Dear colleague,
This week I sat down with David Daoud, CEO of Compliance Standards to share my thoughts on the impact of trade tariffs on sports tech companies and products, on companies’ innovation and R&D. We also discussed the main hubs for sports tech startups are located, what the most innovative sports tech startups are coming from. We also touched on what the revenue and profitability profile of some of the most successful sports tech startups looks like today.
You can listen to the audio interview by clicking on the above button or just watch the full video interview by clicking on the “Watch the video interview below”. You can also check out the best quotes of my interview in the section below.
📝Show Notes: Through this interview, I touched on:
If trade tariffs are impacting sports tech products.
If pro teams are reporting to you an impact on pricing due to the tariffs.
If we are seeing companies diversifying or near-shoring near the US due to the Tariffs.
If the tariffs are impacting innovation and R&D budget of the sports tech startups yet.
What the distribution by regions of where most of the sports tech products are coming from.
Where we see innovation coming form in the world of sports and tech today.
What the revenue and profitability profile of some of the most successful sports tech startups looks like today.
Best,
You can read the full transcript of the interview located at the top of this blog post. Here are below the best quotes from my interview:
Q1. Are trade tariffs impacting sports tech products?
“I think we're starting to see the early effects. The other day, I came across an ad from a performance tech vendor—it's a hardware device—and they explicitly stated in the ad, ‘Because of the tariffs, we're going to have to increase the price.’ That was the first time I saw a company so directly connect their pricing decisions to tariff policy. What’s happening is that tariffs—particularly those raised by the Trump administration on imports from China and other countries—are increasing the cost of manufacturing for a lot of these performance tech companies, especially ones producing in places like Shenzhen. Margins are tightening, and the simplest way for vendors to deal with that is to pass the increased cost on to customers. While we’re not seeing a mass shift yet, I do expect that more and more vendors will follow suit over the coming months.”
Q2. Are teams reporting to you an impact on pricing due to the tariffs?
“Interestingly, no teams have told me directly that tariffs are raising their costs, but I am seeing indirect budget pressure—especially in college sports. One major factor is NIL—Name, Image, and Likeness. I recently spoke with a vendor who sells a $35,000 machine. Historically, schools would find donors to fund this kind of tech. But in this case, the coaching staff decided to use the donor's $35K pledge to help make a $1.5 million NIL offer to a recruit instead. That tells you a lot. Athletic departments are being forced to choose between investing in tech and spending big on player recruitment. So while tariffs haven’t yet visibly impacted team spending, the overall budget environment is tightening, and sports tech investments are sometimes the first to get squeezed.”
Q3. Are you seeing companies diversifying or near-shoring due to the tariffs?
“It’s still early days for that. Most of these vendors have long-standing manufacturing relationships in China, where labor costs are still very competitive—even with the tariffs. That said, I’ve heard some companies are exploring alternatives like Mexico or even Costa Rica. The key is doing the math—if relocating production ends up costing more due to higher wages or logistics, it might not be worth it. However, there are other benefits driving these conversations too. Quality control is a big one. Some vendors complain about specs or colors being wrong when working with Chinese factories. Also, proximity matters—being able to visit a factory quickly is a huge plus. Flying to Costa Rica is easier and faster than flying halfway across the world to China. So while tariffs alone aren’t driving mass shifts yet, factors like QA and geographic access are encouraging some vendors to investigate nearshoring.”
Q4. Are the tariffs impacting innovation and R&D budgets of sports tech startups yet?
“From what I’ve seen, no. Most sports tech startups keep their R&D teams close to their headquarters—whether that’s in the U.S., Europe, or Canada. That’s because R&D is critical, and quality can’t be compromised. These companies want tight control over product design, testing, and iteration. While a few exceptions exist—some have engineering teams in Vietnam or other lower-cost countries—by and large, engineering stays local. So tariffs on components or manufacturing don’t really impact the innovation side directly. If anything, I’d say companies are trying to keep R&D shielded from cost pressures because that’s where their competitive edge lives.”
Q5. What is the distribution by regions of where most sports tech products are coming from?
“The majority of high-performance sports tech products are coming from Western Europe and North America, particularly the U.S. and Canada. There’s also significant innovation happening in Australia, and we’re seeing some solid products from Japan, South Korea, and parts of South America. But the core of the market—especially for elite teams—is dominated by vendors from the U.S. and Europe. These are the regions with strong R&D, deep ties to professional sports leagues, and the infrastructure to support product scaling. We track 450+ top performance tech products and companies from all over the world.”
Q6. Where do you see innovation coming from in the world of sports tech today?
“The U.S. continues to lead, thanks largely to its venture capital ecosystem and the influence of Silicon Valley. But Europe is very strong, too. Countries like England, Germany, the Netherlands, and Israel are producing truly innovative companies. Israel, for example, punches way above its weight. Despite its small size, it’s launched several startups that have gained traction in U.S. pro sports. France, while it has some good companies, hasn’t stood out as a top innovator. I’ve heard French teams themselves say they’re frustrated with the lack of variety—they see the same French vendors bidding on every RFP and want more international options. So the most innovative hubs right now are probably the U.S., the U.K., Israel, and Australia.”
Q7. What is the revenue and profitability profile of some of the most successful sports tech startups today?
“It really depends. Some companies are doing $10 million in annual revenue; others are north of $100 million. A lot are still break-even—$1 million in revenue, $1 million in costs. But the ones that scale successfully all tend to have a few things in common: strong R&D processes, top-tier engineering and product teams, and strong sales. Having a great product isn’t enough—you need to know how to sell it and how to support your customers well. Software companies, especially AMS platforms, tend to be more profitable than hardware-focused ones. That’s because hardware is capital intensive—manufacturing, inventory, QA all eat into your margin. The most successful companies in our space—like Teamworks and Catapult—have thousands of team customers and have built powerful ecosystems. Meanwhile, many startups start in sports for credibility but eventually pivot to other verticals—like construction, healthcare, or military—where the deals are bigger and more scalable. That’s often the real play, especially from an investor’s perspective.”
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