⭐ Upside VC Profile: Stadia Ventures

Upside VC profile of the month:

Investment platform name: Stadia Ventures

Headquartered: St. Louis, MO

Founded: 2015

Managing Partners: Joe Pimmel, Brandon Janosky, Alex Chalmers

Website: https://www.stadiaventures.com

Sectors: Sports + Esports

VC type: Pre Series A investor and accelerator. 

Acceleration duration: 14 weeks

Typical investment range: $50k-$250k

Total number of investments: 60 core investments to date.

Total number of exits:

  • Gameface AI from Fall 2020 to Slinger Bag;

  • Block Six Analytics from Fall 2016 to Excel Partners;

  • INFCLR from Fall 2018 to Teamworks; 

  • Gamerz Arena from Spring 2018 to Alpha Esports; 

  • Upgraded from Spring 2017 to Ticketmaster; 

  • Fishidy from Fall 2015 to FLIR Systems; 

  • Winning Identity from Fall 2015 to Blast Motion

Stadia Ventures is a sports- and esports-focused venture firm with a sports business accelerator. They are based out of St. Louis, MO, with additional presences in Dallas, TX; The Hague, Netherlands and Denver, CO.

Twice a year, they search for 4-6 of the best sports/esports startups in the world and invest $100k cash into each company. Subsequently, the Stadia team then guides the founders through an immersive 14-week business development bootcamp surrounded by an array of business mentors, speakers and impactful introductions from their targeted industries segments.

After six years, they are currently executing their 13th cohort and have over 60 companies in their portfolio. Their portfolio companies have gone on to raise over $300M and their funds have realized 7 exits from the portfolio to date.

This week, we interviewed Joe Pimmel, Managing Partner at Stadia Ventures, to discuss his investment thesis, his accelerator, his area of focus, and what he is typically looking for when investing in startups. 

Q1. What are the areas of investments that your group is focusing on? We typically invest in companies that are disrupting the underlying infrastructure of the sports or esports industries, with a focus on areas where our network and mentor pool can have an outsized impact on the trajectory of the startup. While not inclusive, this includes areas such as fan engagement/experience, athletic performance/training, data analytics/monetization and content/media. We’ve also made niche investments in areas where our network could add outsized value, such as outdoor recreation or airport video gaming lounges.

Q2. Why sports? We get this question a lot, actually, because the average person associates the term “investment” in sports primarily with the purchase and running of sports franchises. The first reason is that sports and esports are highly strategic ecosystems in terms of investment and acquisition. It can be an efficient market in which to scale an impactful new product because many customers are homogenous and seek to ensure they’re “up to speed” with competitive leagues, franchises or development programs in terms of innovation. The second reason is that sports and esports are remarkably adept at providing initial entry points for many technologies that can often be applied in other adjacent vertical markets later in a startup’s journey. Examples of these adjacent markets include entertainment, music, military/defense, wellness and health/med tech to name a few. Like any vertical industry, the same rules apply - fail fast and learn a ton. Our goal is to find great companies that can solve major pain points in the sports/esports world while also having strong applicability in other industries as they evolve.

Q3. What are you typically looking for when investing in startups? Typically, we are looking for the company to have defined the initial product/market fit. This is important for our team because a core tenet of our investment thesis is to be able to help position the company for growth within our global network of potential investors, customers and channel partners. If the company does not yet have a working product that has been validated in the marketplace, that makes that feedback/vetting process more difficult to achieve. The other main characteristic, which is a very predictable answer, is the quality and character of the founding team. We generally prefer teams with multiple founders though we have had instances where we invested in single founder companies. But the most important test is whether we’re comfortable with the founders’ ability to be mentored, to learn and to be open-minded when we begin that feedback loop in the Stadia global network. Our team is constantly learning and evolving; we want our founders to exhibit that same passion for continuous improvement as well.

Q4. Can you tell us about your sports accelerator? Why should any startups apply to your accelerator? Our accelerator is a 14 week program that meets every other week, currently on a virtual basis. The core programming is contained in those seven sessions which generally last from around lunch time on Wednesday to lunch time on Friday, with programming dedicated to intimate guest speaker sessions from executives in the sports/esports industry; mentor office hours with subject matter experts and potential customers; and education/insight sessions from our group of cohort partners. Each session also reserves specific times set aside for the cohort companies to meet as a group to share wins, losses or challenges they’re facing, which helps build incredible relationships and network growth.

The final piece is that each cohort company receives a curated, dedicated mentor team of 4-7 individuals that have been hand-picked for a specific reason. Those mentor teams meet on a weekly basis, each Friday morning, for roughly 1-2 hours.

If it isn’t obvious already, the reason that startups apply to Stadia and have success in the platform is that we literally surround them with industry experts, potential customers and world-class business mentors that give our portfolio companies an unfair advantage relative to their peers in the same space. We can often shrink a company’s path to market and revenue scale dramatically compared to what they would achieve on their own. The formula has worked for the past 6 years and we’re only getting started.

Q5. What do you think is the state of the sports tech industry after a year with COVID-19? It has been truly fascinating to watch the dichotomy between areas of the sports industry that have flourished contrasted with those that have been put on “pause” for the moment. In addition to that, the early-stage investment world has been changed dramatically at the same time, with both 2020 and 2021 setting records for volume of dollars invested into venture capital as an asset class. Generally speaking, our portfolio companies are healthy, which is something we wouldn’t have predicted at the outset of the pandemic; a number of our companies in areas such as esports, athlete monetization, remote fan engagement and virtual coaching have excelled during the past 18 months. The bottom line is that teams, leagues and federations have pushed the accelerator down on any efforts to learn more about the behaviors and preferences of their fan bases, no matter where they’re located, as the pursuit of dollars being spent by fans as well as corporate sponsors has become more and more competitive. Technology is helping to fill that knowledge gap for industry players as they seek to maintain and grow their “share” of the wallets of fans.   

Q6. What advice would you give to any startups looking to raise money right now? It is a great time to be a startup raising capital, especially when you consider some of the figures that are being published. We have never seen a time where more dollars are being invested into the venture capital asset class; many of those dollars are being invested in later stage growth companies, but in rising tides, all boats are lifted and even the dollars invested at the Seed stage have increased ~40% since 2020. My advice would be the same thing we tell our portfolio companies: capital is great, but make sure you’re reading the fine print and while getting that high valuation on your next round of investment is appealing, make sure you have a reasonable plan for supporting that valuation as you look to future rounds of funding. The last thing you want is to take money on a high valuation today and then find yourself growing more slowly than you’d like, which will make the likelihood of realizing a “down” round of funding that much higher.

Q7. What advice would you give to anyone interested in starting a career in the sports investment world? Go work for a tech startup for a bit and learn what it takes to work in that environment. Understand just how gritty it is to build and run a company with limited resources. The key here is acquiring empathy, as much as you can - coming up with ideas is great, but the execution of a small business is real life and incredibly difficult. Once you’ve seen how that is done, you’ll be much more likely to be able to identify the right recipe of founders + ideas + team when you see it as an investor. Plus, you’ll learn a ton!

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Upside Chat: Vasu Kulkarni, Partner (Courtside Ventures)

Upside Chat: Kai Bond, Partner, Courtside Ventures, on the Gaming/Esport Marke

⭐ Best Practices On How To Best Create VC Decks & Pitch Sports Tech Startups To VCs

For the past 10 years I have worked and helped many sports tech startups raise money, meaning helped them put together VC decks and connect them with potential investors (VCs, angels, Teams’ VC arms..). Now I never guarantee startups that I can help them raise money. However what I can do is help these startups be best positioned for success with a VC deck that makes sense and I can open doors to potential investors. And here is what I believe are some of the best practices when it comes to raising money from investors.

Keep your VC deck to 15 slides maximum

Too many times I have seen VC decks that are 20-30 slides long. That’s way too long. Your VC deck should be no longer than 15 slides. If you have more than 15 slides put the extra slides in the appendix section. VCs are extremely busy and if your VC deck is too long it will turn them off and you will jeopardize your chance of getting investment. Plus you need to be able to be concise and straight to the point. Generally speaking your deck should include the following sections: Mission statement, current problems, your solution, your management team, your GTM strategy, your business model, your financial projections. It should also include a slide on how much money you need to raise and how you plan to allocate the funds. I also like including 2 slides showing your unique competitive advantage. We will talk more about that in one of the upcoming sections.

For each slide have a very explicit title with the key takeaway

I have learned this from my days working for one of the largest OEMs in the world. Too many times I have seen VC decks with no explicit titles on each slide. For example instead of saying in the title “competitive matrix” say something like “Your company has an edge over the competition because of the breadth of its offering, his superior technology and unique GTM strategy”. The point here is that a VC should understand the key takeaway just by reading the title and without having to go through the whole slide. You know the slide in and out but do not assume that VCs get it right away just by looking at the content of your slide. So you have to spell it out.

Do not assume that VCs fully understand your space

Whenever you pitch your startup to potential investors you should not assume that they fully understand your space. Remember! You are the expert in your field. So you have to focus on fully explaining to them what the current problems are, the trends are, how your product and company are uniquely positioned, what your solution to the problem is, etc. That’s ok to oversimplify what you are trying to explain in your slides.

Less text is better. Focus on visuals

Oftentimes I see VC decks that contain too much text on the slides. If your slides have more than 15 lines of text it is already too long. It can create confusions for the VCs. I always tell startups to be concise, with less text on each slide. Instead focus on creating visuals (images, diagrams, videos..) as well. It will be easier for VCs to digest your slides as well and it will reflect better on yourself and your ability to make your point across.

Make sure to highlight your startup’s key strengths

I cannot stress that enough. If you only have 2 minutes to pitch to a VC you need to think about your key strengths and why should any potential investors invest in your startup. That means that you need to highlight your key strengths. Key strengths could be things like: “X years of combined experience in a given field, Unique technology, Strong Go-To-Market Strategy or business model, Great traction with top teams or leagues, Unique pricing strategy”. You get the idea. The point here is that the VC or potential investor needs to fully understand what is unique about your startup and why they should invest in your business.

Get testimonials from customers (Teams..)

I always say to startups: “A quote from a top customer (Top teams..) is often worth more than a thousands words”. Even if you are an early stage startup, but you already have some pilot customers, ask the athletic trainer or head of digital of the team if they can give you a testimonial or quote highlighting why they like your product. That will resonate well with your potential investors because if your customers say good things about you it is not just you saying it but your customer themselves. That also shows that your product is addressing a need in the market whether it is to reduce injuries, improve players’ sleep, the rehab process, or improve the fans experience. You get the point here.

Highlight the startups’ unique competitive advantage and positioning

I always like to include in VC decks 2 slides showing your unique competitive advantage(s). The first slide should be a competitive matrix which highlights how your startup is unique compared to the competitors based on several criteria (e.g. breadth of the offering, pricing strategy, etc..). The other slide should also be a slide with a x y axis showing your positioning compared to the competition based on 2 distinct criteria. It needs to be visual so that potential investors can fully understand how you are uniquely positioned to win the market.

Understand at what stage the potential investors usually invest in

This is a common mistake that I have seen made by many sports tech startups. Oftentimes they do not spend enough time researching at what stage a targeted VC or investor usually invest in. If you are an early stage startup and are targeting a VC usually investing in Series A startups you will have very little chance to get any response. Instead if you are an early stage startup focus on raising money from angel investors, family offices, micro funds, or startups accelerators. You will have a much better chance to raise money there.

Think about how your startup can enhance the VC’s existing startup portfolio

Now this is another key element when raising money from VCs. Many times I have seen sports tech startups who do not spend enough time looking at the portfolio startups of a targeted investor. Why is that important? Because it will help you best position your startup when pitching your startup to the investor. For example if a VC has invested in several wearable sports startups and you are a startup that has built advanced algorithms that deliver customizable health insights, your pitch to this VC should be: “If you invest in our startup we will help your wearable sports portfolio startups deliver actionable health insights to their end users. It will help bring value to them and their customers and improve the stickiness of their wearable offering”. So make sure to always do your homework there. It will increase your chance of success raising money from those investors. And VCs will appreciate the fact that you took the time to do that.

Do not be afraid to mention other potential investors

Another thing that VCs like to hear is that other potential investors are already interested in being part of a round of funding. Now not all startups can be in this position especially if they are an early stage startup. But if you are a sports tech startup that already has interest from potential investors do not be afraid to mention them. The truth is that VCs always prefer to invest with other investors because it is less risk for them and sometimes they like making deals with VCs that they work with before. So again there is no harm in mentioning other potential investors. It will help you get more attention among potential investors.

Do not forget to include similar exits in the appendix

This is another important element that is often missing in VC decks based on my experience. You should always try to include a slide in the appendix section showing similar M&As or exits. Why? Because that way the VCs will see the potential ROIs. If your competitor got sold for $100M and you think you have a better technology and better strategy then it is a fair assumption for you to say that you think that we could be sold for $100M+. So make sure to include a slide on similar M&As and exits in your appendix section.

Pitch VCs what they want to hear, but be honest about where you are

Of course you have to pitch VCs what they want to hear meaning that you have a unique technology, great momentum, a strong management team but you also have to make sure to be honest with the potential investors on where you are as a company. If you are an early stage startup with an MVP and working prototype, be honest about it. Do you claim to have a full end to end solution. Say something like: “For us to build a full end-to-end solution with a full analytics platform, we need to raise additional funding. This is why we are talking to you now”. The point here is to not pretend that you are at a later stage because it could backfire with the investors and your customers.

Pitch them the big vision, not the short term vision

VCs always want to hear the big vision. Like they always say “Go Big or go home!”. VCs will always be more interested in startups that have a big vision, that can disrupt markets with disruptive technologies (sleep tech, injury prevention, mental health, AR/VR, NFTs…). They want to see and hear something that excite them. If you intent to enter an existing market there is no point in not pitching a big vision especially if the market you are focusing on is full of competitors. So think big, and do not just pitch the short term vision.

Send 3-4 bullet points to VCs summarizing why they should invest in your startup

When I reach out to potential investors on behalf of sports tech startups I always like to keep it short. VCs are just way to busy and if you send a long email that will turn them off. So be straight to the point on why they should spend 30 seconds reading your email. I always like to include 3-4 bullet points in my email to VCs. The bullet points should focus on highlighting things like “the experienced management team, great traction, unique technology or product”. That’s it. And if you already have potential investors who are interested in investing in your startup be sure to mention it there. And make sure to attach your VC deck as part of this email.

Pick potential investors who understand your space

The last thing you want as a startup CEO is to get money from a VC or investor who does not understand your space. I have seen many horror stories of startups taking money from investors who were not familiar with their space. This could have some serious consequences on the future of the startup. So focus on finding a VC or investor that is focusing on your space (connected fitness, NFT, wearables, injury prevention, AR/VR, esport..). That will increase your chance of success.

Show proof of traction: You can show LOIs.

Telling a potential investor that you have interest from some major sports teams is one thing but you have to show proof of that. So if you can get a Letter Of intent (LOI) from a potential customer (team, league..) saying that they intent to buy your product then take advantage of that. It will go a long way when trying to pitch to a VC.

Think beyond sports and other verticals (healthcare, industrials..).

Now this goes beyond the world of sports and tech, but I have worked with many sports tech startups that have transitioned and gone beyond the world of sports and tech. Why is that important to mention this when pitching to a VC? Because by saying that “down the road we intent to go beyond sports and enter other verticals like healthcare, industrials”, the potential investor will clearly see what the ROIs could be down the road. In sports your product could be used by 20 soccer players but in sectors like constructions your product could be used by thousands of field workers. You get the point.

Bottom line: As a sports tech CEO pitching to potential investors you need to target the right investor, do your homework about their past investments, show momentum and put together a VC deck that is concise, exciting and straight to the point. And you don’t need to pitch your VC to 100 potential investors you need to focus on the right potential investors. This will save you a lot of time and it will increase your chance of success.

If you need help putting together a VC deck and connecting with potential investors (VCs, angels..), feel free to reach out to me at julien@sportscouncilsv.com

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⭐ Upside Analysis: Best Practices on how to build & Sell a Sports Performance Product to Pro teams

Check out our website at www.upsideglobal.org and reach out to us if you need help with sales/BD, VC deck creation, technology sourcing, or fund raising.

🔥 Upside Chat: Ismael Fernandez, ThermoHuman CEO

  
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This week we had the honor to interview Ismael Fernandez, CEO of ThermoHuman, a leading company in the thermography space, which helps teams reduce muscle injuries and quantify internal load.

📝 Show Notes: Through this interview, we touched on his background, his company, your product and how it benefits the teams. We also discussed his plans for the next 12 months.

🚀 Best Quotes: Here’s some of the key discussion points and best quotes from our conversation with Ismael:

  • On his background: “I am a sports scientist. I began ThermoHuman when I was doing my PhD. It all started for me and some other colleagues (Pedro Gomez, Manuel Sillero, Javier Arnaiz Lastras) in 2009 at the faculty of sports science at the technical university of Madrid where we discovered this technology. Basically we tested it and saw from the first day the potential that such a tool could have and how it could help visualize and quantify things using a camera that is measuring temperature in colors. And we saw how it could be related to overload due to potential injuries and so on. So it was something that we did as part of a research project for our master degree in sport science. And then we built a small research group from there. From this research group step by step, we created a spinoff inside the university. And for the first five years our main objective was just to build and create more evidence and more science”.

  • On how he ended up creating ThermoHuman: “Then myself, Pedro, Manuel, Javier and other colleagues, presented our PhD focused on using thermography with different research areas such as injury prevention and the training effect. And simultaneously we started building a software for it. Then we ended up created a company that was specialized in using such data, and analyzing body pictures of individuals (athletes, patients..) for professionals in the health or sports high performance space. We wanted them to use this technology in order to measure internal load, which is currently a very hot topic. Ultimately what we are doing is measuring temperature in order to understand how our body reacts to the different loads (..) We're focusing on helping teams better manage the players’ load and figuring out if something is going on from a temperature perspective. And then we can provide the right data and metrics to sports professionals and help them intervene early on to prevent injuries, support the diagnosis and support the return to play”.

  • On their focus on research and the fact that they not only serve sports but also healthcare organizations: “We have published 49 research papers to date, but wee keep on researching and publishing research papers. And in the last six, five years, we have been growing and working with different institutions which are mainly in the world of soccer. But we are also working with universities, hospitals, and clinics. And at the end of the day, any kind of institutions that might focus on injury prevention and follow up of injuries that's our target”.

  • On the fact that Thermography was initially mostly used to detect breast cancer: “Thermography has been used as diagnosis tool primarily for breast cancer, The main problem that we faced there was that this application for breast cancer diagnosis was used in the early sixties and seventies. And sadly because of a large amount of false positive, this technology was been ignored, or let's just say ripped apart. So the reputation of thermography in the field of human applications in medicine was quite damaged. So when we started in 2009/2010, what we discovered and noticed from the first moment was that most people were not familiar with the technology, and those that knew thermography had a very bad perception of such technology. So it was clear to us that we needed a lot of evidence and research in order to change that perception and to spread the word that thermography if used with a different approach, can actually be valuable. And we are still focusing on the research because this perception problem remains our main challenge today”.

  • On how ThermoHuman and Thermography works: “It's based on the analysis of temperature. So we built metrics based on mainly asymmetries. Theoretically our body should trend with a thermal balance based on the homeostasis principle. So based on that, your left shoulder or left knee should has more or less the same temperature as the right shoulder or knee. So with that in mind, before the athlete starts feeling some discomfort or some pain, we should see this imbalance of temperature. That's what’s incredible. Here we are talking about a few Celsius degree differences. So obviously there are a lot of temperature differences on the areas of the body. But we are essentially using thermography, and we are not just looking at the color changes, but we built specific metrics to do that. Then from the beginning, what we saw is in order to extract the metrics, you should analyze the image manually. That is something that you can do if you have one staff member dedicated to this task, but obviously if you want to analyze 25 players and you want to get the results as fast as possible, you need a software”.

  • On how teams can use ThermoHuman once a week and how such data can be combined with other metrics (GPS) to prevent injuries: “We built a software that helps sports professionals process all those images as fast as possible to get the metrics that might be relevant even before training starts, because the idea there is to analyze and screen the players at least once a week before training. Then we can get this information before training. And we can combine such data with other metrics such as GPS or other external load technologies. Ultimately we can check if there is something going on in the body of players. This might be relevant in order to adjust the training load, or even do any kind of interventions from a recovery perspective, treatment perspective and so on”.

  • On the types of leagues and teams they work with today: “So far we have been mainly focused on soccer. Funny enough, we are Spaniard, but it was very hard initially for us to get our first clients in LaLiga, the spanish soccer league. On the other end Brazil is by far the country where thermography is the most established from both a health and high performance standpoint. So today we work with Brazilian soccer teams like Fluminense. And since 2016, we have been working with pro teams in the US, and especially in the MLS such as the Inter Miami or Orlando City FC. We have also been working with the Houston Rockets in the NBA, and we are also working with some NFL teams (..) We have also been working with soccer teams in the Premier League, the Bundesliga, Italy (Calcio), and as I mentioned in earlier, in Spain (Laliga). We also work with Paris Saint-Germain in France. Today we are working with customers in 30 different countries and across 15 international leagues. But we also know that we are still at the beginning of our journey”.

  • On how their technology resulted into a 63-74% reduction in muscle injuries: “One of my colleagues who has a PhD published a paper in a scientific journal showing that our technology resulted into into a 70% injury reduction in muscle injuries. But it's not the only scientific result that we have. We have another report published with the Corinthians, which showed that with our technology this Brazilian soccer team saw a 63% reduction in muscle injuries and other teams in LaLiga and Portugal saw a 74% reduction in muscle injuries. Basically everything is based on the comparison of two different sessions. The first one without using thermography. And in the second session, we are adding to the same group of players a protocol of intervention based on thermography. So we have now enough evidence with soccer teams in Brazil, Spain, and Portugal. At the end of the day, our scientific reports have shown a significant reduction in muscle injuries between 63% and 74%”.

  • On the fact that their solution is adding objective data related to internal load: “With other metrics (GPS) measuring external loads, all those metrics are focusing on how I exercise, or how I run. But the point here is that it is hard to get objective data about how each individual are assimilating those external loads. So that is exactly where we are adding value, by providing fast and noninvasive data that we get from taking a picture of the body. This is what is really different here and so valuable to the teams. We are adding objective data related to the internal load, which is a main factor when trying to discover if there is a higher or lower risk of injuries with a player”.

  • On how ThermoHuman fits into the players’ workflow: “Teams can use ThermoHuman in a matter of seconds, which is a key factor. That's something that a lot of customers and collaborators tell us. The good thing about thermography is exactly that. We can take an image and it is a noninvasive way to extract metrics. Most of our clients or collaborators are taking pictures at least once a week. In the case of, for example, of a soccer team, they normally use our technology and take pictures when they are asking players to take their weight as part of their daily routine. So when the player gets to the training facility and they are weighing themselves on the scale, we are taking a picture. So it happens in a matter of 15, 30 seconds for each player, and then we are analyzing it automatically through the software in a matter of 30 seconds. I was recently talking to the staff member of a team who told me that he is analyzing 25 players in around 20 minutes before training using our technology”.

  • On the price to use ThermoHuman:”Regarding pricing, at the end of the day, we try to adapt ourself to every single customer. So as part of that, we are providing different pricing options. Teams can rent, pay a monthly fee or an annual fee to use our product. Just to give you an idea, the pricing can go anywhere from €10,000 a year, or €1000 per month, and up to €30,000 per year. The pricing varies because there are different variables that are affecting pricing, but for top institutions that's more or less the price”.

  • On their goal to continue to educate sports professionals about Thermography and become the goal standard to measure internal loads: “We are focusing on improving our technology and product because ultimately, as I mentioned earlier, our biggest challenge is to educate people about thermography. So for us, one very important milestone is just to keep on informing and publishing research papers about thermography. That way sports professionals will be more aware about it because we recognize, and we know that there is still a large number of sports professionals that are not familiar with this technology. DPS is now the gold standard to measure external load. So we really hope that thermography will become the new gold standard to measure internal load in the coming years”.

  • On their goal to continue to improve their technology : “Internally we are very focused on improving everything related to our technology in terms of automatization. That means making the data process and the data collection easier, faster, and in a more automated fashion. We are also focused on creating more evidence, and document more cases. Currently we are mainly focused on the metrics. Right now we are building an alarm system which can help sports professional to not only get the data, but get the correct interpretation of the data. Ultimately we understand the needs from high performance individuals of teams. What we want is continue to bring more awareness about such technologies while working on building a product that can interpret the data faster and more easily”.

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🔗 🔥 Upside Analysis: NFTs Vs Crypto Vs Digital Currency, How Are They Different?

For the past 6 months we have been talking to lots of clubs regarding NFTs, what it is and how it can benefit them. But one thing is becoming more clear every day. Many clubs do not understand the difference between crypto and NFTs. And the clubs are not alone. The media seems to be confusing cryptocurrencies with NFTs. In this analysis we will go through the main differences between NFTs, cryptocurrencies and digital currencies.

Lots of confusion in the media about the difference between NFTs Vs cryptocurrency

Here is a typical example illustrating how many media do not understand the difference between NFTs and cryptocurrency. Last July, Arsenal FC announced a partnership with socios.com as shown in the picture below. The headline from the article was “Arsenal joins the NFT league with new fan token”. The writer explained the partnership as follow:

“Arsenal Football Club is next to enter the NFT scene, partnering with sports and entertainment industry blockchain provider, Chiliz, to launch the club’s $AFC Fan Token on the latter’s Socios.com mobile app. Socios.com will become a digital meeting place for Arsenal’s international fanbase, with the partnership reflecting the club’s drive to create a more engaging fan experience for its global following”.

The problem there is that socios.com is not an NFT company but a cryptocurrency. Basically in the same sentence the writer managed to refer socios.com and Chiliz while saying that Arsenal FC was entering the NFT market. This is an inaccurate statement and we believe that many media, as well as clubs, still do not understand the nuance between NFTs and cryptocurrency.

Source: Marketing-Interactive.com, Arsenal FC, socios.com, July 2021.

But before we get into the differences between NFTs, cryptocurrencies, digital currencies, let’s start with some basics. 

What is blockchain?

As shown in the graph below, Blockchain can be defined as a growing list of records called blocks, that are linked together using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp and transaction data. 

Source: STARGraph

Currently blockchain’s main application has been around cryptovalues such as Bitcoins. As shown in the table below, Bitcoin has had great momentum of the past few years to the point where it would pass Tencent a leading gaming company in terms of market cap. 

So how does Bitcoin work? 

Bitcoin can be defined as a worldwide decentralized peer-to-peer network. Miners create Bitcoins by using computers to solve mathematical functions. The same process verifies transactions. Bitcoin exchanges trade conventional currencies for Bitcoin offering a way in and out of the market for non miners. In addition, individuals and businesses create wallets that allow them to send and receive Bitcoin. Then Cryptocurrency secures the network, ensuring that all balances and transactions are safe.

Here is a video explaining how Bitcoin works.

Video: How Bitcoin works

What is a token?

As shown in the graph below, a token can be defined as a digital asset based on the blockchain that can be exchanged between two parties without the need for the action of an intermediary. 

Source: STARGraph

Digital Currency, A Centralized, Electronic Form of Real World Money

So what is a digital currency? A digital currency oftentimes refers to an “electronic form of real-world money”. For example, through a digital currency, an individual can can buy items or products, and conduct transactions anywhere in the world even though digital currencies are non-physical currencies. From a security standpoint, it is also important to point out that a user buying products through a digital currency will need to use a secure password in order to protect their digital wallet from hackers even though a digital currency does not require encryption. 

Cryptocurrency, Decentralized, Non-Physical Currency

Now we talked about digital currency, but what about cryptocurrency? How is it different from a digital currency? Cryptocurrency, based on blockchain technology, oftentimes refers to a non-physical currency, issued by a private system. It is also decentralized, and not regulated by any governing authorities such as banks.

NFTs, on the other end, also referred to as “Non-Fungible Tokens, are digital assets that represent real-world objects such as fashion, art, music, art, etc.”

Unlike cryptocurrencies, NFTs are not interchangeable, and not tradable. They are also managed by a digital ledger. All transactions also occur online. 

What is an NFT? 

As shown in the graph below, NFTs, defined as Non-Fungible Tokens, allow to demonstrate ownership of a digital asset (e.g. video, photo, audio, etc.). They also ensure the rarity and uniqueness of a digital asset. They also have an agreed regulation thanks to Smart contracts. NFTs can also make a digital asset tradable and they can record permanently the history of transactions. 

Source: STARGraph

Gerbert Vandenberghe, COO and cofounder of Venly.io, explains further: “An NFT is a unique digital asset on a blockchain that proves ownership of e.g. a collectible like a signed picture, a membership token or an artwork. NFTs are interesting for sports clubs to monetize on the brand and build a strong community around the club”.

Michele Imbimbo, CEO & Founder of STARgraph, further explains what NFTs are all about: "The value of NFTs comes from three things: Utility, access, social currency. If you understand the concept behind membership cards, rewards on credit cards, tickets to VIP access-only events, you understand NFTs. If you’ve ever purchased skins or other virtual items for your video games, you understand NFTs. The reason you wanted that item was to be a utility in a world that you cared about, or to have the clout and bragging rights amongst your friends and others. NFTs are going to extend that same utility and “flex” of social currency to everything else."

To summarize, in the world of sports, here are the most frequent use cases where NFTs are being used:

  • Collectable NFTs: These are digital assets which can take forms such as photographs, music or video clips. Websites such as OpenSea and Rarible act as marketplaces and list the prices. Think of them as like Etsy or eBay but for digital asset.

  • NFT based in game assets: These are digital assets that gamers receives. Examples include items, shields, weapons, skins, points, health, custom avatars.

  • NFTs giving access to memberships: NFTs can also give access to members so they can get exclusive content (e.g. VIP access only events).

Difference between Digital currency, Cryptocurrency and NFTs

Now what are the main differences between digital currency, NFTs and cryptocurrency?

The main difference between all 3 is that cryptocurrencies and NFTs are decentralized and regulated by the organizations that run them. On the other end, digital currencies are centralized and regulated by financial institutions such as banks and governments.

Digital currencies also are private transactions and money transfers are confidential. NFTs and cryptocurrency, on the other end, are available through a digital public ledger which makes those transactions transparent. Also, as we noted earlier, NFTs do not necessarily represent real world objects, an in-game item like a sword, a shield or a skin can also be an NFT. For example, in game items gamers can collect in world of warcraft. These items can be registered as NFTs and will only exist in the digital world.

In addition, NFTs, Cryprocurrencies and digital currencies are all tradable. However, NFTs are not interchangeable.

This is what Gerbert Vandenberghe COO & cofounder of Venly.io, pointed out to us during an interview, “NFT are tradable: You can buy and sell them on an NFT marketplace. They are indeed not interchangeable, and that is the main difference between an NFT and currencies. Interchangeable means that they are identical and represent the same value. E.g. when I have two Bitcoins it doesn't matter which one I give to you, they both have the same value. When I have two NFTs of Lionel Messi it will matter which one I give to you as they will have different characteristics, which might define the value of each NFT. An example of such a characteristic is the mint number, an NFT that is minted before another one in the same series typically has a higher value for collectors”. 

Hugo Cortez, COO, MyLads, further explains the difference between NFTs and Cryptocurrency. NFT is a digital or physical asset that has been associated with a unique cryptographic token that exists on a specific blockchain network I.e. Like a digital football Panini sticker that is unique and verifiable digitally. Cryptocurrency is a virtual currency that uses cryptography to secure and verify transactions as well as to manage and control the creation of new currency units on a specific blockchain network. I.e. Like Bitcoin”.

On the other hand, Sven Van De Perre, Creative Director, Tropos AR, believes that this whole debate between NFTs and crypto is irrelevant. According to Mr Van de Perre, Let me put on my pop culture hat and ask: do these public NFT/crypto/blockchain debates really matter? I really don’t think so!  Just like the general public has never heard of the Bretton Woods agreement that forms the basis of today’s USD/Euro/Yen monetary system, they’ll also never adopt terms like smart contract or NFT.  We instead focus on the simple concept of digital asset ownership with its own inherent value. Tropos AR is building a product that makes these unique assets accessible and enjoyable in an augmented reality environment while removing the complexity and making these more ‘tangible”.

With that in mind, the market between the NFT vendors, Cryptocurrency companies and digital currencies can be broken down as follow:

  • NFT vendors: Those include NFT vendors (e.g. MyLads, STARGraph) that enable sports organizations (clubs, leagues..) to offer and sell their own NFTs to their fans. It also includes end users NFT product vendors (e.g. Games), which offer sports organizations an NFT platform which enable them to create end user NFT products (e.g. games, etc.) and sell their own NFTs (e.g. players trading cards..) to their fans. Those include companies such as Sorare, Geer, Fantastec, Illuvium, Rage Fan, Dapper Labs, Unblockable. The NFT vendors category also includes NFT marketplaces Typically NFT market places such as Crypto.com, Binance, FTX, Autograph, Open Sea, Reality Gaming Group, STARgraph, or Venly. Lastly the NFT Vendor category is comprised of NFT Tech enablers & analytics companies, such as Venly or Dachain.io which provide the tools to NFT creators to create NFTs for their customers (clubs, agencies..).

  • Cryptocurrencies companies: Those includes companies such as FTX, Crypto.com. Binance or Socios.com.

  • Digital currencies: Those includes Bitcoin, Ripple, Litcoin and ethereum.

Source: Upside Global confidential, September 2021

Bottom line: In the coming months, we expect many clubs and media outlets to continue to be confused when it comes to digital currencies, cryptocurrencies and NFTs. Like any new emerging technologies, it take times for anyone to learn and understand the nuances. But we believe that with continued education, int he long run, clubs and media outlets will fully understand the differences between all 3. Let’s face it, clubs executives are not all digital experts so it is understandable that they may not all understand the nuances right away. But at the end of the day, clubs recognize the huge opportunity presented by NFTs, cryptocurrencies as a way to generate new revenue opportunities and help them grow their top line which is critical in the pandemic world we are living in.

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🔗 Upside Analysis: The NFT Sports Market: Key Players, Trends, Recommendations to Teams.

🔥Upside Chat: Alexi Pianosi, Strengths and Conditioning Coach, Pittsburgh Penguins (NHL)

  
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This week we had the honor to interview Alexi Pianosi, the strengths and conditioning coach for the Pittsburgh Penguins, a leading NHL team.

📝 Show Notes: Through this conversation Great we touched on his background, his role at the Penguins, as well as the impact of COVID. We also discussed his top three favorite technologies. Lastly we touched on what he is  looking for when buying new technologies and what makes Sidney Crosby his star player, so special.

🚀 Best Quotes: Here’s some of the key discussion points and best quotes from our conversation with Alexi:

  • On his  background and how he got started in the world of elite sports: “So I'm actually from Halifax, Nova Scotia in the Eastern part of Canada, and I grew up playing hockey myself. I played for most of my life, and played through Major Junior in Canada. Then I moved on to play at Queens university collegiately. That's where I did my bachelors degree of kinesiology and at the time I was also running a private business and training hockey players and other athletes as a part-time job in the summer. I then graduated with my undergraduate degree from Queens. I decided to take my business to the next level and try to pursue that full-time”.

  • On how he ended up working for the Pittsburgh Penguins (NHL): “After I started operating my business year round. I worked as the strength and conditioning coach for the Halifax Moose heads, the major junior hockey team in Halifax. I was working for them for two years before a colleague and friend of mine, Andy O'Brien, who was at the time the director of sports science for the Pittsburgh Penguins, told me that the Penguins might have a job opening. And I applied in Pittsburgh and I was very fortunate to get that job after my first interview. I started in August of 2017. I'm just about to start my fifth year here in Pittsburgh and I've had the opportunity very fortunately to work with Andy O'Brien for about 10 years now in different capacities with the Penguins and in the private sector”.

  • On his role at the Pittsburgh Penguins: “ As the strength and conditioning coach for the Pittsburgh Penguins, I work with my colleague, Alex Trinca, who's also a strength and conditioning coach for the Penguins. We view strength and conditioning in the Pittsburgh organization as a very holistic approach. We are responsible for setting the schedule of workouts and setting up lifts, but we also oversee the recovery, injury prevention, and rehab process after injuries.  Myself, Alex and another guy in our organization, Curtis Bell, handle the team's nutrition as well. So it has become a pretty holistic role in a lot of different areas of sports performance. And for myself and Alex, especially, anything that can relate to performance, whether it would be writing an individualized workout plan for a player to do on practice days or the morning of a game, doing some specific rehab exercises after an injury or in the later stages of the players’ return to play process. It could also be about trying to figure out how to customize a specific nutritional plan for an athlete to maximize energy availability. We take all of that on as our role of strength and conditioning coaches and basically anything we can do to help the performance of the players that’s what we are responsible for”.

  • On the impact of COVID-19 on his daily work: “There were two different phases of COVID. When our season got postponed in March of 2020, we went into lockdown mode, everything was closed, nobody had gym equipment, and nobody had home gyms yet because nobody was prepared for this. So there were almost three months of quarantine where we were just communicating with our players via texts and phone calls, trying to run sessions, trying to design workout programs and individualized plans that were specific to what the player had. Some people had a gym in their house, some people had not even a single dumbbell, or nothing but body weight. So trying to adapt to that was certainly difficult and we ended up spending a fair amount of time in meetings with colleagues and writing out programs and talking to athletes, and trying to keep things up and running. The thought was that it won't be that long. And we would be back at the rink soon, so we wanted to make sure we were ready. Ultimately, we ended up coming back in July for the NHLs return to play protocol as part of the NHL bubble that happened in Edmonton and Toronto. And that was the start of phase two, where we were back with our team but in a COVID world. And that was the same as last season where vaccinations were a relatively new thing so the vaccines were not available for very many people. Wearing a mask and gloves constantly was normal. Having very intense restrictions and not being allowed to leave your hotel on the road, was also the norm. So I think it was very challenging for everybody to have to deal with those protocols and not having too much freedom. I think the majority of people who went through this might tell you that it was just 10% or 15% more stressful every day just because of the nature of what COVID had to make you do”.

  • On the fact that COVID-19 made him appreciate the non COVID-19 world and the people he works with every day: “I think it made you appreciate the non-COVID world and the people you were working with so often. And having the opportunity to go through that with people and come out of it with your friends or colleagues and still with a good working environment, it was a real positive thing that we were able to take from the whole experience”.

  • On some of his favorite technologies out there and why, starting with Hyperice and Firstbeat: “I think of technologies in two different streams. There is the sport science data collection of players’ movements and load. And then there's the recovery performance side. On the recovery performance side, companies like Hyperice and Normatec have done a really good job making some really good products, but on the other side of the data collection when you look at what's happening on the ice, it's pretty exciting. Heart rate technologies are by no means a new idea. It's been around for a long time. You have a number of teams that work with Firstbeat out of Finland. And we found Firstbeat to be a really good system for us in terms of monitoring internal load and measuring the heart rate response to the particular practice that we have. I think it's always important to look at what you're getting from each piece of technology and the quality of the data we get from Firstbeat relative to the cost of getting it, I think it is pretty high. We get a pretty good sense of what's going on with the players on the ice, how hard it is for the players from a cardiovascular perspective, just by how they wear a heart rate monitor in the normal practice. So I think Firstbeat is a pretty important piece of technology for us”. 

  • On his other favorite technology 1080 Quantum and Sprint: “We've actually just invested this year in a company called 1080MOTION which built the 1080 Sprint and 1080 Quantum. This company 1080MOTION has given us the two units. And we're just starting to explore some more specific pathways along the rehab process specifically. I think it's a very exciting time to start working with 1080MOTION and to be starting to use their Quantum and Sprint devices. I know they're a little bit more popular in the track & field world, and some of the field based sports like soccer, football, things like that, but there's only, to the best of my knowledge, two or three other teams that are using the 1080 Quantum in professional hockey. So for us to be able to use that in a hockey specific application and try to learn a little bit more about how it can help our players and our return to play protocols and things like that, is important. I think I would put 1080MOTION up there. Now I don't know too much about it just yet, but I'm really excited for what we're going to be able to learn from it. It can collect that data and what we're going to be able to do with data of that caliber and of that quality, is exciting”. 

  • On the importance of measuring movements :”And then the last one is the idea of monitoring movements. Whether it's a GPS or inertial device like Catapult or an RFID technology like Kinexon. We personally use Kinexon at our practice facility. But with the NHL recently signing an agreement to collect in-game data using a company called SMT, we're going to start getting some data from in-games as well. So I think the opportunity is now going to be about learning a little bit more about what is actually happening on the ice in terms of speed and load, and what's happening in a practice. And it's a pretty difficult question because I think hockey is a very unique sport. Some sports start and end with a very similar path, whether it's a pitch in baseball, a swing in golf or the quarterback at the center for American Football. But hockey is so reactive. And even if you try to talk about the hockey skating stride, when you really stop and watch a game very closely and understand some of the nuances, there are 12 or 13 different types of strides that a hockey player can make. Whether it is a crossover stride, a forward, a backward stride, a pivot stride, a crossover into a forward acceleration, or a lateral motion. There are a lot of different ways players can move on the ice. And I think it's a really exciting time to start to try to ask some questions about how challenging and how demanding these different movements are on a player”. 

  • On the kind of insights he hopes to get once they combine the data from Catapult, SMT and Kinexon: “I can tell you about one thing that we found really interesting using our Kinexon data. It was by looking at the movement data in terms of number of accelerations per practice or number of decelerations per practice and the differences in position (...). It is actually really interesting to look at some of the data at the end of a practice when everybody's going through the same drills, but the centermen are skating far further in terms of total distance and they have far fewer decelerations. They're just not stopping and starting as much by the nature of their position. And then even within that, if you look at different wingers or different centermen, the style of play that each athlete exhibits on the ice also lends itself to different levels of loading. So trying to ask some of these questions about how the centermen are different from a winger or different from a defenseman, and then how is this centerman different from that centerman and their styles of play and their approach to the game. So as we start to collect more data from systems like Catapult and Kinexon, and then incorporate more data from SMT as it becomes more prominent in the NHL, we're going to start to learn a little bit more about how demanding hockey is for the players. So I would put those movement capture systems like Kinexon, Catapult and SMT up very high on some of my favorite technologies. Because there are just so many questions you could ask. You'd have to look through a lot of data, but the data is there as long as you're asking the right questions and recording the right information”.

  • On load management and how technologies can help there: “ I think the idea of load management and understanding what players are going through and trying to optimize readiness and energy levels each time the puck drops or the ball tips off, whatever sports you're playing in it is always going to be important.  People are always wondering “how do I get my players to be the most energetic, or the freshest when they need to be so that they can perform at their best?”. And the NHL has a very demanding schedule with 82 games. Usually we have a minimum of three, or sometimes five games per week. So it can be very challenging”. 

  • On the importance of always asking yourself the right questions before adopting new technologies: “I think those questions are going to continue to be asked and technology, I think, has the potential to help answer some of those questions. Now there are so many technologies out there that do so many things that I think it's really important to make sure to ask the right questions. And I know when I sit down with our staff and our colleagues here we have so many questions, so then we have to figured out the best questions to ask and if we think this is the best question, then what do we need to measure? We can measure 20 different things, but which one is going to tell us the most useful information to help us answer that question? So it's really about using the technology as an assistant and not really letting the technology be the driver of the conversation. Understanding the sport and understanding that the demand will lead you to asking the right questions”.

  • On the importance of having future technologies that can be tailored to the specificities of each players: “We're talking about players who have very different anthropometric characteristics, very different nervous systems, very different genetic backgrounds and histories, very different injury histories, and that are at very different points in their lives. We have some 20 year olds on our team and we have some 37 year olds. So each player is unique in the way they play the game, and how they accomplish what they do and then there are their physiological characteristics. So I think the future of technology is also going to be about allowing us to assess the individual and tailor things to the individual while not distracting us from the team concept and the team environment too much. You'll never be able to run 20 different practices for guys in the NHL because teams practices together. But figuring out ways before or after practice to individualize and optimize whether it's performance training or recovery or soft tissue treatments or sleep metrics or devices to help improve sleep or recovery, is critical. Different things are going to work for different players. And at the same time, as you try to find those answers, I think you will also learn that what's going to work for this athlete is not necessarily going to work for the other athlete”.

  • On the three things that he is looking for when considering buying new technologies: “ You want to first know if the product is going to measure reliably what we want it to measure. And assuming that that's the case, and hopefully most products get past that part in the research and development phase. But then like you said, you have to determine logistically, does it make sense in your environment? (..) And if the players are building a negative relationship or negative connotation to that technology, then you're probably not going to get great results. So I think making sure it fits into your workflow, is very important. Then it has to provide something that you can connect back to a player's performance (..)And the connection always comes back to these players. They're typically very high performing and very competitive people. They want to do better, they want to help themselves win, and they want to help themselves be the best. So if you can connect the benefits of the technology to this, it will improve your performance or it will really affect your speed on the ice. Things like that. They're going to be very interested in that. And then it's on you and the technology to follow through and make sure that, Hey, using this information, we were able to help you with this and that as a result, you performed better, you played better, and you scored 15 goals instead of 10 goals”.

  • On Sidney Crosby, considered by many as one of the greatest NHL players of all time and what makes him a special player: “It's a very loaded question, because I think there are so many things that make him great. Having known Sidney for a long time, I think his work ethic and his desire to be the best is just something fun to watch every day. He comes to the rink every day, every workout, every practice, every game, and every chance he has to try to improve and be better, he's going to do that. And like we talked about, it's pretty tough to play an 82 game season, and when traveling, sometimes you play on back to back nights and it's very easy for guys to take a night off and we're very fortunate that he set the standard for our organization for a very long time. And he has never taken a day off. So I think that's something that I feel very fortunate to have been able to watch firsthand over the last several years. And I've been fortunate to know him as we're both from Nova Scotia on the east coast of Canada there. So I knew him a little bit before I worked with the Penguins, and getting a chance to see him and work with him, it's truly been a pleasure for me to watch that unfold in front of my eyes and now be a part of it in Pittsburgh”.

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🔥Upside Chat: Pierre Barrieu, High Performance Director, Toronto FC (MLS)

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