Participated · Equity · Apr 2022

Fanatics began as an e-commerce seller of sports gear and has expanded into a broad sports platform that includes apparel, collectibles, betting and gaming. The company has amassed a database of more than 94 million fans. This year it acquired Topps for $500 million and, in partnership with LeBron James and Kevin Durant, bought Mitchell & Ness. Fanatics signed a long-term deal with Nike to manufacture college sports fan apparel and recently signed Japan’s Tokyo Giants. The company is preparing to launch sports betting in 2023 and projects that betting plus other segments could yield up to $8 billion in annual profit over the next decade. Fanatics estimates revenue, including its Lids segment, will be approximately $8 billion in 2023 and is weighing an initial public offering. Fanatics operates a large sports commerce business selling licensed apparel and fan gear directly to customers for leagues, teams and players. While commerce remains its biggest revenue source, the company has expanded into Collectibles (including its acquisition of Topps), an NFT arm through majority ownership of Candy Digital, and a fledgling betting and gaming division. Fanatics says it is positioning itself as a “global digital sports platform” and describes itself as a tech company. The firm projects $5 billion in revenue this year, up from $2.2 billion in 2017. The company has raised a total of $4.2 billion in funding, according to Crunchbase. Leagues, players’ associations and team owners are now strategic stakeholders as Fanatics broadens beyond its legacy merchandising business. Fanatics separated its trading-card business from its merchandise operations in August and has secured licensing rights that cover MLB, the NFL and the NBA. One month after capturing those league licenses it raised a $350 million funding round that values the trading-card unit at more than $10 billion. Management has recruited executives such as former IAC CFO Glenn Schiffman and launched related initiatives like NFT company Candy Digital to position the business as a technology-enabled collector platform. Fanatics plans to integrate services for collectors — insurance, grading, storage and a marketplace — and to collect transaction fees across those offerings. The company has indicated it may acquire an existing card maker (Upper Deck is cited as a likely target) rather than build manufacturing from scratch. Critics note the licensing rights do not transfer for a few years and some observers call the agreements akin to futures contracts; traditional card manufacturers together are expected to generate close to $1 billion of EBITDA this year, a benchmark cited in valuation discussion. Fanatics operates as a sports-focused e-commerce retailer, selling licensed apparel and merchandise for major leagues, clubs and athletes and also running some physical retail locations. The company has commercial partnerships with the NFL, MLB, NBA, NHL, MLS, NASCAR, European soccer clubs and more than 300 individual teams, and recently signed a multi-year online merchandising deal with athlete Marshawn Lynch. Fanatics reported $2.5 billion in revenue in 2019, and its sales were up slightly in the first half of 2020 as roughly 30% e-commerce growth offset losses from its brick-and-mortar stores during the sports shutdown. Management plans to use new capital to accelerate rights acquisition and pursue further M&A activity. The company is majority controlled by executive chairman Michael Rubin through his holding company Kynetic, which owns nearly half of Fanatics. Fanatics is expected to make an initial public offering its next capitalization step, though no timetable has been announced. Fanatics is a Jacksonville, Fla.-based sports e-commerce company that helps leagues and teams sell licensed apparel and fan gear directly to customers. It sells and sometimes manufactures team jerseys and other products and in April acquired Majestic sportswear, which has made Major League Baseball on-field uniforms. The company is headed by CEO Doug Mack, who joined three years ago, and executive chairman Michael Rubin remains an active entrepreneur. Rubin's e-commerce holding company Kynetic holds stakes in former GSI subsidiaries including Rue La La, ShopRunner and Fanatics. Fanatics says it expects to generate $2.2 billion in revenue this year. The company has focused on selling primarily through its own site and has taken actions against unauthorized sellers on platforms such as Amazon.

Led · Equity · Jan 2014

Cortical Metrics is developing a handheld device that resembles a computer mouse which vibrates a person’s fingertips to activate adjacent brain areas and assess how well those areas communicate. The device plugs into a computer and works with a web-based program to generate a measure intended to indicate the severity of a brain injury. The company was named one of five companies (plus 11 university and medical school–based research groups) selected as finalists in phase one of GE and the NFL’s $20 million Head Health Challenge. As a phase-one finalist Cortical Metrics received $300,000 in funding from GE and the National Football League. Up to five projects from the finalists could win an additional $500,000 next year as the competition advances. The article does not report other operating metrics, revenue, or prior financings.