The main objective of the North American SportsTech Report, produced by our SportsTechX partners, is to analyze the SportsTech scenario in North America. Throughout this blog post we are going to distinguish the values of the market, the main cities and a trend that caught the market’s attention in the last year, the SPACs.
In its first chapter, the report provides an overall look at the industry’s figures for the past year. Despite the crisis generated by the pandemic, 2020 was a positive year for North American SportsTechs. There were almost US$ 2.5 billion in investments, considering an estimate that includes agreements not yet disclosed. This is the highest figure in the last five years, showing a strong valuation of the sector. The most positive months were January, which generated excitement about what was to come, and September, both with investments exceeding US$ 500 million.
Although the report deals with North America as a whole, the highlight is in the United States. 97% of the region’s investments are located in the country alone. When we look at the most relevant cities, New York also shows absolute prominence, with almost three times more capital invested in startups in the sports vertical than San Francisco, the runner-up.
Considering the top 10 cities in general, we understand why California is the leading investment state in the country in this sector. In addition to the aforementioned San Francisco, we also have Long Beach in third place, Santa Monica in seventh, Irvine in eighth and Los Angeles in ninth.
In order not to mention only in the United States, Toronto is the only city in another North American country in the Top 10, ranked in the fifth position. On the other hand, Mexico has little representation in the scenario, with Mexico City ranked only in the 142nd position.7
When it comes to solutions, the most impacted audience by North American SportsTechs were athletes. Approximately 49% of investments were made in the activity and performance areas since 2016, with fans and content receiving 30% and the management and organization subsector only 21%.
Later on, the report brings some of the trends presented in the continent. Among these trends, a specific topic caught our attention: SPACs or Special Purpose Acquisition Companies.
SPACs are companies whose sole purpose is to raise money to acquire other companies, without selling or producing any products. The funds are raised via an accelerated IPO, and the companies to be acquired are even unknown at the time the amount is collected. Which is why they are often called ‘blank-check’ companies.
In a year of great uncertainty and volatility in the financial market, with new investment alternatives being sought by investors to increase their capital, SPACs stood out. There were 237 companies structured in this model, raising about US$ 80 billion, according to Yahoo Finance.
But how do these companies fit into the sports market? According to SportsTechX’s study, 42 of these companies focus on organizations dedicated to sports, with US$ 13.5 billion available for acquisitions.
Another important point to be considered is the participation of professional athletes in SPACs, playing the role of investors. Some of them are Serena Williams, Patrick Mahomes, Naomi Osaka and Robert Lewandowski. Besides them, owners of great teams like Ted Boehly, LA Dodgers and Peter Guber, Golden State Worriors, end up validating this type of investment, which is gradually losing its suspicious label and becoming a smart option.
For the future, we can expect these companies to fulfill their role and acquire startups from several verticals, including sports. Changes in the global scenario can happen from the entry of this new money, as well as the chance for new technologies to be developed.
Another trend the report highlighted was related to the fitness market. As the report says, “It seemed that all people wanted to do while they were stuck at home was to train using new apps and different tools.” The movement created in this direction was so great that it attracted the big technology companies, known as FAANG: Facebook, Amazon, Apple, Netflix and Google. Each one with a different initiative, with its product or just speculation, but all of them pointing to health care.
The third and last highlight was the betting sector, once again carried by the United States. More and more states are legalizing sports betting. When the report was published, it was possible to legally bet in 22 states in the US. And the leagues themselves are keeping an eye on this, with some deals being closed involving NFL, NBA, MLB, NHL and MLS with companies like DraftKings or FanDuel. The report highlights that the growth of betting has led to the development of new forms of content based on this, such as the transmission of fully personalized matches to bettors, which is an opportunity for channels and streaming platforms to reach a new audience.
These are some of the insights we have brought from SportsTech’s North American Report. Download the full report here, and learn more about the North American SportsTech ecosystem.