Neil Patel

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Early-stage funding for sports startups is quickly emerging as a lucrative investment opportunity. This vertical has a broad reach and encompasses a range of sub-sectors, including health and wellness, tech, nutrition, and infrastructure. Sports equipment and eCommerce are also attractive options.

Sports is not just a singular field but also includes sports entertainment, e-gaming, merchandising, collectibles, technology, media, and analytics. Startups operating in any of these sectors can offer products and services to cater to an immense customer base.

The sports landscape comprises athletes, fans, training academies, facilities, consumers, investors, service providers, and other stakeholders. Investors provide not just capital but also networking opportunities, industry-specific expertise, and mentoring to startups debuting in the space.

The sports sector is evolving quickly, with innovations and disruptions emerging to challenge existing methodologies of how games are played.

Upcoming trends and opportunities incentivize rapid growth and advancements in the field. This is why attracting early-stage funding for sports startups is easier than ever.

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The Ultimate Guide To Pitch Decks

Let’s Check Out Some Statistics

Research indicates that the sports market will likely grow from $480.12B in 2023 to $506.93B in 2024, with a CAGR of 5.6%. Further, the sports teams and clubs market will grow at a CAGR of 6.85% from 2024 to 2029.

Technology is driving the sports vertical in a big way, and estimates show that, by 2024, the sports technology market will touch $40.2B. The CAGR, or compound annual growth rate, will rise by 20.63% between 2021 and 2026.

While mainstream sports like tennis, cricket, soccer, and basketball have always ruled the industry, several other games now attract attention. For instance, equestrian sports and extreme sports like rock climbing, sky diving, and skateboarding.

Customers are also experimenting with e-sports in a big way, and competitive online games are quickly growing. This sector is now an entirely separate industry with dedicated gaming companies developing apps to play the games. Players, spectators, sponsors, investors, and bettors engage in transactions worth millions of dollars.

Technology has entirely transformed the way sports are generated and consumed. Games are not just about professional athletes but also casual players using equipment, merchandise, and gadgets.

People are open to investing in mobile applications, wearable devices to measure performance, and social media for interactions. Virtual reality and blockchain are other technologies that have found applications in the sports sector.

With so many opportunities opening up, investors are also looking at startups and new ventures for funding and earning profits. Particularly founders with disruptive ideas about taking sports and their enjoyment to the next level.

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How to Attract Early-Stage Funding for Sports Startups

As the founder of a sports startup, you’ll start by exploring the key factors investors will consider. Their first focus is on startups that demonstrate potential for high growth and can significantly impact the industry.

This sector is intensely competitive and entirely dependent on fans and their interests. A compelling pitch deck should talk about the potential risks the startup may face and how you intend to counter them. Here are some of the main areas to focus on:

Identifying the Right Problem

Identifying a problem that needs solutions is always the defining feature of any startup in any sector. Investors need to see statistics and research to validate the gap that needs to be addressed. Next, they’ll assess the potential solution you present for validity and scalability.

Most importantly, the solution should be innovative and make sense to the consumers. Then, some innovations create a need in the market even when there isn’t one. For instance, studies have shown that more than 50% of households across the US no longer have cable or satellite TV.

As a result, the bigger sports networks are developing apps to provide streaming services to viewers. A startup building equipment or software to enable these services and deliver them to consumers is a great investment-worthy project. That’s just one example.

Achieving the Ideal Product-Market Fit

The startup’s products or services should address the target market and its needs. You’ll demonstrate why the product is better than what’s currently available and its value proposition. If you can present traction with sales figures to indicate customer interest, that’s a win.

For instance, developing an AI-driven program to coach users’ workout sessions according to their body structure. The application will take into account individual lifestyles and fitness goals and design a customized plan, complete with optimum diets.

Users can also update the application with records of their calorie intake and favorite food types. They can connect with wearable devices to monitor physical activity. Solutions like these are ideal for pro athletes and fitness enthusiasts wanting to eat and exercise better.

Put Together a Core Skill Set

A great team with diverse skill sets and talent is always an attractive feature in any pitch deck. Your team should feature engineers to innovate product ideas and convert them into marketable products. You’ll also need software engineers to keep pace with the technology aspect.

When pitching for early-stage funding for sports startups, demonstrate a culture that is enthusiastic about sports. Also, it shows agility to adapt quickly to changing customer preferences and interests, particularly since sports idols acquire fame instantly. With a goal or a well-placed kick.

Your startup’s core mission should be team collaboration, dedication to serving customer needs, and coming up with innovative solutions. Also, make sure your team has a well-rounded selection of skills, including graphic designers, advertising and marketing experts, and digital marketers.

Outsourcing some of the digital operations to cut back on costs can be a smart move that investors will appreciate.

Keep in mind that in fundraising, storytelling is everything. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here)  that I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.

Designing a Well-Planned Business Model

As with startups in any other vertical, investors pay close attention to the business model. You’ll talk about production processes, costs, overheads, sales channels, and logistics. Adding data and financial metrics is crucial for credibility and showing how the business can scale.

The most important metric in your pitch is the profits the company is generating. Even if the startup has yet to generate profits, you can add estimated numbers according to industry benchmarks and projections.

Providing non-financial data to indicate traction is also sufficient to demonstrate that the company has the potential to earn profits. Your business plan should also show the revenue-earning channels and unit economics. Any IP the company owns can also feature on the business plan.

For instance, gaming software that customers are subscribing to for playing games. Business models driven by subscriptions indicate traction instantly since that translates into a steady revenue stream and positive cash flow.

Estimating Market Size and Reach

Showing the market size for startups operating in the sports industry is easily done. But what’s crucial is providing numbers to indicate the market for the products you’re developing. A great way to depict that is by listing competitors’ performance statistics.

Next, you’ll outline product features to show how your brand differentiates from competitors. Make sure to target an underserved market with a product USP that sets it apart. You’ll also provide information about the expected market share your brand can capture.

For instance, the pitch will discuss your target customer demographic if you’re developing a new gaming application. And why they are likely to show interest in it.

Even as you start counting around for a list of investors for your startup, also work out the best ways to approach them. Check out this video I have created on how to put together an investor outreach strategy. Each one has to be customized according to the investor you’re targeting.

Targeted Investors for Sports Startups

When looking for investors for early-stage funding for startups, you’ll start by thinking like them. Understand that investors focus on startups with innovations, ground-breaking technology, and unusual ideas.

Although sports is an entirely distinct niche by itself, several related verticals also attract investor interest. For example, athleticwear and sports footwear can be relevant to the sports and apparel industries.

Or digital marketing and eCommerce stores selling sporting equipment and collectibles, which can be worth millions of dollars. For instance, the Honus Wagner T-206 Baseball card is worth $7.25 million.

Considering these aspects, don’t limit your list of potential investors only to those interested in the sports vertical. Don’t hesitate to diversify the investors you approach. Here’s how to get started.

Bootstrapping and Friends and Family

If you’re really confident in your business idea, start by sinking some of your personal savings and assets. Investors always rely on founders who have skin in the game and are not hesitant to invest money and time.

Trying to build a startup while working full-time at a regular paying job may not convince investors. They’ll want assurance that you’re all in with the concept you’re developing. Next, approach friends and family for small cash advances to help create the MVP.

Rolling back initial revenues from the business to purchase inventory or cover some costs is also a practical strategy. Keep costs low at this point and leverage free social media platforms to sell your first products. For instance, customized sportswear with screen printing.

This strategy will allow you to test the market and customer preferences and get valuable feedback. Most importantly, you’ll create a market presence before the bigger launches. When approaching investors, a social media footprint indicates traction and gets you funding faster.

Crowdfunding Platforms

When your startup is still young, it’s advisable to look for smaller investors where you won’t have to cede equity. Crowdfunding platforms work well, and running a campaign can connect you with these investors. You’ll target sports fans, fitness enthusiasts, or consumers interested in extreme sports.

In exchange for money, you can offer free or discounted products. Sneak previews of gaming apps or tester kits of hydration liquids are also great incentives for funding your startup. You can leverage their feedback to make improvements.

Once the final versions are ready, you’ll have a ready customer base to purchase the product. Not to mention free word-of-mouth advertising for the brand.

Apply for Grants

Several organizations are now offering grants to startups to encourage innovation in the sports vertical. For instance:

  • Innovation grants that back companies developing new software, applications, equipment, analytics, and nutrition. You can use the money for research, developing products, testing them, and producing the MVP.
  • Participation grants are designed to encourage participation in sports and promote physical fitness. Startups working for inclusion and diversity can attract funding. Like for instance, to open sports training opportunities for differently-abled athletes. Or athletes of color or those that face barriers because of other disparities.
  • Excellence grants are given out to companies that enhance sporting performance by athletes and their supporting teams. For instance, coaches, organizers, nutritionists, analysts, and more.

You may have to fulfill certain terms and conditions depending on the grant awarder. So, do the necessary research into their approval criteria before applying.

Incubator and Accelerator Programs

Although getting entry into an incubator or accelerator program is very challenging, these options can be an excellent solution. Founders can get not just funding but also various other benefits to get their startups off the ground.

For starters, getting accepted into the program is validation that the concept has merit. You’ll also get funding to build the prototype, a workshop, technical support, administrative assistance, and potential partnership opportunities.

Networking channels and the opportunity to meet investors on the demo day are the culmination of the program. Here, you’ll present a pitch deck and walk away with enough funding and credibility to make it big.

Angel Investors, Venture Capitalists, and Private Equity Firms

Once your startup is stable and ready to scale rapidly, you can bring in the big guns of the industry. You can approach angel investors, VCs, PE firms, and even family offices at this stage. Most investors operate in the sports industry, but others may be willing to support high-growth, high-potential startups.

You can expect much more than just capital, like a board seat, to assist in scaling the company with expertise. However, you may have to give up some amount of equity and a share in the profits along with other compensation.

At the same time, they will be open to providing rich infusions of capital for rapid growth.

Finding early-stage funding for sports startups is easily done with the right strategies and knowing the market and your investors.

You may find interesting as well our free library of business templates. There, you will find every single template you will need when building and scaling your business completely for free. See it here.


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Neil Patel

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