Despite the COVID-19 pandemic, sportstech is a rapidly advancing industry. Its success may be owed to us all having become more data-oriented and more digital, say experts, who believe the industry has just started growing.
You would think that a time of pandemic, with its limited spectators at sports events, would put a damper on the growth of sports technology. Nevertheless, 2021 is already a record-breaking year in terms of investment: Over the first six months, more than 5 billion dollars have been invested in the industry worldwide.
The industry’s growth has not gone unnoticed at Keystones, an investor network for business angels. They have set up a special sportstech group of 15 investors, all of whom have invested in multiple Danish sportstech start-ups. The group’s chairman - lawyer and former director of the Danish Ice Hockey Union Enver Hansen - believes that the industry generally has flourished, even though the pandemic has clearly been felt in some area.
“Obviously the corona pandemic has affected companies hit by audience and viewing rights-related issues, as those that purchase viewing rights would very much want the audience to be there. But overall, the sportstech industry has done well during the pandemic, especially its digital products, naturally,” the group’s chairman says.
He nevertheless anticipates that the industry will exceed the already high expectations.
“The forecast says that the global sportstech market’s worth will exceed 31 billion dollars by 2024, but I think we will have to amend and upscale those numbers along the way. It may be closer to 40 billion. And in my unequivocal assessment, that will have an effect on Denmark,” he says.
In other words: the sportstech industry is booming. Already by the first half of 2021, 14 rounds of more than 100 million dollars have been put into sportstech start-ups globally. These are record-high numbers.
Consumers Want to Be Measured and Weighed
The umbrella terms of ‘sportstech’ covers, among others, digital fitness, fantasy sport and betting, performance tracking, and fan engagement. The success seen in many of these areas can be ascribed to current macro-trends over the world. We want to measure, optimise, and share our performance with friends and family. That is the view of Ulla Brockenhuus-Schack, partner in the venture capital fund Capital Seed.
“Overall, sports have gotten increasingly data-oriented on professional, semi-professional, and amateur levels. As a consumer, you want to know how you measure against yourself, your friends, and the professional top athletes. ‘Play with the pro’, as they say. The fight for talent has become a megatrend, and to be data-oriented, you need technology. That is the exact connection that creates so many opportunities for tech companies,” she says.
Hansen agrees with this analysis, which also suggests that more and more have the option of arranging their activities along professional lines, if they so choose. That entails a larger degree of freedom to follow and engage with one’s favourite team and favourite discipline. And investors are starting to realize this.
“Sportstech is not some red-headed stepchild of the investment world but is widely recognized. What keeps investors away are the same things that keep them away from any other given industry. Rather, there is a strong belief in the growth of this industry - especially as people globally get more spare time to engage as both fans and participants,” the chairman of the Keystones group assesses.
A Danish Head Start
Even though the Danish sportstech successes like VEO, Endomondo, Tonser, and Trackman can be counted on a couple of hands, entrepreneurs back in Denmark still have a head start when they begin developing new digital sportstech solutions.
“Danish companies have a clear advantage because the test market is so good in Denmark. The Danes are very much natives of the digital world, and therefore very qualified consumers. This can be an advantage for when Danish companies go out in the wider world, as it means many Danish solutions have international potential from day one,” says Hansen.
The investment field in sportstech is however still dominated by large countries like the US, China, and India. The latter especially has profiled itself globally with the fantasy sport company Dream 11, which is one of the first Indian companies in history to achieve so-called ‘unicorn’ status: a start-up with a value of more than 1 billion dollars.
This is no coincidence. Many sports technology companies are greatly successful these days because their digital solutions cross into several different markets and appeal to wide swathes of consumers.
“The consumer angle of this industry is very interesting. As companies can often spread to many different intersections - for instance media firms delivering content - it means they can appeal to many different consumer bases. And that creates a wealth of options for tech companies,” says Brockenhuus-Schack.