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

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This is Pete Moore on Halo Talks nyc. I have the pleasure of bringing

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to our audience Andrew Petcash, who is one of the

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most prolific content providers on LinkedIn.

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I started following him a couple of years ago. He's a VC now,

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ex college basketball player and

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venture capitalist. But what I really view him as is

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he could break down industry categories and segments and where the

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market's going and trends like I've never seen before.

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So kudos to him for articulating and

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understanding a market. And I feel like he definitely knows what's around

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the corner and what's about to come because he understands where it is today. So,

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Andrew, thanks for coming on the show. Appreciate Pete. Yeah, great to be here and

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appreciate the kind words too. Yeah. So could you just give a little background

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on, you know, being an entrepreneur coming out of school,

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talking about, you know, your Boston College, your Boston University,

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you know, roots and how you decided to kind of become

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who you are today and, and why you share all this information, you know,

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freely that, that I view makes you kind of the expert for

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sure. Yeah, I mean, I think it's a twofold. Both my parents were

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entrepreneurs, so it's in the blood. And then I built a big

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MBA YouTube channel when I was a teenager, so

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I knew how to build media. It always was interesting to me, like,

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hey, I can create something. In five years later, people can still

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be watching it, I can still be making money from it. And so it always

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just planted that in my head and obviously went and played college basketball at Boston

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University, which was amazing, actually. 2020, we made March

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Madness, but it was the one year in history, it got canceled,

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which sucks. So it always brings up weird feelings this time of year,

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but my bracket's doing really well. I got the final four

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correct. I just picked all 1 seeds this year. I was like, screw it. Yeah.

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And so hopefully come out on. On that side. And

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then, yeah, coming out of college built another media

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asset in college sports. I got Aqua hired by

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a sports company in Texas. And while I

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was there, I was thinking the next thing. And so I just started posting on

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LinkedIn, on Twitter, building my personal brand, seeing sports as this

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increasingly great asset class and opportunity. And I was like, hey, if I

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can go become a thought leader, I can get way out ahead of

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everyone else and people will bring everything to me. So leverage that

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to build a community of. We now have 700 plus founders and

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investors in there, all within sports. Uh, and then

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because we sit in the center of everything, we built this great ingestion engine,

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which a lot stems from my personal brand, which, you know, I have a good

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reputation and trust in the space now, which I hopefully, you know,

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can continue to keep. I think that's the most important thing. Was able to. To

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go raise a good first venture capital fund to start deploying into these

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opportunities now. Yeah, I was, yeah, I always wanted to be

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a thought leader. And then I also said, okay, I'm a thought leader now. I

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want to be an action leader. So I think you've kind of tipped the scale

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to like, you're an action leader now. And just for our audience, we'll have

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the links up, you know, on LinkedIn.com Ian

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Andrew Petcash that you should definitely follow. But

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some of the things that you're talking about, you know, we were talking about youth

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sports and that there's gonna be a lot of investment opportunities and this whole

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nil was gonna kind of cascade down or waterfall down

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into high school, more colleges, getting more money,

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you know, and you started to lay out like, here's the different categories and here's

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the areas to invest in. So talk about how you do

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your research, some of the market sizing

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that you do, which I don't think is really available, and you kind of like,

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kind of figure out what that. That TAM is, you know, total

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addressable market without really having any other primary

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data done. If you kind of just share how you think about building that up

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and when someone's looking at a market, you know, h. How you address

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that and kind of support that. Yeah, I mean, most of the data

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comes from a few different places. Number one, it comes from Industry

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leaders that are even deeper. So people that have built and used sports for

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20 plus years, that have exited companies, you know, built hundreds of millions of

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dollars in revenue companies, hey, what are you seeing? How big do you see it?

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And then doing some internal calculations or data and

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then working with some of the data providers who they want

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us to go share it because we have the audience, it makes them look good,

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it gives them credit. So now that we do stuff like that, we

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get a lot of the data just fed to us and then I have back

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end databases of like, okay, like I have this.

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When does it make sense to share it or what else do we want to

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put content around it or make investment decisions around it? So yeah, I

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mean to how you brought up like sharing versus

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keeping private is always a big internal discussion

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or even just discussion in my head of like, wow, am I giving away too

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much now? Because even though you're making moves and you know you're progressing

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forward, you know, by you posting something, you're still giving something to someone

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else that's going to go build off of it. But that's where I think you

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just get that abundance mindset where it's like, hey, they can go take it, but

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we really know it, we really understand it. Yeah. And you

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know, go add value to as many people come back around. Yeah, so,

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so, so from your like content strategy if you will

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and profluence, right. Pro. Profluence. Is that

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pronounced productly? Yeah, so profluence capital, you know, you're

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basically sharing all this information as the action leader

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and that kind of creates the credibility the way I'm playing it

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back to you that if I am in one of the sectors

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or, or subsectors that you are referencing and I know you have money,

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then not that you're like a, you know, independent sponsor, but you actually have capital.

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Like I want to partner with you because I feel like you get, you understand

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me. And if another private equity firm or

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venture capital group has some 22 year old kid, you know, cold calling me

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or email me with like a form letter which a lot of my clients get

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and they're like, oh, this private equity firm's interest for me, I'm like, bro, it's

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a form letter, okay. Like I could tell you where it's like insert here

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like your name of you and the name of the company. Like that's not somebody

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who like has done any work on anything. And

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sometimes I get that while we're under exclusivity on a deal. So I have a

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deal in place. Someone's like, hey, man, I just got, you know, these five VCs.

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Who. Interesting. Interested in me? I'm like, dude, there's a Salesforce link

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that. That actually merges this and they're sending it to you. And it's like, kind

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of the same from two of the four groups, so they're not really interested in

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you. Like, stay the course. Yeah. So hearkening back to, like, you're the

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action leader, got a fund. I'm putting this information out

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there. And now you're actually triggering the targets

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instead of saying, like, hey, I'm sharing this information with. With my competitors on

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the VC side. You know, my call is going to resonate

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or my introduction to them is going to resonate, vice versa, because

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I'm the expert and they're like, trailing. Yeah. Is that the way to

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think about it? Exactly right. And I love the word action leader because thought leader

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just implies, like, oh, you're putting good thoughts, but action leader implies,

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like, hey, we're putting thoughts out, but we're taking action. Like, we're doing stuff around

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it. So that's what I always say of, like, the content is going to continue

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to get better because, like, we actually. I don't just say,

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hey, this space is interesting. Like, we go deploy capital into it. Like, we're building

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in the space too, which is amazing. And then to your

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point, yeah, like, if we think an area is interesting, we're going to put content

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on about it, because then people are going to start to come to us, hey,

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I'm building this in that space. Right. And I can do it about anything and

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be like, hey, I find paddle interesting in Europe.

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Who's going to go build it in America? Well, and I'll get all the decks

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and companies and people that will come and, you

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know, then we'll have podcasts with some of the top people, and you just create

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this amazing flywheel is how we like to. To

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describe it. So, yeah, I mean, you're spot on. That's. And

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profluence itself, the word means to tell a

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narrative in an abundant way forward. So it's sort of like a little cool play

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of like, hey, we're using words and narrative to create this abundance or

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what we're trying to get to.

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This is Pete Moore. I want to let you in on a little secret. There's

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members without having to do zero down and one month free

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or Giving away shakes or giving away T shirts. What you want to

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do is build a rewards program that lasts, that people value

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and that doesn't discount your own products and services. So here's the

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deal. There's something called Rewards Vault. The Rewards Vault is going

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to allow a member to set up their own profile. They are going

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to target those members, and you're going to reward them inside your club,

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inside your spa, and outside of the club and outside of the

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spa to get them to become loyal, to get them to pay their

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monthly dues and to be rewarded properly for the

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actions. A lot of companies are cutting back on rewards. You shouldn't be.

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Promotion vault. Your answer, Trust me, this is real.

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So I started Integrity Square 15 years ago tomorrow. And

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I used to live in Union Square in New York on 15th and

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5th. And prior to that, I was dating this girl.

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Woman. She bought me a rock that had the word integrity

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engraved in it. Cause I always loved the word Integrity Avenue. You don't. Right. So

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I put those two together. Cause you say, let's meet in the square. And I

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say now, like, if you're a client of Integrity Square, you're

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protected by the square. Kind of like an old school

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way of thinking. I was the goalie back in the day in soccer, so

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I wasn't responsible for us winning. I was responsible for us not losing. So I

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want to be like your advisor to, to. To. To play that forward.

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Also, during co, we wrote a book called Time to Win Again,

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which is like good to great meets, where's waldo. And it's 52 takeaways from

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Team sports to ensure your business success. So Dave, make sure we send

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it out to Andrew right after this. And it's basically like, take timeouts.

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Nobody takes timeouts in business. People do it. Sports, you

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know, know your competitors, you know, signals like everyone

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does, you know, scouting reports. But in business, you don't really do scouting

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reports the way you should and then take the points. So if

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somebody wants to buy your company and you can sell for 20,

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I could help you sell for 20. You want 22? I'm like, trust me, take

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the 20. It'll change your life. Not the 2 million after tax.

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So we'll get that out to you. So let me ask you a question. Being

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a venture capitalist and his background. I was

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a venture capitalist. I still am, but. But not in a good

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way. I became an angel investor in businesses. And

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I think that's a great Way to lose a lot of money. Because you're basically

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like not questioning the entrepreneur and you're

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basically saying, I believe in you and I'm not

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passive, I'm an active investor. But I say yes.

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Too much is what one of my weaknesses was.

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So being venture capital one, you know the percentages

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of what your batting average is going to be on a deal by deal basis.

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However, you get five or 10 and you hit one home run

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and you know, you basically you return the capital. So

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how do you screen one? What's your like

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if I come to you with a PowerPoint slide or deck and you

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say, hey, you know, what do you got? I'm like, I got an idea, it's

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on paper. Or hey, I got a pro, I got a beta or I'm already

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in the market. How do you kind of calibrate on your end

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what's too early? Because venture capital, there might never be a time was too

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early and then what's too late? We're like, hey man, I can't really help you

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or that's not my, that's not where I want to play. So how do you

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think about that? Yeah, another good question. So first, I think we

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all do a lot of things off who we learn from and who our mentors

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are. And so my mentor is a gentleman that runs a big private equity firm

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called Merit of Capital out of New York. And he very much.

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You have to sometimes try to fit in a box. Are you a pre seed

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seed investor? You private equity? More. It's like, but we don't try to fit in

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a box. Like we try to just do some of the best deals.

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And so we split our portfolio into two sides. There's really

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more the VC venture side and then there's really more the pe, like

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smaller returns but much more linear. We know we're going to go get wins

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there. So 50% of our portfolio is into teams, leagues,

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events. We call them layer one solutions in sports. So we're going to go, go

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drive 5, 10, 15x returns and we're, we can pretty

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much guarantee we're going to return our fund through just those and then we can

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go swing at the venture side and all we need is one of

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those to go crush it. And then we have a top, you know, quartile

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top 1% returning fund in the space

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or just even in, in general industry standards. And so already we're a year

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in again, it's all off markups and stuff. But we have,

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when you put both sides together, you know, we're already in the top.

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We're top quartile easily. And then we looked

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at. To your deck question. We looked at 1500 companies in year one.

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We did 13 investments. So it's under 1%,

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you know, that we're. We're executing on. And

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yeah, I mean, we know. We know the sectors. We know really well. And then

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another strategy was for the first fund, I went and people were

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like, hey, you got to build an advisory or, you know, you got to do

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something there. And so what I did is I wanted to go get private

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equity partners as both LPs and advisors, and

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then some exited sports founders. And so then I went and got all the subject

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matter experts that now have skin in the game, and I gave them a little

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bit of, you know, boost on top to incentivize

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them more. And so now if there's a space, I don't know well enough. Okay.

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Like, let me get my. Let me bring in another opinion. And so I feel

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like we've made really good decisions across the board. Again, we'll see. There's a little

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time lag, but so far, so good. Yeah. So. So

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one of the things that I had a problem with is that we made seven

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investments. We'll have two. Two big wins. Yeah. One.

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One will be a home run, one will be like a triple, and then there's

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probably a couple that we. Well, it's two. We had to shut down during COVID

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because there was a, you know, studio concept, what was

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called Switch Playground. So you switch to, like 20 different

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machines every. Every two minutes with a partner. So if ever,

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if anyone had Covid, everyone gets Covid, you know, so there really wasn't

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a way to pivot. That business called out of South Africa that we

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brought to the U.S. have you had any situation yet?

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We had to either shut down a company or you had to say, look, you

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guys had these. These milestones or these goals, and we didn't

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hit them. And what I was doing, I do an education

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platform called Halo Academy. And what I tell people is like, the way

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things used to be done, or no one really thinks about this anymore, is like,

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you get a series A round, okay. Or you get a friends and family that

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goes, well, you get a series A. Then that experiment

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goes, well, you get a series B, then you get a series C. But all

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those things are based on, like, I'm trying to get from a point A to

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point B, and if I get there, then I'm. Then I'm eligible

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to get another round. Whereas some of these Companies

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get a Series A and that's like, hold on man, like now you need like

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a bridge loan or you need me to meet, cover your payroll and I'm like

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your angel investor. I'm like, I didn't really sign up for the like

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access to my checking account. You know what I mean? So, so have you

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had any of those experiences yet of like how you deal with

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this portfolio that not everyone's going to be successful and I

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gotta, I gotta like cut it and I gotta tell the entrepreneur like, look man,

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it's not personal. Yeah, no, we

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haven't, fortunately. But we've had some pivots and again like how our

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portfolio is constructed. We take larger checks, larger ownership

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shares and the more linear IP plays where we control them a little bit more.

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The events, you know, USL team and pro soccer in the

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US like you can see it, you can feel it, we're in it. And

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so those have been great like this. On the tech side, we're taking smaller checks,

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smaller minority investments where we tell them like, hey, if you need things, put it

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in front of us. But we're, we're small strategic

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investors in those companies. You guys have elite investors that are writing the million, two

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million dollar checks. Like go to them if you really need to figure something

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out. Like we can help you on the real sports specific. And a lot of

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most, most of our companies have said we're, you know, their most

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helpful investor because we can also get them a lot of attention from our

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channels from a marketing lens. We also just have a huge network

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to get them more investment or to get them more customers or whatever.

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But yeah, on that side, you know, we'll hop on, we'll help. But

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like we're, we're very passive in a lot of ways because we're like,

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hey, we're just hoping one of the 15 of you goes and wins.

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But on this side, we need all of these to win and these are all

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going great on the IP side. And so that's,

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that's how we've done it for the first fund. We'll see as we progress what,

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how that changes or evolves. So, so it's a, we'll just do a public

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service announcement here to our audience who's listening to this, this show right

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now. If you're going to invest in early stage deals, try not to do it

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directly as a, as a, an individual investor into

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either a friend or someone, you know, make sure that there's an investment

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group, that one is going to help support the company as a Lead. If you're

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just putting in 50 to 250 grand, who's actually checking the

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valuation? Who actually has some level or semblance of corporate

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governance over the business that you're investing in? Because

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I've got a lot of, what I call, Andrew, expensive

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wallpaper of stock certificates that, you know,

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00:18:48,890 --> 00:18:52,330
it probably could have been managed differently when I

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went into this, like, VC foray or put money behind your

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fund, you know, 10 years ago and say, hey, let these guys run and manage

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it. Because I got a day job and I thought I could also bat a

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thousand when I, when I turn 40. Because I thought I've seen all these

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movies before. Yeah, well, we also see a lot of, like right now,

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family offices, even trying to enter sports and do it themselves and do

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direct deals. And we go, great, go ahead. Like, it's going to be tough to

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navigate. We know they're going to come back around and just give. They're going

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to invest in us to go make the best decisions because we know it, we're

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really deep ingrained in it. But right now, even again, sort of similar

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to you said, like individuals, hey, I want to do some sports deals. Why, why

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would you go? Right. And this is just my opinion and obviously I'm biased because

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we have a vehicle to do it. But it's like, and I went in angel

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invested way too much at my age of my net worth and angel

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investing into seven deals too, before I went to the fun side. You try to

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make me feel better. Thank you. Yeah, yeah, so, but it's like,

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I would have much rather taken those seven that I really had. No,

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like, and just put all that money just into a vehicle and know,

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hey, yeah, maybe I'm not going to hit that one direct. And it's going to

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be a lower return, but it's still way higher than any. It's way. It's going

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to be way higher than the S and P than anything else. Right. And so

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it's like, it's. I would urge most people, yeah, just, just

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go into a fund but make sure it's established, make sure there's good people around

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it, still do the due diligence on that. But yeah, I mean, all of our

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investors, like, I mean, a lot of them are exited sports founders. They could literally

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probably go do it themselves, but they understand, like, hey, let's, let's go

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do it together. It's better that way. We'll drive. We'll drive.

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You know, more returns and, and more impact in the space. So, yeah, it's A

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good call up foreign.

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This is Pete Moore. Here's the last tip for you of the podcast.

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Just as good as the workout.

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00:21:47,740 --> 00:21:51,220
So we got a couple minutes left here. When you take a look at what's

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happened in college sports and you said, hey, I got my bracket right? I got

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the top four teams that are all number one in their, in their region

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going to March Madness to the final four. You know,

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as you take a look at this whole nil and basically like I was

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watching, I don't know if you watched. Did you watch A red storm rising on

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00:22:10,020 --> 00:22:13,780
Vice Hulu? Yeah, it was

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basically. And it was great if anyone wants to watch this. But he was like,

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you look Kadari. You know, we, we blew SE hall out of the water was

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what we're paying him. So you know, he basically better hit that shot because you

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know, and it basically like chimed to me is like these kids are.

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There's the term student athlete should basically be a

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retired term. Just like I want to retire the word wellness because

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the antonym of illness. So it's like if you're not sick, you're okay. And

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I'm just like, that's why we came up this term Halo health active lifestyle outdoors.

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We're trying to create the halo sector. We're not trying to create the wellness industry.

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But these guys basically work for the St. John's athletic department. Right.

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That you know, if you look at the at all players in college sports now.

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So how do you see that as an opportunity? Do you think that

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in a year or two, five years from now, profluence owns 20%

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of the university. You know, UCF's athletic

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department. Is that, is that a viable, like, result of the

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nil? Yeah, 100%. I mean, I think part of the reason we got in

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is all this goes downstream. There's a ton of opportunity, both in college

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and then into youth and amateur sports, but also international.

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There's, I mean, there's no, like, if you look at India, for example, there's no

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collegiate system there. So, like, it's a big undertaking, it's

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a big, you know, challenge. But if you can go build even a similar

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system there, I mean, you're, that's a massive opportunity. So I think

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that's what's cool about sports is it's going more global and it's still

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very underserved and under built in a lot of areas. And then even looking

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in America, you have FIFA World Cup 2026, and you have the Olympics, L.A.

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00:23:46,882 --> 00:23:50,120
28, and you have the Winter Olympics. I think it's 20, 34,

390
00:23:50,240 --> 00:23:53,820
2 or somewhere in there. Right. And so we have this great

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10 to 20 year run and we're at the ground floor of it.

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And so, yeah, I mean, there's a ton of opportunity. Again, you

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00:24:01,220 --> 00:24:04,820
just, you have to really study the space and know the

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nuance and bring the right people. Because sports also,

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00:24:08,650 --> 00:24:12,250
it's, it is very relationship based. And if you don't have some of the right

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relationships, you might have the best product, you might have the best service, but

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you don't know the right person so you can't get what you need to get

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done. Which is, I think, unique to, compared to a lot of other industries.

399
00:24:23,130 --> 00:24:26,890
Yeah. All right, man. Well, look, I appreciate you coming on. I'm one of your

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00:24:27,130 --> 00:24:30,970
loyal followers. Keep up the content and the work. I love that you share it

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00:24:30,970 --> 00:24:34,610
with everyone because it helps frame the opportunities. And I agree with you

402
00:24:34,610 --> 00:24:38,150
that the more interest there is it kind of, please, to your

403
00:24:38,150 --> 00:24:41,990
advantage long term because it could be private equity firms that might read this and

404
00:24:41,990 --> 00:24:45,230
say, hey, it's too early and they'll be the buyers of, you know, some of

405
00:24:45,230 --> 00:24:48,870
your investments. So. Exactly. Yeah. All right, man, Keep up the great

406
00:24:48,870 --> 00:24:52,670
work and action leader. That'll be your term in Halo. And we're going to

407
00:24:52,670 --> 00:24:56,390
get you a copy of our book that you'll, I'm sure you'll thoroughly enjoy.

408
00:24:56,390 --> 00:24:58,750
All right. Awesome, awesome. Thank you. Appreciate it.