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Why Digital Sports Startups Are Magnets for VCs

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September 12, 2013

Venture Capitalists, as well as large companies like Fox Sports, Nike, and ESPN are seeking to invest in startups whose goal is to reshape sports verticals, according to the Huffington Post. The article gives some recent M&A deals as evidence. Fox Sports Digital acquired social network startup Fanhood in August.

 

Earlier, GolfNow was acquired by Comcast for USD 40 million, which spawned a wave of startups like Game Golf, Swing By Swing, and DiabloGolf. These startups aim to change golfer’s experience before, after, and even during rounds.

 

Elsewhere, Nike has sponsored an accelerator with TechStars to find and fund companies who will better assimilate its Nike+ sensor products into the marketplace. The article says that investment dollars will “quickly help establish new distribution channels and create entirely new content”. The range of applications goes from new media “channels” to fantasy sports.

 

Investment in this niche is driven by the health, size, and potential of the general sports market. Sports consumers are “broad, diverse, and loyal”. The article says that 75 of the top 100 TV programs were sporting events in 2012.

 

Such market demand is reflected in record-setting team valuations and TV-rights deals, like the USD 2 billion paid for the Los Angeles Dodgers which was then followed by a USD 6 billion TV rights deal with Time Warner Cable. (Image Source: Nike+ Website)

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