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 companiesâ 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 âWatch the video interview belowâ. You can also check out the best quotes of my interview in the section below.
đShow 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?
âI think we're starting to see the early effects. The other day, I came across an ad from a performance tech vendorâit's a hardware deviceâand they explicitly stated in the ad, âBecause of the tariffs, we're going to have to increase the price.â That was the first time I saw a company so directly connect their pricing decisions to tariff policy. Whatâs happening is that tariffsâparticularly those raised by the Trump administration on imports from China and other countriesâare 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 weâre not seeing a mass shift yet, I do expect that more and more vendors will follow suit over the coming months.â
Q2. Are teams reporting to you an impact on pricing due to the tariffs?
âInterestingly, no teams have told me directly that tariffs are raising their costs, but I am seeing indirect budget pressureâespecially in college sports. One major factor is NILâName, 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 havenât yet visibly impacted team spending, the overall budget environment is tightening, and sports tech investments are sometimes the first to get squeezed.â
Q3. Are you seeing companies diversifying or near-shoring due to the tariffs?
âItâs still early days for that. Most of these vendors have long-standing manufacturing relationships in China, where labor costs are still very competitiveâeven with the tariffs. That said, Iâve heard some companies are exploring alternatives like Mexico or even Costa Rica. The key is doing the mathâif 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 mattersâbeing 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 arenât driving mass shifts yet, factors like QA and geographic access are encouraging some vendors to investigate nearshoring.â
Q4. Are the tariffs impacting innovation and R&D budgets of sports tech startups yet?
âFrom what Iâve seen, no. Most sports tech startups keep their R&D teams close to their headquartersâwhether thatâs in the U.S., Europe, or Canada. Thatâs because R&D is critical, and quality canât be compromised. These companies want tight control over product design, testing, and iteration. While a few exceptions existâsome have engineering teams in Vietnam or other lower-cost countriesâby and large, engineering stays local. So tariffs on components or manufacturing donât really impact the innovation side directly. If anything, Iâd say companies are trying to keep R&D shielded from cost pressures because thatâs where their competitive edge lives.â
Q5. What is the distribution by regions of where most sports tech products are coming from?
âThe majority of high-performance sports tech products are coming from Western Europe and North America, particularly the U.S. and Canada. Thereâs also significant innovation happening in Australia, and weâre seeing some solid products from Japan, South Korea, and parts of South America. But the core of the marketâespecially for elite teamsâis 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.â
Q6. Where do you see innovation coming from in the world of sports tech today?
âThe 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, itâs launched several startups that have gained traction in U.S. pro sports. France, while it has some good companies, hasnât stood out as a top innovator. Iâve heard French teams themselves say theyâre frustrated with the lack of varietyâthey 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.â
Q7. What is the revenue and profitability profile of some of the most successful sports tech startups today?
âIt really depends. Some companies are doing $10 million in annual revenue; others are north of $100 million. A lot are still break-evenâ$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 isnât enoughâyou 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. Thatâs because hardware is capital intensiveâmanufacturing, inventory, QA all eat into your margin. The most successful companies in our spaceâlike Teamworks and Catapultâhave thousands of team customers and have built powerful ecosystems. Meanwhile, many startups start in sports for credibility but eventually pivot to other verticalsâlike construction, healthcare, or militaryâwhere the deals are bigger and more scalable. Thatâs often the real play, especially from an investorâs perspective.â
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