There’s An Innovation Revolution Going On In Sports, And VC Firm Sapphire Is Helping Pay For It

Sapphire Sport says it has received a new $181 million from the who’s whom of investors with a total of $300 millionto fund startups that disrupt the world of sports entertainment and culture.

There’s also Overtime that pays six-figure contracts to high school athletes who are promising streaming their sports. There’s a Buzzer that aims to become the mobil-version that the NFL’s RedZone for all sports. There is also Tonal which is a intelligent home gyms.

Sapphire Sport — whose parent company, Sapphire Ventures, has more than $10 billion of assets under management has pledged $300 million towards funding the revolution in innovation that will disrupt sports and fitness entertainment and culture with businesses like those. The money comes from a new $181 million announced on Wednesday by the top names in the investment community for sports.

There’s An Innovation Revolution Going On In Sports, And VC Firm Sapphire Is Helping Pay For It
There’s An Innovation Revolution Going On In Sports, And VC Firm Sapphire Is Helping Pay For It

It’s an odd period for startups, as the rise in rate of interest and rising inflation forcing some of them to fall in value. Sapphire Sport managing partners Doug Higgins and Michael Spirito told Forbesthey intend to take advantage of the current market conditions.

“Entrepreneurs are becoming more sensible about their valuation expectations at every point,” Higgins told Forbes. “If organizations are still analytical they are worth their finances same to what they were three years back, we have to be more calm.”

Sapphire Sport is among a small number of companies that have obtained funds from limited partners in order to purchase equity in new startups. Courtside Ventures said it attracted $100 million for its third sports fund. It also attracted investors like Basketball Hall of Famer Shaquille O’Neal. Based in Chicago, KB Partners said it closed on a raise of $127 million in 2022.

Sapphire brought back a variety of investors who’d contributed for the company’s first sports investment fund in the year 2018, such as City Football Group, which was the lead investor in the round. The names of newer investors who are following the business who were also part of the group are Stephen Pagliuca, the co-chairman of Bain Capital and co-owner of the NBA’s Boston Celtics; Blackstone Group BX 0.0 percent executive as well as Philadelphia 76ers co-owner David Blitzer. Others investors are Madison Square Garden MSG 0.0 percent sports and Major League Soccer franchise owner Stephen Kaplan. The LPs that are returning include the owners of the Indiana Pacers; owner of the NHL’s Tampa Bay Lightning Jeff Vinik; Adidas; Sinclair Broadcast Group SBGI +0.4 0.4% as well as Anschutz Entertainment Group. Sapphire did not disclose the details of the investment.

In the near future the market is expected to see significant developments in the field of augmented reality, blockchain, virtual reality, and Web3. The digital revolution could help owners of teams in unlocking an array in new media-related rights. The NBA is, in fact, in the forefront of making use of the technology. On Monday NBA renewed their deal to Meta for the streaming of 52 matches using Meta’s Oculus Quest VR headset from an angle that is courtside. A part of the agreement is five games with a unique immersive experience exclusively created by Meta. Sapphire Sport is looking for companies that can enhance these kinds of future-oriented experiences.

“We trust that AR or VR is only starting,” Higgins mentioned. “If you consider the things that Apple APL +1.4 percent does, or what Meta is doing, we’re searching for killer apps that can take AR/VR from “Hey, this sounds sort of interesting and then ‘I’m going to be unable to do without this.'”

Research from research firm Morning Consult show Gen-Z is not watching sports as much as the previous generations. It could be a threat to the future of the global sports rights market that’s expected to reach $60 billion in 2024. Sapphire Sport suggests it can aid in solving the problem and work with companies such as Buzzer to boost rights fees.

Higgins 50 cofounder and founder of Sapphire Ventures, said the firm relies on Spirito’s experience in the media acquired during a stint in the New York Yankees’ YES Network in order to discover the latest sports tech gems. Spirito 46, who is the co-founder of Sapphire Ventures, said the challenge now is to sustain and grow the importance that media rights bring to a hostile environment.

“How do make them more treasures in a period when younger generations spend their line-up in various ways?” Spirito said. Gen Z’s “attention span” is the lowest it’s ever been. The value of content and media are at an all-time level? What can you do to make it even more valuable? This is the problem we are trying to re-solve.”

Sapphire Sport makes investments in companies that are in the early stages for up to ten years. Spirito stated that the company will seek for a minimum investment of $5 million into 20 companies in the second fund. Sapphire Sport already made one investment in a lottery platform known as The company is looking to make state lotteries more accessible across all of the U.S. started operating in its first market, Texas, this month.

Bo Han, Buzzer’s founder who founded the company, has said that he signed up to Sapphire Sport after he learned that Spirito does not have a Twitter account. “I realized that this was a real problem,” Han said.

As of now, Sapphire Sport has exited just two businesses. In the year 2020, it sold its stake in the gaming studio Phoenix Labs to a Singapore-based internet firmcalled Sea Limited, valued at $150 million, as per PitchBook. Sapphire also decided to sell its stake in the streaming platforms MyCujoo for an unspecified amount.

That being said, Spirito and Higgins caution limited partners to consider the long-term perspective.

“I think that what players and team owners are taught is the fact that venture capital is extremely sexy and thrilling when you meet new entrepreneurs with new ideas. However, at the same time it’s a commitment to the long term.”

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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