Private equity looks beyond big-league glamour to invest in lesser-known sports
Plus: How investors can support entrepreneurs' mental health, and high valuations masking slow growth
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Private equity is learning to bump, set and spike. Volleyball is one of several niche sports to attract private capital in recent years. Another is padel, a racket sport that originated in Mexico and has taken hold in Spain. Traditional sports like soccer still dominate the investment narrative, but in recent years, lesser-known sports have captured interest.
PE writer Andrea Gaini reports that passionate fans and the allure of getting in on the ground floor are driving investment in up-and-coming sports. More than $10 billion has been deployed in the sports category this year as investors capitalize on the intersection of live events and intellectual property.
"Private equity capital can be especially helpful in the proliferation of a sport," says Jeff Collins, managing partner at niche sector-focused firm Cloverlay. "It brings the capital needed for growth initiatives and expertise to improve the product."
CVC Capital Partners, for example, invested $300 million in the International Volleyball Federation in 2021, which has since transformed into what is known as Volleyball World.
This investment led to the introduction of new competitions, such as the Volleyball Nations League, which greatly boosted the sport’s popularity.
Collins said that choosing a sport with the potential to hit an inflection point and become a "generational form of content" is key.
Dig deeper into private investment in sports:
Q&A: Startup founders are struggling with their mental health more than ever
The startup world is still struggling with founder burnout.
In a new survey by Balderton Capital, more than two-thirds of entrepreneurs said burnout is a significant problem in the startup ecosystem. That's a higher number than last year and could be a sign of the toll today's tough VC dealmaking environment is taking.
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PitchBook's Leah Hodgson spoke to Balderton's Suranga Chandratillake about the particular stress on founders in recent years...
"The thing about burnout is that it builds over time, and we’ve been through about a three-year period which has been extremely tough for a lot of founders, ... where they can’t raise as much money and sometimes they can’t raise at all. They’ve had to let people go and trim down their expectations. ... For the first year, it might have been OK, but it’s not surprising to me that more founders are being impacted now.
And about how investors can move the needle on founder mental health...
"There are definitely VCs who believe that being a founder is all about sleeping bags in the office and living off ramen. ... But pretending that that's the only way one can build a business is dangerous because it means that a whole bunch of other people feel they can't be a founder when they absolutely can."
High startup valuations mask slow growth in VC
The venture market's LP problem is as bad as ever.
Some $4 trillion in value is locked up in VC-backed companies in the US alone. The overinflated valuations set in 2020 and 2021 burned many companies' willingness to exit, and investors' holding value of those stakes is teetering, according to PitchBook's Q3 2024 US VC Valuations Report.
Frothy valuations for AI companies are overshadowing the reality of much of the industry: Valuation growth between funding rounds has slowed, startups are waiting longer to raise their next round, and the rates of flat and down rounds are at a decade high of 26.6%.