About three or four years ago tech accelerators in sports were all the rage, but in the last 12 months there seems to have been noticeable growth in cynicism around them.
Done correctly, however, I think they have an important role in advancing innovation and helping the sector to solve some of its most intractable problems.
One of the first accelerators to really catch the attention of the sports industry was the LA Dodgers’ programme, run in conjunction with the R/GA consultancy. Over their first two cohorts, they worked with some companies that have since become significant players in the sports industry, such as Kinduct, WSC and Shot Tracker.
Other notable programmes soon became established – the most eye-catching among them were Stadia Ventures in St Louis, who are now about to go into their tenth cohort, and the Lead programme in Berlin, one of the best-known programmes in Europe.
Where these led, others followed. There are now programmes in Paris, Toronto, Indianapolis (run by accelerator kings Techstars), Qatar and multiple programmes run by Hype. In 2018, Arsenal became the first Premier League club to run a programme; Uefa ran one in 2019.
At Sports Loft, we’re not an accelerator, but rather we work in conjunction with many of the other programmes. That means we often work with our favourite companies from each programme and try to add more value to the investments that have already been made. Consequently, we are often asked by start-ups which are the best programmes. But when you look across all the programmes operating today, the most noticeable thing is the sheer variety of different models at play, many of which have managed to find a niche.
For example, in Toronto, the MLSE programme is able to offer start-ups the opportunity to work closely with a variety of franchises such as the Raptors, Toronto FC and the Blue Jays, different venues and even a broadcaster, all under one ownership group.
At Stadia, they have built up a very international flavour due to the excellent opportunities that their network offers companies looking to expand into the US. The Dodgers’ programme has now evolved into the Global Sports Venture Studio which operates on a more ongoing, 12-month basis and works less as a programme with a defined start and end.
Some of the programmes invest and take equity, whilst others do not. In some cases, the companies that go onto the programmes are earlier stage than others – for example, companies on the Lead programme tend to be much earlier stage than the companies that go onto Stadia.
I think that the best programmes can offer huge value to start-up companies, provided they go to the programme best suited to their needs and at the right time in their development. But getting onto a programme is not an end in itself – just as raising money is not the definition of a successful company.
It can be horrible to see the same companies pitching at all the different events, making the final stage but never getting selected – they become perennial pitchers and almost seem to forget that they have a company to run.
Looking at it from the perspective of the people running the programmes, there are lots of different business models in operation. If the programme is being bankrolled by a franchise or brand, there are very different dynamics than if the programme is being run commercially. For instance, the franchise might be running the programme for the PR value rather than an investment return.
As a general rule, I think that teams have been right not to jump into running accelerator programmes – it’s not their core business and not their area of expertise. If you are a football club worrying about player transfers, attendances and next year’s sponsorship income, why do you want to be spending time thinking about a few $50,000 investments in start-ups?
The important exception to that rule is when a club’s ownership are also an active investor group. Prime examples are Guggenheim in the case of the LA Dodgers or Wise ventures in relation to the Minnesota Vikings. In both of these cases, the investor can use the franchise to add significant value to the tech investments by creating case studies and proving a product’s market fit – but that can just as easily be done through direct investments as through an accelerator.
I think that running an accelerator on its own for commercial return is a very hard way to make money. In the last three years I have been repeatedly asked when I was going to launch the UK’s sports tech accelerator, and my answer was always the same: I wouldn’t, but I do think they offer fantastic opportunities for due diligence and deal flow if there is a Series A fund in the background. That’s one of the reasons why Lead has their Advantage Fund and Stadia has a follow-on fund.
However, some of the programmes don’t always help themselves. In some cases, the terms offered to companies are a disincentive for high potential companies to apply. If as a founder, you are offered $25,000 for 6 per cent of your company, take it or leave it, why would you take it if you have a company that is getting traction and attention elsewhere?
So is there a future for tech accelerator programmes? I think there is, but natural selection will reduce their number to a collection of the best companies, and each will have their niche. The ones that endure will genuinely add value to the companies and founders they help, and they will be part of a broader investment strategy – either because they are part of an investment group or have a later stage fund alongside.