Identifying Early-stage Investment Opportunities

Lance Dietz joined K.B. Partners in 2018 as part of the investment team, where he focuses on making venture investments in early stagestartups operating at the intersection of sports and technology. He currently serves as a board member for K.B. Partners' portfolio company Asensei, Compliable (formerly Rebric), and status; he also serves as a board observer for Alembic, ANGLR, PandaScore, PickUp, Rupie, and Repeat.gg. Prior to joining K.B. Partners, Lance was an investment banker with J.P. Morgan, where he managed M&A and capital raising transactions for companies in the building products, packaging, and distribution sectors. Previously, he served for five years as an Engineer Officer in the U.S. Army with assignments in Germany, Afghanistan, and the U.S. 

What are some of the technological trends and challenges you have witnessed happening in the sports tech space?

Over the past few years, we have seen incredible interest in sports or sports-tech as an investment class, and the pandemic accelerated trends that were already on the horizon. In traditional sports, teams/leagues/organizations realized they had to find new ways to engage their fans while outside of the stadium using various types of immersive technologies, such as A.R. and V.R. experiences, interactive video and audio, and new viewing experiences. Sports betting also has exploded over the past few years since the repeal of PASPA –legal U.S. sports betting quarterly revenue reached $960mm+ in Q1 2021, a 270% year-over-year increase, and the shift from land-based betting to digital is happening at a rapid pace. We also recently saw significant interest in digital health/wellness/fitness offerings – Peloton IPO'd, Whoop, Strava, and Hyperice became unicorns, Lululemon acquired Mirror, etc.

Is there a checklist for you to identify the right partnership with startups in the space?

We, first and foremost, are looking for exceptional entrepreneurs, and these come in various forms without always fitting a one-size-fits-all checklist. However, we do place value on certain experience that allows an entrepreneur to truly understand a problem she is solving and the customer she is going after.

"Within sports/sports-tech investing, a certain amount of first-hand experience can mean the difference between true insight into the end-user experience and a false sense of understanding of that customer segment."

The sports world is generally a close-knit community and having a strong network in the space is a valuable asset for founders at the early stage. We are also looking for unique advantages in product differentiation and customer acquisition at the early stages, along with a clear vision for becoming an iconic company. These criteria look different from startup to startup but are the things we are assessing and evaluating to build conviction in a team and idea. Lastly, we look for ways in which our expertise and network across the sports space can be additive to what the entrepreneur is trying to accomplish in the next 12-18 months.

 What are some of the common misconceptions when it comes to sports tech, and how do you advise your peers on them accordingly?

 To some, sports-tech can come to seem quite narrow and a relatively small market. We believe that sports touch many adjacent markets – from health to gaming to media – and that those markets are massive. Sports, in general, is part of the global social fabric and culture, impacting everyday life on many levels, which makes the space attractive from an investment perspective. Overall, the global sports market is worth over a trillion dollars and growing at a double-digit annual pace. 

 Could you shed light on your current investment portfolio?

 Here are a few that I think are reallyinteresting right now. Streamlayer is a Chicago-based company that is developing a new video streaming overlay operating system to make any streaming video incredibly more engaging and interactive, beginning with live sports. Another company in which we recently invested is Compliable, which is developing a comprehensive compliance management solution for the rapidly expanding sports betting industry. And AlkemeHealth is reinventing health/wellbeing support and healthcare for underrepresented populations, starting with the Black community. 

How would you see the evolution of the sports tech space a few years down the line with regard to disruption and transformation with space? 

Sports betting and sports media will be integrated (on this path now) as a new form of fan engagement. The overlap between sports, esports, and gaming will become more prominent, especially with the recent boom in NFTs. Elite performance technology will continue to trickle down to consumer health and wellness applications. Athletes/influencers will continue to be prominent ambassadors for and investors in startups, using their brand to drive awareness and growth.