The Continued Acceleration Of The Athlete-Investor Model

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Friends,

Hyperice, a maker of athletic performance recovery products, announced a $48M Series A funding round yesterday — which values the company at $700M.

( 📸 / Hyperice)

Founded in 2010, Hyperice has worked with athletes and early investors like Mark Sanchez, Blake Griffen and Lindsey Vonn to develop and market their products. In total, Hyperice has only raised $4.5M of outside capital prior to their $48M funding announcement yesterday.

The best part?

They’re killing it — Hyperice has been profitable for the last 5 years and expects to exceed $200M in revenue this year, which is about 20x the $10M in sales they had just three years ago. For a business built on physical products, which are typically capital intensive, that’s extremely impressive.

On the financing front, yesterday’s round was led by Main Street Advisors (MSA) and SC.Holdings, but also included capital from the equity investment arm of the NFL, NBA, and 15+ professional athletes.

New athlete-investors include:

• Anthony Davis

• Naomi Osaka

• Patrick Mahomes

• Trae Young

• J.J. Watt

• Russell Westbrook

• Fernando Tatís Jr

• Rickie Fowler

• Christian McCaffrey

• Jarvis Landry

• Ja Morant

• Chris Paul

• Doc Rivers

• Ben Simmons

• Kelly Slater

• Seth Curry

• DeAndre Jordan

That’s not all, here’s a fun fact for you:

• The “Hyper” in Hyperice was derived from Kobe Bryant’s “Hyperdunk” shoes, as he was a crucial resource in the testing and development of their initial product.

( 📸 / Hyperice)

Whether it’s Hyperice, or companies like BodyArmor & Tonal, we’ve continuously seen brands within the sports, entertainment, and health & wellness space utilize the concept of athlete-investor in a strategic way.

Personally, I love it.

From an athletes perspective, the days of cash endorsements and paid instagram posts are losing their luster — athletes of today know the power of their brand and want significant upside, which equity in a growing business brings them.

From the brands perspective, they’re typically giving up negligible percentage points of equity in the business — but open up an entire new customer acquisition channel through a personality who is able to authentically endorse the product on a regular basis.

Think about it this way — an athlete & brand partnership gives the brand an ability to drive down their customer acquisition cost, increase the lifetime value of a customer, and in return, the athlete is given uncapped upside financially with an incentive to market the product aggressively.

That’s great, but what’s the next step?

As athletes continue to see success through equity partnerships, I think we’ll see more start to pursue a less traditional route — partnering with the best entrepreneurs in the world where they provide up-front capital and have large percentage ownership stakes.

An example?

LeBron James with Ladder and Tom Brady with TB12.

The concept is simple — Instead of negotiating for a few percentage points with an existing brand, or putting up capital through a funding round, athletes will partner with talented individuals, fund the business themselves and capitalize off their larger equity ownership stake.

This structure enables athletes to participate in the full lifecycle of a company and incentivizes them with potential growth each time they promote the product.

As we continue to move into a world where audience is the new currency, athletes are in a prime position to take advantage of this fundamental shift. The progression of an investors mindset takes time, and this is no different, but don’t be surprised when the concept of athlete-investor turns into athlete-entrepreneur.

Have a great weekend! See you on Monday.

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Extra Credit

For those that missed it, I posted a thread on Twitter last night detailing the incredible journey of Tampa Bay Lightning head coach Jon Cooper — now a Stanley Cup Champion.

If you haven’t read it, I highly recommend checking it out. It gave me a whole new perspective on the concept that you have to find your passion early in life.

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