The Era Of The Athlete-Investor

The Era Of The Athlete-Investor

Hyperice is a maker of athletic performance recovery products. They just announced a $48 million series A funding which values the company at $700 million.

Hyperice was founded in 2010 and it has worked with athletes and early investors such as Blake Griffin, Mark Sanchez, and Lindsay Vohn to develop their products. Hyperice has only raised $4.5 million of outside capital before their $48 million funding.

Hyperice has been profitable over the last 5 years and they’re expecting to exceed $200 million in revenue this year. This is about 20x the $10 million they did in sales 3 years ago. 

As a business that is built on a physical product, this is quite impressive. Physical products tend to be quite capital intensive and a backlog of inventory that can’t move off the shelf signals disaster ahead.

Their investment was led by Main Street Advisors and SC.Holdings. They also got investments from the NFL, NBA, and 15+ pro athletes.

Notable investors include:

  • Ja Morant
  • Rickie Fowler
  • Christian McCaffrey
  • Jarvis Landry
  • Ben Simmons
  • Trae Young
  • Russell Westbrook
  • Naomi Osaka
  • Patrick Mahomes
  • Anthony Davis
  • J.J. Watt
  • Doc Rivers
  • Kelly Slater
  • Seth Curry
  • DeAndrew Jordan

Here is an interesting part for you, the “Hyper” in Hyperice was inspired from Kobe Bryant’s “Hyperdunk” shoes. He was a key resource in testing and developing their initial product to market.

Companies such as BodyArmor, Tonal, and Hyperice are brands in the entertainment, sports, and health & wellness space we see that are utilizing the concept of the “athlete-investor” in a strategic way.

From an athletes perspective, the days of cash endorsements and paid social posts are losing their allure. 

The modern athlete of today understands their power within the economic landscape of their personal brand. They are now searching for a higher upside where equity in a business gives the higher returns long term.

From a brands perspective, they are giving up a large percentage of their business. This is strategic as it opens up a whole new acquisition channel through a personality. The athlete is heavily invested in the business and is going to authentically endorse the product to their following on a consistent basis.

We are entering a time where athletes are going to stop negotiating with an existing company on the size of endorsements deals. Having an audience is the new currency and athletes are in a prime position to take advantage of this shift in the market. We are now entering a time where it’s “athelte-entrepreneur.”

A partnership between a brand and athlete has large upside that justifies the significant allocated equity stake to the athlete. A partnership with an athlete allows a brand to drive down their customer acquisition costs, Increase the LTV of a customer, and the athlete isn’t capped financially. They have an incentive to market the product aggressively.

 

Athletes like LeBron James have seen success in going the less traditional route and starting their own brand from the ground up. LeBron began Ladder with talented individuals where he provided the capital, and capitalized from his large equity stake.

This new strategy allows an athlete to take advantage of the evolving life cycle of a company. It gives them unparalleled incentive to promote the product as it presents infinite opportunities for potential growth each time they endorse their own product.

Takeaway: As they say in marketing: “the money is in the list.” Athletes are waking up and realizing that their audience and following is something they can nurture and build a relationship for the future. Athletes are now moving as an entity rather than a walking billboard that just accepts anything that comes with a cheque. It’s going to be interesting to see how athletes who aren’t well known develop their audience and work to build their social equity with people who don’t know them as this will be one of the key drivers to getting the foot in the door with brands.
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