From LeBron and Serena to Roger and Götze: Just how successful are athletes as startup investors?
“I spent a lot of money on booze, birds and fast cars. The rest I just squandered.” Much like George Best—perhaps the most famous footballer in the UK in the 1960s and 1970s—sports stars in the past were not necessarily known for being good with money. Today’s athletes, however, are cut from a different cloth as they are increasingly investing in tech companies and startups. We’re breaking down some successful examples, and some less successful ones, plus we asked some startups about their experiences with sports celebrities as investors.
What possible reason could a bike maker from Koblenz, Germany have for being in close contact with NBA star LeBron James? Truth be told, there are roughly USD 30m reasons, after “Bron” invested in the company and acquired a 4% share of the company. In late July 2022, people were surprised to learn that LeBron had acquired a stake in Canyon. Upon further inspection, however, the investment seems less surprising. Canyon is focusing on growth in the US and LeBron James is not only a big-time bike fan, but currently also probably the most successful businessman in professional sports.
50 Millionen US-Dollar mit Pizza-Kette
According to estimates by Forbes, James’ fortune a href=”https://www.forbes.com/sites/chasewithorn/2022/06/02/lebron-james-is-officially-a-billionaire/” target=”_blank” rel=”noopener”>nach Schätzungen von Forbesexclipsed USD 1b for the first time in 2022. This gigantic sum stems from his annual salary as an NBA professional, which is currently estimated at just under USD 45m for the Los Angeles Lakers. Added to this are lucrative advertising contracts with Pepsi, Nike and Walmart, which are expected to bring in an additional USD 70 to 80m per.
The real catalyst to James’ fortune approaching 10-figures is, however, another: corporate investments. Back in 2015, he walked away from a reported four-year advertising deal worth USD 15m per year with McDonald’s to boost business for Blaze Pizza, where he had already secured a ten percent stake for around USD 1m in 2012. In 2022, ten years later, his investment in the chain is worth fifty times that amount, according to a media report.
Blaze Pizza is far from passing fad or an isolated example. Another example is James’ two-percent stake in English club Liverpool FC. Acquired in 2011 for USD 6.5m, his stake increased more than 5-fold to USD 32m by 2018, when he expanded his holding to Fenway Sports Group (FSG) – the main shareholder in Liverpool FC. James does not make his investments alone. Back in 2005, he founded LRMR Ventures together with his friends Rich Paul, Maverick Carter and Randy Mims.
Mit Family Office zum Erfolg
Another athlete investor from the NBA is Kevin Durant, who is pursuing a similar strategy to James. In 2016, Durant founded sports, media and entertainment company Thirty Five Ventures (35V) together with his business partner and friend Rich Kleiman. 35V enjoyed some considerable successful right off the bat with some of its investments. In 2016, it acquired a USD 1m stake in Postmates, according to “Forbes.” In 2020, Uber acquired the food delivery startup for USD 2.65b, meaning Durant’s shares are worth USD 15m just like that. At the time, Durant and Kleiman employed a staff of 15 employees and together they invested about USD 15m in 40 different startups, according to Forbes.
Serena Williams baut an ihrer “Legacy”
Meanwhile, tennis legend Serena Williams has invested in over 50 companies with Serena Ventures since 2014, and in keeping with her on-the-court prowess landing some excellent returns. Since 2009, she’s had a stake in the Miami Dolphins. When she acquired her holding, the NFL franchise was valued at around USD 1b. In 2022, it’s value more than quadrupled to north of USD 4.6b. Another of Williams’ investments is the UFC, in which she acquired a stake in 2016. Since, its value has tripled from four billion at the time to around USD 12b in 2023.
All her investments can be summed up quite simply in exactly four words, analogous to the title of her appearance at the OMR Festival 2023 in Hamburg: “Building her next legacy.” It’s a leitmotif that’s apt for many athlete investors.
Wer sind die deutschsprachigen Athlete Investors?
The trend has long-since gained footing among European athletes as well. The most prominent example is Swiss tennis icon Roger Federer. In 2020, he acquired a stake in shoe brand On Running, which is also from Switzerland. According to Swiss financial publication “Handelszeitung (paywall),” Federer may have paid up to EUR 50m for his 3% stake. In 2021, On had a successful IPO on Wallstreet and Federer’s presumed shares skyrocket to USD 300m.
There are other sports stars this side of the pond who’ve scratched their competitive itch with investments, including former F1 champion Nico Rosberg, ex-Barca legend Gerard Pique and current AS Rome fullback Chris Smalling, among others.
Mario Götze ist der deutsche LeBron James
One of the most prolific investors, however, is Mario Götze. The man whose goal gave Germany the 2014 World Cup title, has invested in more than 40 startups through his entity Companion M and now calls himself a “Professional Athlete and Business Angel” on LinkedIn. In a recent episode of the OMR Podcast with Philipp Westermeyer, Götze said that his strategy in investing is to build a diversified portfolio that covers angel and later-stage startup investments to stakes in the private equity sector.
The list of failures is long
There are plenty of examples of athlete investors who’ve had to stomach high-profile, and expensive, failures with their investments. Here are three examples:
- Ex-soccer pro Marcell Jansen had to prematurely shut down his digital project Picue, which was proclaimed as “Instagram for teams” in 2018, and lost a “significant seven-figure sum” in the process, according to his own statements..
- The aforementioned Gerard Pique had big plans with his investment group Kosmos, when he founded it in 2018. Through a stake in the International Tennis Federation (ITF), Pique and Kosmos had controversial plans to revamp the Davis Cup. This past May, however, that partnership was terminated by the ITF. The future for Kosmos is now uncertain to say the least.
- A serial winner on the pitch, a href=”https://www.welt.de/sport/fussball/article194086437/Philipp-Lahm-Sixtus-Wieder-geraet-eine-Firma-von-ihm-in-Schieflage.html” target=”_blank” rel=”noopener”>the opposite has been true for World Cup winner Philipp Lahm with his investments. In 2016, he acquired 40 percent of the Franconian health startup Danova and quietly withdrew again a short time later. In 2017, he acquired care products manufacturer Sixtus entirely, only to sell it at a loss in 2021. And his investments in Schneekoppe (where he has owned 75.1 percent since 2018) and Fanmiles have also been rather sluggish.
When Christian Mees hears that athletes have put seven figures into a single start up, he can’t help but cringe. “Investing a couple of million in a single venture is the exact opposite of what I try to teach professional athletes about investing.” To ease athelets into the investing game, Mees launched Players Tech, which aims to provide athletes a safe environment to make sound investments as a part of a larger professional community of investors.
Mees’ advice to professional athletes who want to invest in startups:
- Invest small amounts of EUR 50,000 to EUR 100,000—or less—in startups, while never exceeding three to five percent of your assets.
- Never go it alone. Join forces with other investors who are, ideally, not other professional athletes. The most important thing is to have experts from the respective industry on board.
- Don’t decide on investments in five to ten minutes via WhatsApp. The entire process should take around 120 hours before responsibly coming to the conclusion a given investment in a startup is promising. Another rule of thumb: vet around 1000 startups result for every four to five investments.
- Stay anonymous for as long as possible when investing and choose the time yourself when you go public with your investment.
- The failure rate is 60 to 80 percent. On average, 1 out of 14 investments must work out so that the ROI is able to absorb the other 13.
Eigene Produkte per “Company Builder”
Professional soccer players such as Mats Hummels (Borussia Dortmund), Alexander Hack (1. FSV Mainz 05) and Icelandic international Alfred Finnbogason are among those who’ve invested via Players Tech. Together with some of the players, Mees has also created “Company Builder” in which the professional athletes are part of the startup team as idea providers and/or co-founders. The current project is the “Your Last Bottle” drinking bottle.
Players Tech also employs a classic fund model. Mees & Co. are currently planning a USD 30m fund called Players Tech X Fund. Among others, Lead Sports & Health Tech Partners, a company initiated by three of the Adidas founder’s grandsons (“Lead” stands for “legacy of Adi Dassler”), is pulling the strings behind the scenes. The fund is primarily intended to attract German-speaking sports professionals to investments.
Lead Sports uses its network to drive the growth of sports and health technology startups around the world. This includes, for example, a USD 30m seed fund in the U.S., a USD 50m Series A fund focused on North America, Europe and Israel, as well as a growth stage fund with three investments to date.
Sport is “today’s gold”
Another example of the fund model in sports is growth dung Cerro Capital, which has up to USD 250m in UAM. In 2022, Cerro Capital took a stake in the film production company Religion of Sports, founded by NFL legend Tom Brady, as part of a USD 50m Series B round.
Part of Cerro is sports and investment expert Marcus Höfl, who is convinced that athletes tend to stick to what they know with their investments, namely sports topics. As such, he sees the potential of athlete investors as far from exhausted. “The global sports market is worth over EUR 500b and is growing by over five percent each year. The sports betting market is around EUR 200b and growing at ten a year. Esports is over a EUR 1b and growing at 20 percent per annum,” he says. Sports is also “very crisis-proof and has always grown despite the 2008 global real estate crisis and Corona.” All of which makes the sports industry something like “gold of the modern era.”