovers patterns and makes proactive recommendations to improve output, detect burnout risk and mitigate injuries.

Brown’s company works with teams in a variety of sports and leagues including the NFL, English Premier League, Spain’s La Liga and Italy’s Serie A. He said data and analytics have been embraced by owners looking to protect the millions — if not billions — of dollars they have invested in their players.

He also points to the NBA and teams like the Golden State Warriors, Houston Rockets and the Mark Cuban-owned Dallas Mavericks as teams that have been looking at new and different ways to infuse data into their operations.

“This is just more important than ever,” said Bruce Taragin, managing director at Blumberg Capital.

The rich datasets available now are something desired not just by owners and players, but also by fans and even sports media.

“A lot of the data has always been there, but now it’s cool and mainstream thanks to fans,” said Davyeon Ross, president and co-founder of Kansas-based DDSports’ ShotTracker.

His company, which received an $11 million investment in January, makes sensor-based technology that captures basketball statistics in real-time for leagues, teams and television networks.

“Data really has been democratized by the fans,” added Ross, pointing to the proliferation of websites following advanced statistics.

Thinking health first

While the increased access to data has benefited the industry, sports tech also is riding a wave that was only accelerated by the COVID-19 pandemic which provided a heightened awareness and desire to live a healthy lifestyle.

“In general, you are just seeing people more interested in nutrition, fitness and sleep,” said Moore, whose company helps athletes manage physiological stress and includes biomarker analysis. “Now we have the information to help them.”

During the pandemic, Orreco even added a COVID-19 symptom tracker to its platform to help keep athletes and teams safe from those who could be infected. Likewise, Zone7 worked with the medical community to help spot burnout by employees fighting on the frontlines of the pandemic.

Todd Ramasar, founder and CEO of Los Angeles-based Life Sports Agency — a firm representing professional athletes — and an investor in Orreco, said he has been monitoring the space for more than a decade. He agrees there has been an increase in startups, likely due to both the rich data now available and a general desire by many people — not just athletes — to be healthier as illustrated by the success of fitness companies like Mirror and Peloton.

“I just think people are turning to wellness more,” said Ramasar, who used the Orreco platform with his clients before investing in the most recent round. “There’s a desire for a healthier lifestyle, especially with everything right at your fingertips in your smartphones. The tech is getting better, smarter, more efficient. The predictive analytics are getting smarter and smarter.”

Getting outside the game

Better and smarter sports tech also could mean superior and more intelligent solutions for other,  even larger, markets — yet another theme likely driving investment in sports tech.

“There are just so many adjacent markets that can open beyond sports,” Moore said. “When you’re analyzing the effects of sleep and travel and other things, that data applies to so many different areas of people’s lives.”

Corporate wellness, factory work and the military are all areas in which much of sports tech related to wellness and predictive performance could be applied — growing a large market even bigger.

That growing market likely will see increased interest from both strategics and investors, most agree.

Many of the largest tech players have already staked their interest in the sports and wellness space — such as Google through its Google Health branch and Amazon’s exploration of the wearables sector. There are also more pure sports companies like Nike that have shown a curiosity for more sports tech.

“I think a lot of those companies are still figuring out where to go with it,” Moore said.

Regardless of what some of the larger players do, those in the industry think venture investment will continue to roll in.

“I think there are definitely larger rounds coming down the pipeline,” he added.

Zone7’s round was oversubscribed and competitive, said Taragin. “There’s just way more of an appetite and interest in this space right now,” he said.

Brown said he still is getting messages about investors wanting to join the round. “Four or five years ago, I don’t  think that would have happened,” he laughed.

Methodology

Sports technologies, as defined in this article, includes startups in the Crunchbase dataset that are working within the industry of sports, but excluding other categories such as video and casual games, brand marketing, fantasy sports and esports. Funding numbers include pre-seed, seed and all venture rounds.

Illustration: Dom Guzman