Roughly 75 percent of all venture capital in the U.S. is invested in just three states: California, Massachusetts, and New York. But there have been various initiatives launched in other locations aimed at changing that. The Indianapolis-based Techstars Sports Accelerator, which begins on Jun. 10, is the latest of those.
Since being founded in 2006, Techstars has grown a network of mentorship-based startup accelerators that now counts 43 unique programs. In August, the company released initial details of the Techstars Sports Accelerator Powered by Indy, which plans to invest $120,000 in each of 10 selected startups per year. The participating companies in the first 13-week program have not yet been announced.
Founding partners of the sports accelerator include Next Level Fund, an investment firm backed by the state of Indiana, the Indiana Sports Corp, the NCAA, and Pacers Sports & Entertainment, which owns the Indiana Pacers and Indiana Fever. Supporting partners include the Indianapolis Colts, the NTT IndyCar Series, and the Indianapolis Motor Speedway.
“To make something like this happen is a testament to the strength of the Indy sports teams and how close and friendly everyone is there,” said Jordan Fliegel, managing director of the Techstars Sports Accelerator. “I don’t think that’d be possible in a city like New York, or LA, or Boston. I don’t see the Celtics and the Patriots, Red Sox, and Bruins all getting together in a super collaborate way with no egos.”
Indiana has a rich sports history. The NCAA headquarters are located in Indianapolis. Indiana Sports Corp was responsible for bringing the Super Bowl XLVI to Indianapolis in 2012, and will bring the 2021 NBA All-Star Game to the city. The Indy 500 is one of the biggest motorsports races on the planet, and the IndyCar series can trace its roots back to the state’s iconic race track.
And although basketball was invented in Massachusetts back in 1891, James Naismith, the game’s creator reportedly once said ”basketball really had its origin in Indiana, which remains the center of the sport today.” The state’s obsession with the game was captured in the 1986 film Hoosiers.
According to Fliegel, Indianapolis ranks as “the number one sports tournament city due to its infrastructure.” He said the state’s passionate sports fanbase is one reason startups should be eager to flock to the Indianapolis metropolitan area.
Before entering the business world, Fliegel played basketball at Bowdoin College and professionally in Israel. The native of Cambridge, Mass., founded youth sports coaching platform CoachUp and is a former co-CEO of DRAFT, a daily fantasy sports app that sold to Paddy Power Betfair for $48 million in 2017. According to Fliegel, all the money he helped raise at both CoachUP and DRAFT were from VC firms based in either New York, Massachusetts, or California. Both CoachUp and DRAFT went through Techstars accelerator programs.
“Having done two sports companies that benefited tremendously from going through an accelerator, I thought it really made sense to have a great sports accelerator and I didn’t think one existed in the world [for companies] that were raising seed rounds or accelerating into their Series A. Those are the companies we usually go for,” Fliegel said. He said that hundreds of companies have applied for a spot in the sports tech program.
According to Techstars co-CEO David Brown, the sports accelerator will select companies in potential areas such as fan participation, athlete safety, ticketing, merchandising, athlete performance management, and athlete wellness. Fliegel noted that other possible areas of interest include sports betting and fantasy sports.
Notably, Indiana governor Eric Holcomb signed a bill in May to legalize sports betting. That bill included legalization of online and mobile gambling.
Selected companies will receive mentorship and the chance to pitch to angel investors and venture capitalists at the end of the program. Techstars has recruited over 100 entrepreneurs across sports and technology fields to mentor its sports tech program, including former MLB All-Star Ryan Howard, NFL player Russell Okung, NBA player Spencer Dinwiddie, former NBA All-Star Baron Davis, and SportTechie CEO Taylor Bloom.
Techstars will receive a percentage of stock in each company that joins its sports tech program. The company claims that startups raise an average of $2 million in outside investment once their programs end. One notable success story is delivery pharmaceutical company PillPack, which was a member of the Boston-based Techstars accelerator program and sold to Amazon for nearly $1 billion in 2018.
Fliegel will take a “founder friendly” approach to developing the Techstars Sports Accelerator, and said he doesn’t view himself as a venture capitalist. “I think the way to drive the best returns is to actually try to help the founders and be really supportive of them on their journey. I think it’s hard to really help founders if you haven’t been a founder and can’t empathize with them and really understand the challenges they’re facing.”
He touts Indianapolis’s easy accessibility and central location to other big cities as a reason it should attract a robust sports tech scene. A direct flight from Indianapolis to New York City is just two hours, and the city is less than four hours by car from cities such as Chicago, Detroit, Columbus, and St. Louis. Indiana also has a strong college academic presence: the University of Notre Dame, Purdue University, Butler University, and Indiana University. “It’s an affordable city, there’s a lot of great talent coming out of universities, it’s a great place to start a business,” Fliegel said.
“The thought here was that we could kinda plant a flag in the ground in Indianapolis as the capital of sports tech. It’s got all the ingredients, it just hasn’t received the attention from the coasts and I think that’s changing. Hopefully we can be a part of that solution.”