Episode #562: Breaking Down Sports Investment Trends with Andrew Petcash-Insights on Venture Capital and NIL

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0:48 It's easy to use. Go to the prospectwizard.com get a free 30 day trial. Talk to my boy Dave Gallen. He will get you all set up and let the leads flow based on the Wizard. Go get him. This is Pete Moore on Halo Talks nyc. I have the pleasure of bringing to our audience Andrew Petcash, who is one of the most prolific content providers on LinkedIn. I started following him a couple of years ago. He's a VC now, ex college basketball player and venture capitalist. But what I really view him as is he could break down industry categories and segments and where the market's going and trends like I've never seen before.

1:34 So kudos to him for articulating and understanding a market. And I feel like he definitely knows what's around the corner and what's about to come because he understands where it is today. So, Andrew, thanks for coming on the show. Appreciate Pete. Yeah, great to be here and appreciate the kind words too. Yeah. So could you just give a little background on, you know, being an entrepreneur coming out of school, talking about, you know, your Boston College, your Boston University, you know, roots and how you decided to kind of become who you are today and, and why you share all this information, you know, freely that, that I view makes you kind of the expert for sure. Yeah, I mean, I think it's a twofold. Both my parents were entrepreneurs, so it's in the blood. And then I built a big MBA YouTube channel when I was a teenager, so I knew how to build media. It always was interesting to me, like, hey, I can create something. In five years later, people can still be watching it, I can still be making money from it. And so it always just planted that in my head and obviously went and played college basketball at Boston University, which was amazing, actually. 2020, we made March Madness, but it was the one year in history, it got canceled, which sucks. So it always brings up weird feelings this time of year, but my bracket's doing really well. I got the final four correct. I just picked all 1 seeds this year. I was like, screw it. Yeah.

2:55 And so hopefully come out on. On that side. And then, yeah, coming out of college built another media asset in college sports. I got Aqua hired by a sports company in Texas. And while I was there, I was thinking the next thing. And so I just started posting on LinkedIn, on Twitter, building my personal brand, seeing sports as this increasingly great asset class and opportunity. And I was like, hey, if I can go become a thought leader, I can get way out ahead of everyone else and people will bring everything to me. So leverage that to build a community of. We now have 700 plus founders and investors in there, all within sports. Uh, and then because we sit in the center of everything, we built this great ingestion engine, which a lot stems from my personal brand, which, you know, I have a good reputation and trust in the space now, which I hopefully, you know, can continue to keep. I think that's the most important thing. Was able to. To go raise a good first venture capital fund to start deploying into these opportunities now. Yeah, I was, yeah, I always wanted to be a thought leader. And then I also said, okay, I'm a thought leader now. I want to be an action leader. So I think you've kind of tipped the scale to like, you're an action leader now. And just for our audience, we'll have the links up, you know, on LinkedIn.com Ian Andrew Petcash that you should definitely follow. But some of the things that you're talking about, you know, we were talking about youth sports and that there's gonna be a lot of investment opportunities and this whole nil was gonna kind of cascade down or waterfall down into high school, more colleges, getting more money,

4:30 you know, and you started to lay out like, here's the different categories and here's the areas to invest in. So talk about how you do your research, some of the market sizing that you do, which I don't think is really available, and you kind of like, kind of figure out what that. That TAM is, you know, total addressable market without really having any other primary data done. If you kind of just share how you think about building that up and when someone's looking at a market, you know, h. How you address that and kind of support that. Yeah, I mean, most of the data comes from a few different places. Number one, it comes from Industry leaders that are even deeper. So people that have built and used sports for 20 plus years, that have exited companies, you know, built hundreds of millions of dollars in revenue companies, hey, what are you seeing? How big do you see it?

5:19 And then doing some internal calculations or data and then working with some of the data providers who they want us to go share it because we have the audience, it makes them look good, it gives them credit. So now that we do stuff like that, we get a lot of the data just fed to us and then I have back end databases of like, okay, like I have this. When does it make sense to share it or what else do we want to put content around it or make investment decisions around it? So yeah, I mean to how you brought up like sharing versus keeping private is always a big internal discussion or even just discussion in my head of like, wow, am I giving away too much now? Because even though you're making moves and you know you're progressing forward, you know, by you posting something, you're still giving something to someone else that's going to go build off of it. But that's where I think you just get that abundance mindset where it's like, hey, they can go take it, but we really know it, we really understand it. Yeah. And you know, go add value to as many people come back around. Yeah, so, so, so from your like content strategy if you will and profluence, right. Pro. Profluence. Is that pronounced productly? Yeah, so profluence capital, you know, you're basically sharing all this information as the action leader and that kind of creates the credibility the way I'm playing it back to you that if I am in one of the sectors or, or subsectors that you are referencing and I know you have money, then not that you're like a, you know, independent sponsor, but you actually have capital.

6:49 Like I want to partner with you because I feel like you get, you understand me. And if another private equity firm or venture capital group has some 22 year old kid, you know, cold calling me or email me with like a form letter which a lot of my clients get and they're like, oh, this private equity firm's interest for me, I'm like, bro, it's a form letter, okay. Like I could tell you where it's like insert here like your name of you and the name of the company. Like that's not somebody who like has done any work on anything. And sometimes I get that while we're under exclusivity on a deal. So I have a deal in place. Someone's like, hey, man, I just got, you know, these five VCs. Who. Interesting. Interested in me? I'm like, dude, there's a Salesforce link that. That actually merges this and they're sending it to you. And it's like, kind of the same from two of the four groups, so they're not really interested in you. Like, stay the course. Yeah. So hearkening back to, like, you're the action leader, got a fund. I'm putting this information out there. And now you're actually triggering the targets instead of saying, like, hey, I'm sharing this information with. With my competitors on the VC side. You know, my call is going to resonate or my introduction to them is going to resonate, vice versa, because I'm the expert and they're like, trailing. Yeah. Is that the way to think about it? Exactly right. And I love the word action leader because thought leader just implies, like, oh, you're putting good thoughts, but action leader implies, like, hey, we're putting thoughts out, but we're taking action. Like, we're doing stuff around it. So that's what I always say of, like, the content is going to continue to get better because, like, we actually. I don't just say,

8:19 hey, this space is interesting. Like, we go deploy capital into it. Like, we're building in the space too, which is amazing. And then to your point, yeah, like, if we think an area is interesting, we're going to put content on about it, because then people are going to start to come to us, hey, I'm building this in that space. Right. And I can do it about anything and be like, hey, I find paddle interesting in Europe. Who's going to go build it in America? Well, and I'll get all the decks and companies and people that will come and, you know, then we'll have podcasts with some of the top people, and you just create this amazing flywheel is how we like to. To describe it. So, yeah, I mean, you're spot on. That's. And profluence itself, the word means to tell a narrative in an abundant way forward. So it's sort of like a little cool play of like, hey, we're using words and narrative to create this abundance or what we're trying to get to.

9:14 This is Pete Moore. I want to let you in on a little secret. There's this company called Promotion Vault, and. What they do is they give out. Rewards from retailers that allow you to incentivize your members without having to do zero down and one month free or Giving away shakes or giving away T shirts. What you want to do is build a rewards program that lasts, that people value and that doesn't discount your own products and services. So here's the deal. There's something called Rewards Vault. The Rewards Vault is going to allow a member to set up their own profile. They are going to answer questions. You are going to get those answers. You're going to be able to target those members, and you're going to reward them inside your club, inside your spa, and outside of the club and outside of the spa to get them to become loyal, to get them to pay their monthly dues and to be rewarded properly for the actions. A lot of companies are cutting back on rewards. You shouldn't be.

10:11 Promotion vault. Your answer, Trust me, this is real. So I started Integrity Square 15 years ago tomorrow. And I used to live in Union Square in New York on 15th and 5th. And prior to that, I was dating this girl. Woman. She bought me a rock that had the word integrity engraved in it. Cause I always loved the word Integrity Avenue. You don't. Right. So I put those two together. Cause you say, let's meet in the square. And I say now, like, if you're a client of Integrity Square, you're protected by the square. Kind of like an old school way of thinking. I was the goalie back in the day in soccer, so I wasn't responsible for us winning. I was responsible for us not losing. So I want to be like your advisor to, to. To. To play that forward.

10:58 Also, during co, we wrote a book called Time to Win Again, which is like good to great meets, where's waldo. And it's 52 takeaways from Team sports to ensure your business success. So Dave, make sure we send it out to Andrew right after this. And it's basically like, take timeouts. Nobody takes timeouts in business. People do it. Sports, you know, know your competitors, you know, signals like everyone does, you know, scouting reports. But in business, you don't really do scouting reports the way you should and then take the points. So if somebody wants to buy your company and you can sell for 20, I could help you sell for 20. You want 22? I'm like, trust me, take the 20. It'll change your life. Not the 2 million after tax.

11:40 So we'll get that out to you. So let me ask you a question. Being a venture capitalist and his background. I was a venture capitalist. I still am, but. But not in a good way. I became an angel investor in businesses. And I think that's a great Way to lose a lot of money. Because you're basically like not questioning the entrepreneur and you're basically saying, I believe in you and I'm not passive, I'm an active investor. But I say yes. Too much is what one of my weaknesses was. So being venture capital one, you know the percentages of what your batting average is going to be on a deal by deal basis.

12:21 However, you get five or 10 and you hit one home run and you know, you basically you return the capital. So how do you screen one? What's your like if I come to you with a PowerPoint slide or deck and you say, hey, you know, what do you got? I'm like, I got an idea, it's on paper. Or hey, I got a pro, I got a beta or I'm already in the market. How do you kind of calibrate on your end what's too early? Because venture capital, there might never be a time was too early and then what's too late? We're like, hey man, I can't really help you or that's not my, that's not where I want to play. So how do you think about that? Yeah, another good question. So first, I think we all do a lot of things off who we learn from and who our mentors are. And so my mentor is a gentleman that runs a big private equity firm called Merit of Capital out of New York. And he very much.

13:11 You have to sometimes try to fit in a box. Are you a pre seed seed investor? You private equity? More. It's like, but we don't try to fit in a box. Like we try to just do some of the best deals. And so we split our portfolio into two sides. There's really more the VC venture side and then there's really more the pe, like smaller returns but much more linear. We know we're going to go get wins there. So 50% of our portfolio is into teams, leagues, events. We call them layer one solutions in sports. So we're going to go, go drive 5, 10, 15x returns and we're, we can pretty much guarantee we're going to return our fund through just those and then we can go swing at the venture side and all we need is one of those to go crush it. And then we have a top, you know, quartile top 1% returning fund in the space or just even in, in general industry standards. And so already we're a year in again, it's all off markups and stuff. But we have, when you put both sides together, you know, we're already in the top.

14:11 We're top quartile easily. And then we looked at. To your deck question. We looked at 1500 companies in year one. We did 13 investments. So it's under 1%, you know, that we're. We're executing on. And yeah, I mean, we know. We know the sectors. We know really well. And then another strategy was for the first fund, I went and people were like, hey, you got to build an advisory or, you know, you got to do something there. And so what I did is I wanted to go get private equity partners as both LPs and advisors, and then some exited sports founders. And so then I went and got all the subject matter experts that now have skin in the game, and I gave them a little bit of, you know, boost on top to incentivize them more. And so now if there's a space, I don't know well enough. Okay.

14:56 Like, let me get my. Let me bring in another opinion. And so I feel like we've made really good decisions across the board. Again, we'll see. There's a little time lag, but so far, so good. Yeah. So. So one of the things that I had a problem with is that we made seven investments. We'll have two. Two big wins. Yeah. One. One will be a home run, one will be like a triple, and then there's probably a couple that we. Well, it's two. We had to shut down during COVID because there was a, you know, studio concept, what was called Switch Playground. So you switch to, like 20 different machines every. Every two minutes with a partner. So if ever, if anyone had Covid, everyone gets Covid, you know, so there really wasn't a way to pivot. That business called out of South Africa that we brought to the U.S. have you had any situation yet?

15:43 We had to either shut down a company or you had to say, look, you guys had these. These milestones or these goals, and we didn't hit them. And what I was doing, I do an education platform called Halo Academy. And what I tell people is like, the way things used to be done, or no one really thinks about this anymore, is like, you get a series A round, okay. Or you get a friends and family that goes, well, you get a series A. Then that experiment goes, well, you get a series B, then you get a series C. But all those things are based on, like, I'm trying to get from a point A to point B, and if I get there, then I'm. Then I'm eligible to get another round. Whereas some of these Companies get a Series A and that's like, hold on man, like now you need like a bridge loan or you need me to meet, cover your payroll and I'm like your angel investor. I'm like, I didn't really sign up for the like access to my checking account. You know what I mean? So, so have you had any of those experiences yet of like how you deal with this portfolio that not everyone's going to be successful and I gotta, I gotta like cut it and I gotta tell the entrepreneur like, look man, it's not personal. Yeah, no, we haven't, fortunately. But we've had some pivots and again like how our portfolio is constructed. We take larger checks, larger ownership shares and the more linear IP plays where we control them a little bit more.

17:03 The events, you know, USL team and pro soccer in the US like you can see it, you can feel it, we're in it. And so those have been great like this. On the tech side, we're taking smaller checks, smaller minority investments where we tell them like, hey, if you need things, put it in front of us. But we're, we're small strategic investors in those companies. You guys have elite investors that are writing the million, two million dollar checks. Like go to them if you really need to figure something out. Like we can help you on the real sports specific. And a lot of most, most of our companies have said we're, you know, their most helpful investor because we can also get them a lot of attention from our channels from a marketing lens. We also just have a huge network to get them more investment or to get them more customers or whatever.

17:47 But yeah, on that side, you know, we'll hop on, we'll help. But like we're, we're very passive in a lot of ways because we're like, hey, we're just hoping one of the 15 of you goes and wins. But on this side, we need all of these to win and these are all going great on the IP side. And so that's, that's how we've done it for the first fund. We'll see as we progress what, how that changes or evolves. So, so it's a, we'll just do a public service announcement here to our audience who's listening to this, this show right now. If you're going to invest in early stage deals, try not to do it directly as a, as a, an individual investor into either a friend or someone, you know, make sure that there's an investment group, that one is going to help support the company as a Lead. If you're just putting in 50 to 250 grand, who's actually checking the valuation? Who actually has some level or semblance of corporate governance over the business that you're investing in? Because I've got a lot of, what I call, Andrew, expensive wallpaper of stock certificates that, you know, it probably could have been managed differently when I went into this, like, VC foray or put money behind your fund, you know, 10 years ago and say, hey, let these guys run and manage it. Because I got a day job and I thought I could also bat a thousand when I, when I turn 40. Because I thought I've seen all these movies before. Yeah, well, we also see a lot of, like right now, family offices, even trying to enter sports and do it themselves and do direct deals. And we go, great, go ahead. Like, it's going to be tough to navigate. We know they're going to come back around and just give. They're going

19:21 to invest in us to go make the best decisions because we know it, we're really deep ingrained in it. But right now, even again, sort of similar to you said, like individuals, hey, I want to do some sports deals. Why, why would you go? Right. And this is just my opinion and obviously I'm biased because we have a vehicle to do it. But it's like, and I went in angel invested way too much at my age of my net worth and angel investing into seven deals too, before I went to the fun side. You try to make me feel better. Thank you. Yeah, yeah, so, but it's like, I would have much rather taken those seven that I really had. No, like, and just put all that money just into a vehicle and know, hey, yeah, maybe I'm not going to hit that one direct. And it's going to be a lower return, but it's still way higher than any. It's way. It's going to be way higher than the S and P than anything else. Right. And so it's like, it's. I would urge most people, yeah, just, just go into a fund but make sure it's established, make sure there's good people around it, still do the due diligence on that. But yeah, I mean, all of our investors, like, I mean, a lot of them are exited sports founders. They could literally probably go do it themselves, but they understand, like, hey, let's, let's go do it together. It's better that way. We'll drive. We'll drive.

20:29 You know, more returns and, and more impact in the space. So, yeah, it's A good call up foreign. This is Pete Moore. Here's the last tip for you of the podcast. We are partnered up with a company called higher dose higherdose.com they are the leader in workout recovery products, infrared technology, LED light masks, neck enhancers and other products such as PEMF mats and sauna blankets. If you have not gotten on the workout recovery train yet, your time and your stop is now. You got to get these products in there before these workout recovery and spas end up saturating your market.

21:13 Having your members walk out of the club and going into one of their locations for 200 bucks per month where they're paying 39 to you. Let's become an expert in workout recovery. If we are already an authority in. Workouts, Higher dose, check it out. There's a wholesale code and we look forward to helping you augment your products and services to meet the demands of your members. And hey, let's get people happy, healthy and sweating and the recovery should be. Just as good as the workout. So we got a couple minutes left here. When you take a look at what's happened in college sports and you said, hey, I got my bracket right? I got the top four teams that are all number one in their, in their region going to March Madness to the final four. You know, as you take a look at this whole nil and basically like I was watching, I don't know if you watched. Did you watch A red storm rising on Vice Hulu? Yeah, it was basically. And it was great if anyone wants to watch this. But he was like, you look Kadari. You know, we, we blew SE hall out of the water was what we're paying him. So you know, he basically better hit that shot because you know, and it basically like chimed to me is like these kids are.

22:27 There's the term student athlete should basically be a retired term. Just like I want to retire the word wellness because the antonym of illness. So it's like if you're not sick, you're okay. And I'm just like, that's why we came up this term Halo health active lifestyle outdoors. We're trying to create the halo sector. We're not trying to create the wellness industry. But these guys basically work for the St. John's athletic department. Right. That you know, if you look at the at all players in college sports now. So how do you see that as an opportunity? Do you think that in a year or two, five years from now, profluence owns 20% of the university. You know, UCF's athletic department. Is that, is that a viable, like, result of the nil? Yeah, 100%. I mean, I think part of the reason we got in is all this goes downstream. There's a ton of opportunity, both in college and then into youth and amateur sports, but also international.

23:20 There's, I mean, there's no, like, if you look at India, for example, there's no collegiate system there. So, like, it's a big undertaking, it's a big, you know, challenge. But if you can go build even a similar system there, I mean, you're, that's a massive opportunity. So I think that's what's cool about sports is it's going more global and it's still very underserved and under built in a lot of areas. And then even looking in America, you have FIFA World Cup 2026, and you have the Olympics, L.A. 28, and you have the Winter Olympics. I think it's 20, 34, 2 or somewhere in there. Right. And so we have this great 10 to 20 year run and we're at the ground floor of it. And so, yeah, I mean, there's a ton of opportunity. Again, you just, you have to really study the space and know the nuance and bring the right people. Because sports also, it's, it is very relationship based. And if you don't have some of the right relationships, you might have the best product, you might have the best service, but you don't know the right person so you can't get what you need to get done. Which is, I think, unique to, compared to a lot of other industries.

24:23 Yeah. All right, man. Well, look, I appreciate you coming on. I'm one of your loyal followers. Keep up the content and the work. I love that you share it with everyone because it helps frame the opportunities. And I agree with you that the more interest there is it kind of, please, to your advantage long term because it could be private equity firms that might read this and say, hey, it's too early and they'll be the buyers of, you know, some of your investments. So. Exactly. Yeah. All right, man, Keep up the great work and action leader. That'll be your term in Halo. And we're going to get you a copy of our book that you'll, I'm sure you'll thoroughly enjoy. All right. Awesome, awesome. Thank you. Appreciate it.