New Venture Studio Aims To Put DraftKings In The Driver’s Seat For Sports Tech Innovation

The past five years have been something of a roller coaster for DraftKings, with metaphorical peaks coming in the form of the boom in daily fantasy sports circa 2015, which saw the Boston-based company spending as much in advertising as mainstream blue chip companies such as AT&T and then of course their most recent (and arguably more lucrative) foray into legalized sports gambling coming on the heels of the U.S. Supreme Court’s decision in Murphy v. NCAA, which effectively made sports gambling a state’s issue. Of course, sandwiched in between those two windfalls was the inevitable push back from state legislatures and attorneys general, who, before the Supreme Court chimed in, were of the opinion that daily fantasy and gambling were far too similar to be deemed legal in their states.

Now, on the heels of what can best be described as a legalized sports gambling “gold rush”, the daily fantasy giant is expanding at a pretty robust clip. With that expansion has come a diversification into other arenas, their most recent move outside of their traditional domain is a new venture called DRIVE, which the company describes as “...an Ecosystem of athletes, entrepreneurs, investors, teams, leagues, super-fans and business leaders who are driving the acceleration of sports professionals into tech and tech entrepreneurs into sports.”

DraftKings tabbed their former Chief Marketing Officer, Janet Holian and veteran venture capitalist and athlete/celebrity investment adviser, Rashaun Williams to spearhead the new venture. Williams, who manages a $300 million-dollar fund for Manhattan Venture Partners and who was also an integral part in hip hop legend, Nas’ Queensbridge Venture Partners has been amassing a massive network of current and former athletes interested in tech and venture capital for a number of years. As he puts it, “DraftKings and I were running on two parallel tracks, me on the athlete network side and of course DraftKings being one of the biggest and most successful sports tech companies of all time. We ended up meeting during NBA All-Star Weekend in February and came to the realization that 1+1=5, which is how DRIVE was born.”

DRIVE’s take on the venture studio is a multifaceted approach, where on one hand, encompasses a number of athlete-facing initiatives that are designed to educate, provide opportunities for, and give exposure to both current and former players who want to break into the startup, tech, and VC worlds. “Modern athletes don’t simply want to invest, they want to be founders of companies or be substantively involved with startups,” said Williams. On the other hand, DRIVE operates an accelerator that focuses on seed or pre-seed stage technology companies that want to break into the sports industry/space.

Companies like DraftKings in conjunction with the modern day phenomenon of athlete venture investing has given rise to this hot new sub-vertical that the “powers that be” who coin such phrases have dubbed “Sports Tech”. While the sports tech space has grown significantly since the DraftKings and FanDuels of the world came on the scene several years ago, it remains to be seen whether there are enough components of the sports ecosystem that are rife for innovation to support the venture studios, accelerators, and incubators that have popped up recently in response to this purported “wave” of sports tech companies. The Philadelphia 76ers, Minnesota Vikings, and Los Angeles Dodgers all have programs of their own, seeking to find the next DraftKings-esque unicorn success story.

However, according to Williams, what makes DRIVE different from its’ peers in the space is that, “Sports tech is merely the access point to teach players how to become a VC because it’s relatable and easily understood.” Williams sees DRIVE as being a complement to the financial literacy education offered by the various player’s unions and associations. “This is a tiny piece of the financial literacy pie. We’re not teaching guys about stocks and bonds, we’re teaching them how to go through a financial model, how to read a pitch deck, what kinds of questions to ask founders, etc. We don’t ask for a single dollar, our only criteria is an interest in tech and business.”

When pressed about whether the current pace of sports tech investment is sustainable over the long term, Williams cited a number of high profile examples of sports tech investments like DraftKings and ticketing upstart, SeatGeek, noting that these companies had their skeptics in their nascent days but have thrived in spite of the initial bearishness from VC’s about their respective spaces. The most poignant example Williams offered was that of Boston-based wearables company, Whoop. “I wish you were in the room when we took a handful of players in the DRIVE network to the Whoop office. When they saw the technology, it resonated with virtually all of them because it made them realize that technology was validating something they had been doing manually their entire careers. Elite athletes know when they need a day off and through Whoop’s technology, they now had the data to support how they felt,” said Williams.

The veteran venture capitalist went on to explain that one of the key differentiators of a program like DRIVE in the eyes of both sports tech founders and athletes alike, is the ability to bring critical stakeholders such as teams, leagues, and owners to the table. The off the court and off the field opportunities that a market has to offer is now becoming a key selling point for teams looking to lure free agents. As such, creating an innovation ecosystem that lends itself to more of these opportunities is not only something that savvy team owners should be doing, it’s becoming a virtual necessity. “There’s a reason Kevin Durant decided to go to a market like San Francisco as opposed to Oklahoma City. Look at Lebron, you don’t have to look too far in terms of his off the court ventures to see why he chose LA,” Williams noted. In his estimation, DRIVE will end up having the same effect on Boston, though they are not at a loss for talent or championships.

The success of sports tech companies like DraftKings, who have received investments from the likes of Major League Baseball as well as New England Patriots Owner, Robert Kraft and Dallas Cowboys Owner, Jerry Jones, have prompted other leagues and team owners to wake up and smell the proverbial coffee about not just the money to be made but the residual impact these companies and investments have on their core businesses. Though statistically speaking, not every corporate venture capital program is likely to succeed, the infrastructure that DRIVE has already put in place has certainly given them a leg up.

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