The SportsTech Ten is Mills & Reeve’s new series of ten question interviews with some of the most important stakeholders and disruptors in the domestic SportsTech ecosystem. This will include investors, start-ups and purchasers of cutting-edge technology utilised in the sports industry, all of whom are clients or good friends of the firm.
In our first interview, Julian Moore sat down with Andre Tegner (founder of the London-based start-up studio, Studio 54, former head of investment at Aser and board member of Leeds United FC) to talk funding gaps, ideal investors and Championship football.
“There is a real gap in the market in terms of access to Seed and Series A level investment for early stage sports companies and also in terms of numbers of specialist dedicated sports and media funds.”
1. What is your background in the sports industry?
My career originally started in corporate finance, but I’ve always been intrigued by the sports industry and the business behind it. Having decided to pursue a career in sports business, I completed an MBA and was lucky enough to land a position with the WPP group in Asia. I worked with the well-known senior executive, Mike Rich, and we built their sports and entertainment division in Asia, which eventually became Group M.
At Group M we advised a number of big brands and rights holders on their sponsorships and activations. It was a great experience as I was able to learn about the industry from the ground up with a really wide range of different sports stakeholders, including Tiger Beer on their Premier League sponsorship.
Following Group M, I then worked on my own fantasy gaming start-up in Germany before being contacted by one of the MP & Silva founders, Andrea Radrizzani. He had just sold his stake in agency to Chinese investors and he wanted me to help him set up a new company, Aser, into which Andrea reinvested some of the proceeds of that sale. Aser was created to provide investment and incubate ventures in the sports & media space.
In a relatively short space of time, Aser launched a number of new ventures, including a football player agency, Football Capital, and the international sports broadcaster, Eleven Sports, which started operations in Singapore, Belgium and Poland (the latter of which I was personally responsible for setting up) and was a big success story.
I was also head of investments at Aser and looked at a large number of start-ups looking for capital. In that role, I worked closely with Andrea on the acquisition of Leeds United Football Club, where I remain a member of the board of directors.
I departed Aser on very amicable terms to start up my own venture studio, Studio 54, and to advise and invest in a number of early stage ventures in the sports and entertainment space.
2. On what project(s) / for whom are you currently working?
Studio 54 is an umbrella organisation under which we advise a number of entities, invest in ventures and create our own startups. This includes advisory work for Moteefe, one of the city’s fastest growing e-commerce start-ups. The company uses a social commerce platform called Mazying to monetise social media followings (particularly for individual athletes and sports clubs) through the sale of merchandise. Working with our clients, the merchandise can be designed and distributed almost immediately after an event has taken place, for example if a footballer scores a hat trick or a club wins the league. We can distribute branded merchandise for fans as memorabilia and to celebrate those events immediately after a match has finished. We call this “live merchandise”.
A number of our other start-ups are in ‘stealth mode’, including one that will be active in the influencer marketing space and another that will be bringing to market an exciting new consumer product.
Aside from these existing projects, Studio 54 will be very selective about the start-ups with which we’ll be working. We are approached by a lot of new companies and entrepreneurs, and we’re always really happy to help and offer advice when asked. We’ll then look to work with the companies we like, most of which I anticipate will be based in the UK. However, for me, what’s really important is that a start-up is scalable, which often means they’re not just capable of growth in the UK, but also overseas, including on the continent and in the USA. All our companies will be globally focused.
“However, for me, what’s really important is that a start-up is scalable, which often means they’re not just capable of growth in the UK, but also overseas”
3. What was your route into SportsTech? Was it accidental or deliberate?
Our focus isn’t actually on pure SportsTech. I’m obviously attracted to, and have a deep understanding of, the SportsTech industry, but all enterprises in sport will necessarily have a technology focus in the future or are already influenced by technology. Studio 54 companies could well have SportsTech as their main core value proposition, but that’s not essential to me. I’m equally attracted to interesting start-ups that don’t have tech at their core, but simply utilise tech to produce the products or provide the services that are at the heart of what they do.
For example, social commerce venture Moteefe is essentially a merchandiser, but it uses cutting edge technology and leverages the explosion of social media and has built a really exciting business doing so. The same is true of our consumer goods business. The product is fresh and highly innovative, and technology and data analytics will be used to sell the product, but I wouldn’t class it as a pure SportsTech start-up. The lines are rather blurred here, I think.
“Studio 54 companies could well have SportsTech as their main core value proposition, but that’s not essential to me.”
4. What makes the UK an attractive market for SportsTech sellers / manufacturers, purchasers and investors?
I’m not British, but I am a big believer in the UK, and London in particular, and its ability to deliver enormous value for the global sports market. There are a number of reasons for that. Firstly, London is the capital of Europe’s sports economy, it is Europe’s financial capital and is the home of the world’s most popular sports league, the Premier League – as well as being the home for a number of large Championship football clubs and other major sports, such as rugby, tennis and cricket.
The UK also has other advantages in that the English language is the business language of the world and English law and the English legal system are so widely respected internationally. In summary, it’s a city that welcomes commerce, and is a highly attractive landing pad into Europe for American sports investors, leagues and franchises. It was therefore no surprise that the first European football clubs bought by American investors were in the Premier League.
Also, London is for various reasons a genuine hub of technology business and talent, is attracting some fantastic talented tech entrepreneurs, including from Scandinavia and Israel.
“I’m not British, but I am a big believer in the UK, and London in particular, and its ability to deliver enormous value for the global sports market.”
5. For start-ups, what’s your view of the current state of the UK SportsTech ecosystem?
There is huge potential. As I’ve said, there are many highly talented sports industry and technology professionals here, absolutely no shortage of creativity and energy, some high class universities, a number of important sports federations, a comparatively favourable tax regime for early stage investment and a sophisticated network of specialist services on offer, including lawyers, accountants and agencies.
Everything is in place, including a huge market opportunity, except for funding. There is a real gap in the market in terms of access to Seed and Series A level investment for early stage sports companies and also in terms of numbers of specialist dedicated sports and media funds. Capital can be found – sometimes from business angels and from generic VC funding - but it’s only ‘bits and pieces’ and the value of funding is small relative to the market opportunity. This has improved of late to an extent, but there’s a long way to go for funding activity to be on par with the USA.
Without access to funding, many great business ideas have been and will continue to be lost. In theory, young businesses can still grow without access to outside investment, but that’s a real challenge for technology focused companies incurring significant hardware, software and engineering costs – as well as salary and other standard overheads. The goodwill and creativity of the company’s founders will only take you so far. Invariably, outside investment will be needed to take a product to market properly.
6. What, in your opinion, could/should be done to improve this?
In my view, there are basically 2 main sources of investment.
Using Berlin as a case study, in that city a generation of successful tech company founders successfully exited at high valuations, but then re-invested sale proceeds into the city’s tech ecosystem. This resulted in an increase across the board in investment activity in the city’s tech industry, and in tech start-ups. The ecosystem has flourished from the success of its original founders and ticket sizes and volumes have increased accordingly. I believe the same will happen in London assuming we see a similar number of high value exits from the city’s first wave of SportsTech enterprise. It’s self-perpetuating.
The other source of funding is more traditional private equity and venture capital. For me, investment levels from this source will increase if an increasing number of investors (i.e. limited partners and other professionals) properly recognise the opportunity of the market. For me, the sector currently lacks some specialist sports and media industry know-how and expertise. I believe this will change, especially once we see a number of high-profile successful SportsTech exits.
7. What key challenges have your start-ups had to/will have to overcome – and how will you overcome them?
For Studio 54, I am sure we have in place the talent and successful business concepts, but the key thing to address is to get sufficient capital to take our ideas to market given the investment gap in Europe. As I said previously, the nature of that challenge will change once the investment market for sports start-up business improves.
8. As a start-up founder, what/who is the ideal investor?
A good investor may not always end up investing in your company. For me, it starts from the time you end your investment pitch. A good investor – someone who genuinely wants to see the ecosystem flourish – should be there to provide feedback, positive and negative. If they don’t want to invest, they should give reasons for making that decision and they should give fast feedback or at least be transparent about their process. Even worse, some investors then suddenly “ghost”. I’ve never understood that. That’s highly unprofessional in my opinion.
I’ve sat on both sides of the table as a potential investor and as a start-up, and for me it’s vital to provide or be given open, transparent and honest feedback. If someone doesn’t want to invest for a specific reason, a start-up can really learn from that and then has an opportunity to refine their business model and proposition.
Also, the best investors I’ve worked with have genuine knowledge of the sector, can make interesting and beneficial introductions to other industry specialists and can provide really valuable know-how and experience. They’ve been mentors and coaches. It’s also about meeting expectations. If the model at the outset is for an investor to be involved in the operation of the business, they should get involved. The opposite is true too. If not, the relationship between investor and company will really suffer.
“A good investor may not always end up investing in your company. For me, it starts from the time you end your investment pitch.”
9. Assuming access to funds, in which 3 SportsTech companies (UK or otherwise) would you personally invest?
Haha….naturally all of the companies in which Studio 54 is involved! We decide to invest in companies because we admire the team behind them and their business ideas. I also strongly believe in putting my money where my mouth is.
Otherwise, I’d invest in a certain Championship football club in the north of England!
10. Your advice to aspiring tech entrepreneurs…
Do not neglect your market research. You have to understand your potential market place and, as part of that, identify your existing or potential competitors. I have been pitched to by so many start-ups who seemingly have overlooked this essential task, or who aren’t willing to accept that a competitive landscape exists for their product. More often than not, it is fine to have competition. This possibly demonstrates that your idea is good and that a genuine market exists for it. You just need to demonstrate product differentiation.
Also, try to get out of your comfort zone. Don’t limit yourself to friends and family to get feedback on your new concept. Get advice, but from neutral and professional sources. Interview your potential future clients. Your friends will likely tell you what you want to hear, not what you need to. Source the market and be prepared to accept rejection. History if full of highly successful company founders who were told their idea wouldn’t work. Understand whether others have also tried what you’re seeking to do and, if they have, whether you can do things differently or better and avoid the same mistakes or failures.
Get in touch
Please do make contact if you would like to meet or speak with any of the Mills & Reeve specialist SportsTech team. We work with a wide range of stakeholders in the tech sector, including funds and other investors, start-ups and established technology providers and purchasers. We would be delighted to hear from you.