Sports Tech Startup Trends of 2024, Part 2
Putting a final bow on 2024 with some retrospection about which types of sports startups are accelerating and who's pressing the gas pedal
Halfway through 2024, I wrote about the trends in the sports tech startup market— funding amounts, popular sports, product types, target markets, and more. Although the invisible hand has buried a lot of nuance within each these categories, I was struck by the momentum of very broad investment in the world of sports that showed no signs of slowing. As it turns out, that funding momentum continued, and possibly quickened through the 2nd half of the year, despite a longer period off for most folks around the holidays. (Was is just me, or was the holiday schedule wonky this year with the Thanksgiving-Christmas-New Years timing?)
Sports Tech Startup Trends of 2024, Part 1
Every day, it seems like more and more hype builds around sports entities as a financial growth mechanism. CNBC recently kicked off a sports-focused business channel, the NFL is considering opening team ownership to private equity (PE) funds, and companies like On and Hoka
The second half of 2024 brought increased investment events in sports technology and innovation companies compared to the first half, with a total of 51 in the second half of the year compared to 37 in the first half. Continued appetite for investment in sports certainly fueled this growth, but the biggest momentum driver was likely funds being unlocked from the many sports-centric private equity (PE) and venture capital (VC) funds. The first half of 2024 yielded a mind-boggling $9B in publicly-disclosed investment fund launches (nearly 3x the 2nd half of the year), and startup incubators helped launch 24 companies in H1 (vs. 16 in H2). This money and time investment from the startup funders had to start going somewhere!
Of course, startup investment alone cannot consume the amount of money funneled into the world of sports investment, so it was also a big year for team and company acquisitions. Two of the more interesting examples involve the two biggest hockey gear manufacturers, Bauer and CCM, which both sold nearly simultaneously to PE funds (much to my chagrin after writing about the companies’ struggles). Numerous pro sports teams were acquired throughout 2024, particularly with many European soccer clubs changing hands, and many sports tech companies themselves expanded through acquisition.
This trend was most common in the broadcast and analysis market, with Sony acquiring KinaTrax, Spiideo acquiring fellow startup Signality, and Hudl moving further into the analysis industry with their acquistion of StatsBomb. Even Red Bird Capital, who raised their fund earlier this year, acquired a majority stake in Front Office Sports. This limited list only covers a small subset of the total for the year, and already represents a pretty wide range of acquisition targets and markets!
Returning to the world of sports tech startups, though, I’ve broken out the investment trends for the second half of the year into four categories:
Product Type (Software, Hardware, Hybrid)
Primary Target Sport (Market)
Product Market (Nutrition, Analytics, Apparel, etc.)
Size & Type of Investments
Product Type
The breakdown of startup product types in the second half of the year did not stray too far from the first half. The biggest difference you’ll see visually is the addition of the “Other” category. However, the quantity of software company launches still dominated hardware and “hybrid” launches. I don’t think this breakdown is particularly surprising in the grand scheme of startup launches, or based on the startup breakdown from the first half of the year. The biggest surprise increase in the second half of the year was the acceleration of pure media-, and league-based investments, which prompted the creation of the “Other” category, whose product doesn’t really fit into these other buckets well. In particular, 2024 seemed to be the year of athletes launching their own production companies, as Charles Barkley, Leo Messi, Derek Jeter and Tom Brady with the Boston Globe all launched new production companies, and I’m sure I’m not even capturing the whole list. It turns out when you have enough celebrity and name recognition, the best endorsements you can leverage are for your own companies!
Primary Target Sport(s)
Perhaps unsurprisingly, the quantity of investments and incubations in products meant for use in many sports (i.e. “Generic”) was nearly equal to the total of products meant for a specific sport. Part of this might be due to the large supply of companies creating generic products, but I think investors also drive likely bias towards broadly applicable products from the demand side as well. A lot of new companies I reviewed had products that could expand their total addressable market (TAM) by looking outside the world of sports, but it might be slightly easier to pitch the idea that a new cleat brand could begin making different types of shoes than it is to convince someone your new electric golf bike could actually be a great mobility tool at retirement communities (which it actually could be). If I was starting a new sports tech company, the clear message would be: pitch the company and project as applicable to many sports, even with a beachhead market selected.
Product Market
As opposed to the target sport for newly launched companies, there is a decent distribution of products across multiple industries. Similar to H1 2024, Media and Infrastructure products received the most funding events, but a slight dip in Analytics and Gambling launches in the second half of the year surprised me (though this might be a sign about the growing saturation in these markets). As noted above, we’re starting to see pretty widespread acquisition and consolidation of infrastructure and front-end solutions in the analytics and gaming spaces specifically, so we might be reaching the apex of the Klepper curve, which has some interesting implications for these markets. Unfortunately I don’t have enough historical data to concretely endorse this sentiment (yet), so keep your eyes peeled in 2025!
Investment Breakdown
If you ever wanted to see an example of how the power law affects the startup world, look no further than the translation of the investment quantity by market above into the investment dollars spent in each category. Despite the Apparel/Gear market receiving less than 1/5 of the quantity of investments that the Infrastructure category received, it earned about double the total money invested— almost exclusively due to a massive $825M investment in Vuori by General Atlantic and Stripes. Apart from this anomaly, I am surprised how well the general shape of the investment quantity matches the amounts with such a small sample size:
Throughout the entirety of 2024, I tracked the launch of 17 new investment funds created specifically for sports endeavors (though not all with public fund sizes). This was a relatively even mix of venture capital and private equity firms, a balance that was reflected in the distribution of funding event types throughout the second half of the year. Nearly half of all investments made had no formal delineation, while Seed Rounds composed nearly a third. The dominance of unnamed funding rounds, which often seemed to be some form of bridge funding ahead of more formal re-investment events, speaks to the melting pot of companies receiving funding, with many being well beyond early-stage startup, and the blend of VC and PE firms investing.
In the first half of the year, unnamed funding rounds comprised a lower percentage of overall events at only 25%, with Seed through Series C making up about 60%. My hypothesis is that the increase in unnamed events comes from the rise of PE funds getting more involved after major capital allocations were unlocked in the first half of the year. This also meant that the distribution of investment amounts morphed as well, with a much greater emphasis on larger overall investments. Perhaps most shockingly, we went from having over 10 funding rounds below $500k in the first half of the year to zero in the second half, if my count is correct. My instinct is that the frenzy of small-scale seed and incubation activity in the first half of the year really satiated some of the immediate market need for startup funds. While overall investment quantity was higher in the second half of the year, the unlock of PE funds meant that investment skewed larger, as the market added its first four investment rounds north of $100M for the year after July.
If I had to guess, I would imagine that investment quantity and values continue to increase in 2025, both in terms of sports team acquisitions (which are not tracked here), and investment in sports tech startups. There is so much money earmarked for these companies in the coming years and I expect that this supply of capital will continue to grow through 2025 as well. In general, sports tech startups launching over the next few years will likely be in a great position— demand is going to be high, and despite the fact that over 80 sports tech companies received funding this year, the investment market could likely support double that amount. So, either the amount each company raises will increase (with better terms), or more speculative investments will be made. Either outcome would be a win for the startups!
Next year, I will likely provide only one formal startup market review at the end of the year, but I will likely share the underlying database of companies at the end of June with perhaps some light commentary as a mid-year marker. This database will be relatively bare bones since I typically flesh out the data and analysis for these articles specifically, but at the very least, it should provide a pretty comprehensive list of funding events, which hopefully has standalone value (especially if you are putting off a Crunchbase subscription).
Please do let me know if this type of analysis is appreciated, though, and may we all be lucky enough to earn a piece of the sports tech pie in 2025!