Rohn Malhotra is a serial entrepreneur with over 16 years of work experience. He started his career as a Management Consultant at KPMG and went on to co-found and successfully exit his last startup in 2017 before entering the sports tech industry in 2018. As the Co-Founder and Managing Director of SportsTechX, he is dedicated to promoting and enhancing the global SportsTech ecosystem and its trends. His company publishes reports, conducts a podcast, and provides various services such as market analysis, funding, connection with startups, business growth, communication, development, and fundraising support for select startups not only from the world of sports.
During the talk, our guest will focus on the SportsTech industry’s latest developments, including partnerships, collaborations, and the integration of technology in sports. His insights will be a valuable source of content for anyone interested in the intersection of sports and technology. Rohn’s diverse background, from entrepreneurship to management consulting, gives him a unique perspective on the industry, making this podcast episode a must-listen for sports enthusiasts, entrepreneurs, and anyone passionate about the evolving SportsTech landscape.
Tune in to get to know the challenges that SportsTechX has faced:
- Integration of New Technologies: Integrating new technologies, systems, and processes poses a significant challenge. It can be costly, time-consuming, and requires substantial investment in research and development
- Data Privacy and Security: With the increasing use of wearable technology and the Internet of Things (IoT) in the sports industry, data privacy and security have become critical concerns. Protecting athlete and fan data is essential.
- Adoption of New Technologies: The adoption of new technologies in the sports industry can be slow, as athletes, coaches, and organizations may be resistant to change. Building trust and demonstrating the value of new technology takes time.
- Regulatory Landscape: Understanding and navigating the regulatory landscape is challenging for sports technology companies. Compliance with existing rules and guidelines can be a hurdle for companies developing innovative technologies
- Barriers Affecting Participation in Sports: SportsTechX has also been involved in addressing barriers affecting participation in sports, such as local and social infrastructure, weather constraints, and the need for technological innovation to make sports more accessible
To enjoy this insightful conversation with Rohn Malhotra, Co-Founder of SportsTechX, please visit our website or the YouTube channel. Don’t miss this opportunity to gain valuable insights from a leading figure in the sports tech industry.
The full transcript of the episode:
Jan Kamiński: Welcome to Keep IT Healthy podcast, a show hosted by people making things happen in technology, aiming to optimize healthcare delivery, health, well-being and fitness. My name is Jan Kaminski and I’m the co-founder of AppLover, a company dedicated to improving the quality of life with IT solutions and digital advisory. We started making this podcast to amplify great thinking to propel health care forward. Our guest today is Rolan Malchotra, co-founder of SportsTechX. Thanks for joining the podcast today. And I want to start with a question that I asked all of our guests to give some context to our audience. So essentially your background. Could you tell us about your background and what interests me the most is essentially the transition from KPMG to the sport tech industry and what was the inspiration to enter this niche?
Rohn Malhotra: Thank you for having me Jan. Yeah, a few pit stops on that journey between KPMG and SportsTechX. There was a pretty long pit stop in the middle. So yeah, I was born and bred in India in Goa for any of the listeners who were familiar with the region. And I lived most of my life, most of my adult life, my schooling, my college, my first job, everything in Bangalore, which is also in the south of India. So Goa is on the coast. So I grew up on the beach. I have some amazing memories of that. And then most of my life grew up in a big city in Bangalore which is the IT capital, the startup capital, the tech capital of India. And still it was through the late 90s and still is today pretty much. I started my career in consulting, it was a job straight out of college, no big story behind that, they were 1 amongst many companies that came to campus for recruitment. I liked the idea, spoke to a few people, consulting sounded like an interesting enough job versus going into banking or any of the other sectors that everybody else was going into. I studied commerce and then that turned out to be 1 of the best decisions I ever made completely by chance because my short stint in KPMG was only about 2 and a half years but that background in consulting which is super horizontal, you get exposed to a bunch of different industries pretty early, pretty quick. That was a great setting for my career to the ability to go in, learn things quickly, and then adapt and find ways to find add value. I think those skills apart from some harder skills, technical skills like Word and Office and Excel and things like that which I use till today. All of that happened in KPMG. I spent a lot of time consulting in the Middle East and Africa. So in Dubai, in India a bit of course, but mainly in Dubai, in parts of Africa, in Rwanda and Swaziland. And I would do these long like 3 months, 6 months at a time stints. So again, got to travel, got exposed to new cultures, countries that I would never go to. Otherwise, I haven’t been since. And they’re unlikely that they will be destinations that I travel to on work probably anytime soon. So KPMG was an amazing experience for me but I think very early in my career I realized that I didn’t want to do a corporate job. The idea of wearing a tie and a suit to work, yeah, didn’t really strike with me. I’m more of a t-shirts kind of guy and I had a best friend, 1 of my really good friends who had this idea that he wanted to make t-shirts for our school that we graduated from together and this was a very nascent idea, merchandise, official merchandise for your school, college, your alma mater and that idea grew into a business called alma mater We ran that business together for started in 2009 for about 8 9 years did a couple of rounds of funding Became the biggest in its category in India became a category leader in India and customized merchandise Yeah, we got pretty big and pretty famous. There was a book about us and a movie and we got a cover of like got a good amount of press coverage. And eventually I sold that business in 2017. The reason was, I think, and I was pretty young when I started I was 24 when I set up the company but after initial buzz of hey you’re a startup founder and you’re doing something exciting and all that but after like 5 or 6 years we’re just selling t-shirts we’re not really changing the world And I think I fell out of love with the business. I enjoyed the team and the people and the exciting journey of hiring and growing and all of that. But once we got to a bit of stability, and yeah, I think I just realized that we hit a kind of a plateau with where we could scale and I wanted to do something else. So in 2017 I eventually sold that business and that fueled and funded my move to Europe. My ex-girlfriend at the time was living in Barcelona and I just went and sat in her house for 3 months and at that time already sports was an emerging topic in my head that, hey, it’s a growing business, there’s so much more money in India and everywhere in the world and I also stumbled upon this topic of sports tech which was marrying innovation and entrepreneurship with sports which is what I love. So set up based in Barcelona then traveled around Europe, met people in Berlin which is where I am now, in Paris and other places and through those travels when she met my co-founder Ben and yeah started off on the journey of exploring the sports tech space.
Jan Kamiński: I have a few questions but I’ll start with the with the beginning with the consulting work just out of curiosity because we had some guests here starting the consulting and their let’s say common thing they said was that they were a little bit tired with the job because they didn’t really see the outcome. You know, they were working for their clients, but the outcome wasn’t there. And they were kind of tired with Excel type of work, maybe not Excel, but like PowerPoint type of work. Is it your, is it also, or you had a completely different impression and their experience is just different?
Rohn Malhotra: I can understand that. And I think I would probably say mine was similar in some ways. I was quite young, like I said, I was only 23, 24 at the time. I was 24 when I left already, so 21, 22 when I joined. So at that time, everything is new and exciting and you don’t really know what’s happening. But looking back, yeah, all we were doing was making PowerPoints and doing research. And I don’t know how much of any of the PowerPoints that I made, I must have made hundreds of them, how many of them actually were used beyond that final presentation that we gave. So I think that’s part of it. But at the time, I didn’t think of it that way. At the time, I enjoyed it. At the time, you know, you’re traveling all the time. So I cannot like now if I was traveling the way I was like I’m 37 now. If I was traveling the way I was then I would be probably really tired and feel fatigued by 21. You’re like, hey, every Thursday you’re flying here, flying there, going to new places, meeting new people. So all of that stuff, all of the stuff that I loved about consulting then I might probably not enjoy as much now. But you’re right. I think the idea that consultants are only about, you know, blah, blah, blah. And you do a lot of presentations and you do. And I’m not saying they don’t add value, but you don’t always see it through. You make a lot of suggestions, but how much of that gets implemented I don’t know so I can see that argument we do a bit of consulting now but not in that way we try to do more research like hey you’re asking me for an opinion here is some data to support the answer, you know, so we do a bit of consulting or presenting the sports tech market, for example, we try to do it, but I try to stay away from that idea of consulting.
Jan Kamiński: And with the with the first business that was a success. So I’m a matter of store because that was an e-commerce, right? You were only selling online.
Rohn Malhotra: I’m only online.
Jan Kamiński: Could you share some and that was what was the what were the years that you were scaling more or less?
Rohn Malhotra: So online and events. But yeah. 90% plus of our business was online. We set up in 2009 while I was still at KPMG, kind of like shadowing job a bit. And I quit by early 2010. We set up mid-2009, by early 2010 I already knew this was the thing. We did our first round of funding I think in early 2012, so conversations through the second half of 2011. So in the first couple of years already, we saw good traction. Like I think for the first 3 years, we tripled our revenue. I think we tripled our revenue every year till we hit like a million or something in year 4. So I mean, for 2 guys who were like not even barely 25, 26, that was great. Like we were super excited. We were quite happy with what we were executing at. Yeah, I think those first 3, 4 years and you’re hiring people and you’re growing, there’s so many moving parts because you’re just understanding what investment is and what angel investing in and what a series they would like. All of these things were so new. So, yeah, I think I think that period from 2010 when we both kind of went in full time till about 14, 15 was like super, super exciting.
Jan Kamiński: This regards to that, what were the, could you share some of the key learnings from your experience? You mentioned fundraising, you mentioned team management. So what were those?
Rohn Malhotra: I think that’s the stuff that you hear of more. Yeah, it’s more traditional for a startup founder to say, like how to hire people, how to fire people on occasion when you need to, how to be flexible and be able to pivot. But I’ll focus on this couple of specific ones that I hold very strongly till today. I think the first was that not having competition is not always a good thing. Like competition is good. Why I say that is because for the first 4, like that category that we were operating in didn’t exist before we started. We thought this like, hey, nobody else is doing this. We should do it. And that was great for us. And that was great for us and that was great for us to grow to that like I said million revenue point or around that figure but the challenge of that was when we went to investors for our series A conversation and to do more they were like so hey you’re what we call now a tentpole industry which is hey you’re the 1 who’s holding up this whole tent where is anybody else who else is under this thing and we realized that actually yeah there wasn’t a lot of competition we were the market maker so it was very difficult to justify how big this market is and that became like a weird learning at the end like I’d have I’d go into series a kind of pitch meetings where we’re trying to raise like you know 2 and a half 3000000 and they be you always get this kind of like good job boys you know well done you know nice try and I was like man you guys are nuts like how do you not see this? We’re making revenue, like we’ve got huge audience, like everybody loves us. We’re getting so much traction, so much love on social media, so much press and all of this. And at hindsight, they were right, because now even, you know, yeah, almost 13 years after we started, that category is still not huge. It’s not like that category. It’s like we were just too early and then you know the category took off no that till today and there are many challenges for it which we don’t have to get into price and logistics and blah blah blah but that was a super interesting learning for me which was that don’t be afraid of competition and I mean understand it react to it and and work with it but competition is good it’s more validation more people entering your market is a good thing. I hear this even now from startup founders that nobody does what we do. Is there a reason for that? Is that because nobody else is interested in doing what you do? So that was 1 very powerful, very specific learning that it took away. I would say the other was to fail quick, which was also an idea that I didn’t really understand then. Like I said, for year 4 or 5, we were growing like super well. But then after that, we kind of plateaued because we didn’t have the extra revenue to kind of push our fuel, our growth. And we were kind of profitable, but we didn’t have a lot of money ourselves to invest in. So like you kind of hit a plateau. And we thought we were doing good, but that plateau lasted maybe 2 years, 2 and a half years. And that was already too long. Like you needed to be quicker and to be more dynamic. So yeah, a couple of things I would say don’t be afraid of competition, try and fail quick before you know it, 5678 years are gone and you’re like, hey, what would have really happened? So I have many, many learnings from that journey that I carry with me in our current ventures and talking to startups.
Jan Kamiński: I’m not an expert in that field, obviously, but I know a few founders in this sector in Europe, I mean, essentially close for universities. And when I talked with them, the common problem was with the clients. So your clients are university students that will eventually become, I mean, they will just stop being students and then you just lose a particular client base and then you need to of course you have another ones because they’re another year coming but still it’s a quick it’s a it’s a quite a different market than just like a standard e-commerce, I don’t know, t-shirt shop or something. What were your experiences with that?
Rohn Malhotra: I disagree with that idea. I think the power was that we were building a brand with a very young audience. So what happened with us, for example, is that you’re right. First of all, that supply is never ending. As long as the university is there, you’re always going to have customers. Right. But the interesting thing is that you always have a new supply of new customers because the older customers, they still like, I mean, they’re not going to buy a lot of stuff, but they still like wearing maybe a couple, having a couple of t-shirts in their wardrobe from their, from their university. Or what would very often happen with us is that a lot of these guys and girls would graduate and then start working at big companies, whatever, Amazon, Google, wherever they go. And then they would want their Amazon hoodies and t-shirts made by us. So they became like a really good lead gen for us, like that they would carry our brand into wherever they went. So we started getting a lot of, we started in schools and colleges, but very quickly we were doing a lot of work for corporates.
Jan Kamiński: It was like white label later. I thought it’s only because you, I thought you mentioned like Alma mater. I thought it was only for universities but it also was for companies that made their own brand.
Rohn Malhotra: I would say it was not purely white label we did some pure white label stuff it was mainly co-branded like it’s like if it’s like the football jersey you’re wearing a Manchester United shirt but it is also a Nike shirt right or an Adidas shirt so the Adidas logo is on there. Our Alma Mater logo was always on all our merch but it also had it’s an Amazon shirt made by Alma Mater it’s a Google shirt made by Alma Mater so yeah that was the idea that we went for. So our brand always remained fairly prominent. But the idea was that this is your shirt for your group. And it not just became corporates, it was any like you could have a drama group of 20 people and they’d want their merch made. So it is very much it started in schools and colleges and what it became was a community play. So not just for the corporates, it might be that specific team within Amazon or whatever, like they just want their 10 t-shirts or 20 t-shirts made. And it’s this collective identity thing that we were tapping into. But you want you want much for your batch for your school for your class and that’s the big group but then you can keep making okay I want it only for my class I want it only for my sports guys. I want it for the only for the football guys. I want it only for the first year football guys. And you know and it keeps getting into the smaller smaller group which is this community affinity thing. And that’s where the real power of the Alamodav brand shone through because people felt that we were talking to them and helping them identify, hey, you and I, we go together because we wear the same merch. And you’re seeing that a lot manifest in many different ways with other tech, but we can get to that.
Jan Kamiński: But I want to come back to the Sport Tech X. So if you can explain it for the audience. What is it? What’s your main, let’s say, goals, mission? And what’s the company all about?
Rohn Malhotra: And I’ll start with the origin story of SportsTech X which is that when I met Ben he was basically doing publishing like overviews of what is happening in the sports tech world in different parts of Europe. So what’s the sports tech ecosystem in dark region, which is where we’re based in Benelux or in Iberia or UK or whatever. And what that was was just an overview of how many startups there are and categorizing the startups into what we developed, which is the SportsTech X framework. So Ben had like this version of the framework that he had developed and he was working with that and just doing these, he was just writing like little blog posts and putting it up and that’s when I came across it and I was like hey actually this sounds really cool let me do this research for other markets. So I did it for India, for Australia, for Southeast Asia, so on. So what we quickly realized was that and the goal of the research project was for me to find which specific sector of sports tech would be when I would launch my next startup. So it was just to identify which areas are hot right now. What we realized is that actually the research itself was valuable, that people were paying us to either appear in our content, to be associated with our content that, hey, we’re supporting this kind of quality research or just paying directly for the data itself. So that’s what SportsTech is, is we’re a market research company for sports innovation. Our job is to know what are the latest trends, who are the hardest startups, who are the leading investors in the world of sports innovation anywhere in the world. So comparing all of this in the US versus Europe of what SportsDX is. Market research and market intelligence for the sports innovation space. What we do with this base code layer of research is a few different things that we monetize. The first is our content, which is probably what we’re best known for. We have these detailed reports, which is basically our flagship product. So the SportsTech, the Global SportsTech ecosystem report, which I think we just published and we started publishing in 2019 and the Global SportsTech VC report, which we started in the following year so it’s been published every year since then and these are like state-of-the-industry like a 40-50 page PDF with lots of graphs and charts and interviews and all that kind of stuff to present what’s happening in this market. So we start with reports and a newsletter and a podcast and video content and like a bunch of social stuff. And yeah, there’s a bunch of this full team which is running our media business. And our media business monetizes like a media business does either through paid advertising, sponsorship, or through some paid content. So some content is behind a paywall like our database, or like we have a free version of the report and we have a pro version of the report. So some paid content, but primarily through advertising and sponsorship. The second part of our business is Connect, where we connect startups to investors for fundraising. So either on the startup side or on the investor side. So sometimes we work with investors to find startups in a particular topic to say, I don’t know, like, hey, some fan engagement solutions based out of Germany, or some German clubs, or something like that. Or we work on the startup side, which is, hey, find me some capital, find me good investors. So that’s fairly straightforward. I’m also a partner at a venture partner slash investment director at a European sports tech VC. So we have now a partner fund that we work with and also work with a network of investors. So that’s part 2. And part 3, I mentioned earlier in the conversation is that we do a bit of consulting, but our consult is usually research-based consulting. So for example, we just did a project with Bundesliga, with the DFL, which is a white paper on 5G in sports. So they want to present as a thought leader in the space and they will say, hey Rohan, can you write a report for us and we’ll co-brand it and give you some materials. Basically, we do the research and present it. Sometimes we do private research or sometimes we do public research. There are a few papers that are published. Otherwise, we’ll do private research to educate an investor on a particular sport or a market or particular sector or anything of that sort or we do like workshops. Hey, here’s what’s happening in sports tech. Here’s a 1 day workshop to educate you on what’s happening in the sports like what all the latest trends all the data all that kind of stuff. So yeah, that’s essentially what sports decades is is where a media business We do some startup investor services and we do a bit of consulting.
Jan Kamiński: OK, but I’m sure we have a few sport tech startups listening to us. So how does your company support them in the Sportech ecosystem with because as I understand is okay, fundraising and some business development. But is it like you take a cut out of the deal or is it like a paid service? What’s the model?
Rohn Malhotra: so first of all, we don’t do business development. That’s 1 thing that I make a distinction between. We don’t do client conversations. We do investor conversations. And there’s a reason for that. I don’t like the business development 1 is a harder 1 to track. But so when we do investor conversations, yes, we take a small whatever success fee based on on any funding that we help a startup raise. That’s 1 model. Another way that we work with startups is and these are the paid models. So another way is through our marketing. So a lot of times startups will want to reach our audience of investors or sports teams, so they will pay us to advertise in our content. So there are a couple of paid ways that we work with startups. But beyond that, My job is also to constantly be interacting with startups because A, I think it’s beneficial for us to find high quality startups for our own fund to invest in and B, just generally to build visibility in the ecosystem. I’ll give you an example. So every month this year, we’ve started a new thing in 23, but every month we pick up a new theme and we all our content for that month is focused on that theme. So we’ve done months on AI in sports or women tech for women’s sports or tech for differently abled people. Last month for October was cricket tech because I’m from India and cricket is big for us and also the cricket World Cup was going on. Now so when we do these months we will usually find 1 or 2 startups that we like that we that we want to promote and this is not paid. So we’ll reach out and say, hey, would you like to come on our podcast? We do maybe a newsletter feature. So depending if it fits our topic, then we were happy to do some paid stuff, some free stuff to promote startups because we feel like, yeah, the right startups should be presented to a wider audience. So it’s not just paid stuff that we engage with startups on. We will do free things as long as it’s within our topics. But for the paid stuff, it’s usually through marketing or through, like I said, on a success fee on on any funding that we have to raise.
Jan Kamiński: I get that. But in a sense also the company itself somehow helps you because you know you’re a venture partner in the VC you mentioned. So essentially also kind of like a machine to just fuel the VC as well. I mean, in a sense, somehow you probably take some of the startups that just approach you and you’re able to pitch it in front of the VC that is just connected with you directly.
Rohn Malhotra: Absolutely. Like I said, I mean, it’s a it’s a win-win in that way that we we try to generate like we put out a lot of content to get visibility in the market, which will help attract the best quality startups reaching out to us, which fuels our deal flow. And if we can execute deals, then that’s better for the ecosystem, for the startup, first of all, and also for the ecosystem in general. So, yeah, absolutely. I’m always on the lookout for the most interesting startups that we can plug into our own pipeline or if not without without our own fund then at least bring it to our investor network.
Jan Kamiński: Is there any particular interest for example hardware or data or something or does it matter?
Rohn Malhotra: It depends. So different investors have different thesis or have a different thesis that they will work with. So our job is to know what each investor is usually looking for. So some funds will only do consumer facing. So they’re not interested in any B2B companies. Some funds are more hardware focused. Some funds will say no to hardware completely. They’re not interested in touching it. So our job is to know what fund looks at what for our own partner fund. Yeah, there are some specific topics that we look at. The fund Indigo has a good track record in hardware, actually. So they have we’ve helped them do a couple of investments in hardware, they’ve done a few more before that. They’ve also had a traditionally had a really strong focus on football. So we’ve, again, looked in 1 particular industry, 1 particular sport and try to find connections there, because then that’s a good kind of their own portfolio of companies has a good ecosystem between them. So they can build some synergy between their own portfolio. But beyond that, I mean, I don’t know if you’ll get there but there are so many areas of sports tech that are super interesting on automated media production is really hot right now. We can talk about web 3 it’s gone through its hype cycle it’s gone dead right now but it feels like it’s making a decent comeback. We can talk about AI. We can talk about fitness. I mean there are many areas. Sports tech and sports in general is growing in a bunch of different areas which is what’s what makes it an exciting place to be right now.
Jan Kamiński: It will be just an obvious question but isn’t that the most of those I mean the startups that actually get I mean get funded in the more in a set let’s say faster pace are the ones from the sport industries are just so popular as football or basketball I mean probably there are 5 disciplines that matter in a sense financially, and then the rest is significantly under, let’s say, under those budgets that these disciplines have. What’s your take on that?
Rohn Malhotra: I think the I mean, this is a capitalist market by definition. So the money follows the money in in most ways. That said, what you’ll be surprised by the number of other industries where you might not think of them or other sports where you might not think of them, but there is a lot of capital because there is a lot of interest. Fishing is a good example. Fishing as a sport is not 1 that you’d traditionally think of, but people who get into fishing, they’re usually, usually the average demographic is kind of a middle aged 35 plus male, who’s probably a man of means. So he’s, he’s got a bit of money, likes to invest in his leisure. So fishing is his hobby of choice. So if this is his hobby of choice that he’ll spend a lot of money and you know, whether it’s interesting devices or tackles or apps that will help him find the right switching, fishing spots or travel that’s built around this hobby. So that’s just 1 example. Ultra, ultra marathons and ultra sports are another example where people when they get in, they will unlock value in super interesting ways. Golf is another 1, which might not be the biggest sport, but yeah, there is a lot of money, a lot of tech and a lot of innovation which follows it because of the purchasing power of the people behind it. So my point is that it’s not only the most popular sports that you watch on TV that always attract the most capital, the investors will go where they find the highest possibility for return. This is the definition of a VC. This is not an altruistic or not profit business. These are guys who are their job is to provide a return to the investors. So they’re looking for the maximum avenues for return. And it’s not only in football and basketball for sure. There are many other areas of sports tech which can give them that.
Jan Kamiński: that, like when you were starting the company and you were entering the sport tech industry, what were the biggest challenges that you faced from that? They can be either from the industry perspective, also your model in a sense, kind of a media model perspective. What were them?
Rohn Malhotra: think from the industry. So let me take that in 2 parts from the industry perspective. So we started in 2018 kind of rough and 2019 full time. It still felt a bit early. It felt like sports tech was still this niche kind of junior part of the entire industry, which people are kind of giving attention to but not really thinking so much about yet, which is also exciting because my question was, hey, I don’t know, we’re early, are we too early is the question, but we’re definitely early, which is a nice place to catch an industry. So at that time, there was a lot of education that we had to do about, like, you wouldn’t find too many sports teams with an innovation manager or somebody who’s like looking after this, this topic, either from leagues or teams, or the industry in general. We’ve seen that change drastically over the last few years. So that’s been what started out as a challenge has now become. Okay. It’s gone from niche to it’s increasingly becoming mainstream and you don’t have to take my word for it. Just the simple fact that Apple, Amazon, Facebook, Google, like all these big tech companies are now investing in sports by buying up sports properties and bidding for sports rights. All of that has happened in the last 2 years, all post-COVID. Right. And and that was not the case 5 years ago. So I think that that shift in the industry is very clear. Sports tech has gone from this niche kind of side industry to now this is a big part. Sports is a big part of every conversation. So that was a challenge to get over the early days. Today, I think there are different challenges. I think today sports is, it’s teething issues, growing issues, growing pains, whatever you want to call it. That is this industry which is trying to break out, but it’s having challenges of finding scale. The models that were used, especially in Europe, the way sports businesses were run were usually family-run businesses or community-based businesses these are not built as profit multiplying
Jan Kamiński: Public right that’s also a problem I mean in a sense yeah
Rohn Malhotra: Germany is a classic example the 50 plus 1 rule does put on in the 50 plus 1 rule in football For anybody who doesn’t know by default, 51 percent of every club is owned by its members, by its fans. But now that inherently limits the commercial potential of a club, because the fear of the fans would want to grow things that are different from the way a private shareholder would. And that is, in a lot of ways, a very good thing as well. Don’t get me wrong. I’m not only purely capitalist. I think this is a very strong sustainable way to grow sport. But the classic example I’ll give you here is Formula 1. Formula 1 was run for decades for half a century from the 50s right down until the early 2000s. It’s kind of this cool elitist thing that was this play like the playground of the playboy rich rich playboys and it was sexy and exciting and stuff but didn’t really make money. People went in there to only lose money. And yeah, you had a decent loyal fan base who liked, who were either gearheads who liked cars, or just like the excitement of racing. Cut to after the investment from Liberty, and a lot of these were family run teams, you know, running under losses, or run by, by rich billionaires or something. Cut to now, where after the investment from Liberty Media, which is kind of professionalized the way that things are run, put in a salary cap, taken Formula 1 to new markets, the whole thing has changed. I put up a post on LinkedIn, I think just earlier this week, where Laurence Stroll, who owns the Aston Martin F1 team, bought that team for £90 million in 2018. Yeah, so just 5 years ago, for 90 million in a distressed sale force India with the previous property that he bought it from, which is an Indian billionaire who is going bankrupt. So a lot of these billionaires always find ways to go bankrupt. I don’t know why. For 90 million 5 years ago, like last week or earlier this week, Arctos partners, which has a huge portfolio of sports companies, made a minority investment in Aston Martin F1 for 1000000000 pounds. So from 90 million to 1 billion in 5 years, that’s a CAGR of, I did this calculation, like almost 70%. Year on year for 5 years, that is insane growth. That is just to give you an idea of the scale that the sport has achieved. And that is 1 example of the success. But this also has to happen across different sports. The Italian league, the Serie A is a good example. The La Liga is struggling. French league, you can see how much they’re struggling with their broadcasting rights and stuff. So these growing pains are there in a lot of areas. How does sports get more professional? The digital transformation quote unquote of sports is going on and that brings with it a lot of pain where people are persevering because they see the potential of it and they can unlock to make the investment at the right times. Yeah, I think from an industry perspective, that’s what I would say from personally for SportsTech X, it has been, yeah, lots of interesting challenges finding audiences in Europe. It’s a bit more conservative way of thinking, whereas companies who do what we do in the US have bigger audiences. It’s a bigger market. We see that media businesses are traditionally not very good businesses to run today because nobody really pays for content. Everybody wants the content for free. So how do you find ways to monetize? Okay, you have to find advertisers. But then you could, again, through COVID and through these, like, there was a lot of money. There was not a lot of money at all in COVID, then there was a lot of money for a year and then there’s no money again in this market. So it brings its own challenges of finding your audience. But yeah, all those are exciting challenges that we’re happy to take on.
Jan Kamiński: Said a few things about the landscape of Sportech and I know you entered the industry in 2018 more or less but based on the experience because you’ve been doing that for I mean looking at the trends looking at the companies for like 5 years now what trends do you anticipate in the coming years?
Rohn Malhotra: This is something that we will talk about more in our next report, which should be out in a couple of weeks. So our next vc report, SportsTech vc report will be out either November 30th or first week of December, something like that. We will cover that. So for anybody who’s listening, you can go to sportstechx.com reports and download the full 1. But to answer your question quickly, because we’re just doing this analysis, there are 3 or 4 key trends. So number 1 again we just published some content around this is the number of new investors or new entrants in the sports tech market is really important to note. Why that is, is because 2023 was a really bad year for funding, for investment. 21 was an incredible year, was a breakout year post COVID, over $12 billion invested in sports tech. 22 was a good follow up year, about 8 and a half billion, which is more than any of the previous 5 years combined and then 23 has been just falling off a cliff I think we’ve barely crossed 2002000000. The reason for that is it’s not just sports tech across the investment landscape deal flow has been at an all time low, you speak to any investor, any startup founder, capital is at a premium. But at the same time, we’ve seen that it’s okay, investment activity has not been happening, but M&A activity is at an all time high. Again, higher than any year that we’ve been seeing since 2014, we’ve been tracking the space. So that’s super interesting to see as well. So it’s not like there’s no capital, it’s just being redistributed. This is what we’re going to call it as the year of consolidation, where sports tech also understands as an industry that you can’t have 5 guys or 10 guys doing the same thing. You need 2 or 3 big players to get to a certain scale and to get rid of the, let’s say, the lower quality startups and they will get acquired. Hopefully, the talent will come in to the main company and they can build and scale better. So this is what we’re seeing a lot of. So M&A activity on 1 side. And on the other side is, like I mentioned, new investors. So new investors are constantly coming into the market. Over 31 new funds were announced in 2023 for sports tech. And this is new capital waiting to be deployed. So on 1 side, you’ve said, hey, there’s not much investment activity. There’s some M&A, but like there’s not much capital. But at the other side, you’ve got a lot of new investors coming in with, you know, millions, hundreds of millions of dollars, actually 4000000000 by our account, that is waiting to be deployed. So the message to founders is to be patient. If you’re struggling right now, and this is I think not just in sports tech, this is across industries, hold on, there is capital waiting to hit the market but it’s a test from investors to founders that hey who are the ones that can really survive how can they you know financially eke out this period adapt business models etc do whatever they need to do and it’ll be the survival of the fittest and the fittest will be rewarded. It really feels like that. So that’s 1 thing that I would say that there is a lot of new investment and new capital waiting to be deployed. The other thing that I would say in terms of sectors, maybe you’d be curious, automated video production or AI based video content creation and content distribution. Let’s not just say video. Let’s say content is a bit more blanket. Automated content creation and distribution is huge. People are hungry for content. There’s no question about it. And it’s not just I don’t, I think there is a lot of data on a lot of, let’s say, theories on it’s only short form, like 60 second, 90 second clips. No, we’re also seeing a good uptake in long form content in 1 hour plus like 2 hour plus like long series kind of formats like podcasts like this people consume. So anything which helps you create this content very quickly and get it out very quickly is really powerful. We’ve seen strong funding trends on this area in the past, especially over the last 12-18 months or so. So anything which fuels, helps you, helps a sports right holder like this, they have so much content, not just on the match day, they have training footage, they have behind the scenes footage, they have access to the players, interviews like whatever, there’s so much that they can do, but how do they get it done and get it out quickly. So anything which helps sports rights holders do that is really powerful. Broadcasting tech, I can talk about because I mentioned earlier all the major big tech companies, Apple, Amazon, Google through YouTube are all buying up sports rights. How do they differentiate is by making their stream a bit more innovative. How do they extract value I guess. How do they get most people paying by adding more layers. Okay, they might add a betting layer, might add a commerce layer onto their stream. What kind of innovation can they bring on the stream itself to make it more interactive or make it more immersive for the viewer body cams and 360 kind of degree VR headsets which will immerse them in the place of… And those are just some examples but there’s a lot of innovation in broadcasting tech. So content creation and distribution is 1 thing. The other is live sports broadcasting where you’re going to see a lot of innovation. The third and fourth, I mean, I could go on with a few, but fitness tech is a big trend, recovery and fitness. Everybody, not just professional athletes in general, if you live in a world today that is a bit healthier there’s a bit more conscious of what you put in your body and how you train etc. So that trend has been running and will continue to run AI in different ways in the way it interacts. We can talk about NFTs and Web 3.0 and the different applications and that NFT thing is kind of gone thankfully but what are the core applications of that technology how do smart contracts really benefit the sports industry and there are lots of applications look at ticketing look at loyalty so there are I’ve named like quite a few already I think. But there are a few trends that are that are really exciting that will continue to drive the growth of sports tech.
Jan Kamiński: The streaming platforms wasn’t that Netflix that also bought the rights to the like sports?
Rohn Malhotra: I think Netflix just did their first live sports event. They did. Well, but again, it was not really live sports. So they did something which was like a pro, like a golf tournament, which is F1 drivers versus PGA2 golfers and they hosted a golf event and Netflix put that on the air. Netflix has been in talks for a long time whether they will actually start bidding for live whether it’s football or American football or Formula 1 because drive to survive was the series that made it that you could argue started this whole thing but yeah they’re also in it they’re also investing in sports properties they’re not yet buying live rights we don’t know if they will but there’s been constant talk for the last 2 3 years that they’re going to enter the market as well, which also just, it pushes up the price further for, or it gives sports rights holders, who by the way, are also at the same time exploring DTC streaming, direct to consumer streaming. F1 has F1 TV in India, where they do the streaming themselves. La Liga Pass, I think they call it, which they’re experimenting with in a couple of Southeast Asian countries. I think it’s Vietnam and Cambodia or something. I’m not sure. But there are 2 countries that La Liga is streaming directly. The NBA, of course, has had their game pass for a while, NFL. So all these guys are either looking to stream themselves or they have these big tech companies that they’re looking to partner with and then you have all the traditional guys, the broadcast players. So with so many options there’s going to be a lot of innovation in all these areas. And that’s going to be I think sports viewing is going to be is going to be fun for sports fans for a while.
Jan Kamiński: And with that, because we talked about the industry, but what about what are sports like X? I mean, in your opinion, what’s the future in like 3 to 5 years. Do you want to pivot to some other model. What would be the case.
Rohn Malhotra: To predict the future at least 4 or 5 years. I don’t usually look that far. We have a broad vision that we want to get to. I think for now the image of next 12 months 12 to 18 months will be we continue to do what we do, which is maximize our deal flow, get really good quality startups in our network to our investors, and do more of that. I think that’s the big thing, actually get to deploying more capital, rather than just doing research. I mean, our media will continue to churn and we might innovate a bit there, but the main focus is deal flow. In 5 years time, what are we doing? Maybe we’ll have our own fund. Maybe we’ll be investing in sports properties. My personal dream is, which is probably not going to happen in 5 years, is to own Manchester United. I think their last valuation was 6000000000 pounds. They got an offer and the Glaser said no. So I’m a little bit short in my own personal wealth of that. I don’t know that’s realistic at all. But in some way to continue to invest in sports. I’m a huge believer in the power of sports in the socio-cultural political power of it has to change communities, impact communities and affect them in a positive way. So I will continue to invest. I’ve said this a few times that I will own a sports team, whether it’s Manchester United or whether it’s my daughter’s under 14 like neighborhood eats like whether it’s sponsoring that I don’t know what whatever I can afford on like this spectrum, I will definitely I will definitely do because that’s how much I think that it is important to support sports because it can really affect change for people.
Jan Kamiński: I wanted to ask you this about your personal let’s say personal interests what are your favorite teams and sports? I see Manchester United.
Rohn Malhotra: Yeah. Manchester United has come up a few times. It’s a team that’s given me a lot of joy for a long time and now a lot of pain for a long time. But that’s the journey of a sports fan. No problems with that. But I was 1 of those like growing up my mom and the girls I dated in the past would always complain like if there were 2 drops on a glass on a window and they were coming down and I’d watch that just because it’s competition like who’s going to get that first. I was obsessed with sports growing up, was not very good at playing anything. I played a lot but like never to a good level. Like I played for my school and my university and stuff but never to, I was never in like any national teams or anything or at a good level but no foot growing up cricket was the sport of my choice so of course I still watch a lot of cricket and whenever India we just lost the final against Australia and heartbreaking loss but we’ll take that football Manchester United because they were the first team that was on TV growing up in India because I was a huge Beckham guy, still am. He’s been my sporting idol in many ways. I tried to play like him, had long hair, long ponytail, did all that nonsense. But beyond that, just watch a lot of football in general. Obviously, being here in Germany, you support what’s the Bundesliga, La Liga and so on. Formula 1, I’ve mentioned a couple of times, I’m a huge Formula 1 fan. Watch a lot of the NBA, tennis a bit. Yeah, There are a bunch of sports that I can name. In general, if it’s interesting, if there’s good competition, yeah, count me in. I’ll be there.
Jan Kamiński: I mean, I think I saw it on your on your LinkedIn that you had this interaction with a cricket legend, Gary Kirsten, right? Could you share some insights from the conversation and its impact on sports tech?
Rohn Malhotra: Sure. I’m guessing, Jan, you have no idea who Gary Kirsten is, probably at least not until you looked up. Yeah. I don’t know how many how much of your audience would know but Gary Kirsten is a cricketing legend. He’s not also for context. He’s not like the 5 greatest players to ever play the game. Yeah there are others but he was he played over 100 over 200 times in total I think for his country for South Africa. So I mean he’s he’s held world records. He had a long, very successful career at the elite level in a tough sport. So already he was like an incredible athlete. But his second innings, his second career as a coach and in that stint he helped India win its only its second ever World Cup in 2011. So when we won, which was at home in India, he was the coach of the Indian cricket team. So he’s for Indians personally, of course, like it’s a huge moment, you know, the guy who, who helps who will help you lift the trophy and such. I was very lucky that actually somebody from his team reached out to me a couple of years ago because he has a startup where he’s actually educates coaches cricket coaches. He has a platform where they do video and they do master classes and stuff to help coaches get better because he is an elite elite coach. He has since then embarked on a very successful coaching career in India, in South Africa and other parts of the world. And somebody from his team reached out to me and said, hey, would you, you know, we’d love to chat with you and get your perspective on what’s happening in cricket. And would you be up to chat with Gary? And I was like, who the hell is Gary? And obviously, then I looked up the company, I was like, oh, he’s talking about Gary Kirsten. I had a huge fanboy moment. We had a call a couple of few years ago just generally chatting and I introduced them to some investors and we did some stuff and then when we were doing our cricket tech month I thought this is a good time to have him on. So he invited Gary on the podcast. He was gracious enough to join us. For me, it was a huge fanboy moment. But also to learn what an elite it would be like, I don’t know, inviting, well, who’s the Germany coach now? Hansi Flick is no longer, or Yogi Lowe, like somebody who’s at the elite, Gareth Southgate, like somebody who’s at an elite international coach onto your podcast. So you get obviously to learn a lot from them, get their perspective, like what kind of tech are you looking at? What tech is at, because they’re also looking at the game all throughout, not just at the elite level, but could also be involved in grassroots. So what do you think is important from coaching at a grassroots perspective to elite? The evolution of cricket or tech in cricket, and we’ve seen a big change in that as franchise cricket. You might not be familiar with this term, but the way the IPL or the main leagues are set up, like each team has, each league has 10 teams, this multi club ownership that we’re seeing in football, where 1 team has many teams in different leagues. This is a big part of cricket now, where like the Mumbai Indians who are based in Mumbai have the New York Indians or have, you know, the turned out in Tobago Indians. I don’t know if these are their teams, but just an example, right? Like Manchester City has the teams across the world like that. It’s happening. It’s happening in cricket as well. What that does is franchise cricket is now creating a scale. Now I own 4 or 5 teams. So now I’m investing in tech in a better way. I can, my facilities are a bit wider, my network, I need to do scouting in 4 or 5 locations so I need tech to help me do all these kind of things so we talked a lot about the growth of cricket tech but overall I mean I got some personal stories from him about his experience and coaching India was just a huge fanboy moment and yeah 1 of the main reasons that I love working in this industry that I’m first a fan and then a professional. So when you have these moments, you really cherish them.
Jan Kamiński: For the audience, you need to check Ron’s LinkedIn, because as I mentioned, he’s sharing a lot of insights from the industry so just comment on the side but thanks for sharing that. We always, pretty often I would say 90% we ask founders about advices to other founders and maybe you can share some of yours but mainly for the Sport Tech industry. I would like to focus on Sport Tech founders or other founders doing something in this field.
Rohn Malhotra: I mean first of all I don’t think I’m really a person in a position to give a lot of advice or something like we’re all trying everybody’s trying to figure out their way. There’s no right or wrong.
Jan Kamiński: That will work for you from 10 years or 5 years ago.
Rohn Malhotra: That’s a good way to put it. That’s how I was going to answer it. Like, hey, what would I like to have known starting out? I think 1 of the joys of working in this industry is that you have these incredible fanboy moments. We do events in stadiums and you get to interact with professional, I’ve met, had the luck, good fortune to meet a lot of professional athletes. It’s a great place to work if you’re truly passionate about sports and all that. But the main reason is this is a job and you’re probably trying to make make money of this job. I don’t know how much you’re looking to make whatever that’s up to you. But this is sports like presents a very serious opportunity today not 1 that was available 5 even 10 years ago to a generation before like They could have had a job and made a bit of money and had a good career and got tickets to all the sporting events, but probably very few people got to do that. Today, the sports industry is really growing as it professionalizes. So this is not just the startups. This is for anybody looking at the sports industry in general. I’m saying if you’re thinking about it, this is a really good time. Even now, it’s not too late. Sports will continue to grow. Sports will continue to be a big part of what influences culture, what influences politics, what influences society in general. I’m a big believer of that. And you just have to read the stories around you, wherever you live, to see examples of that. Specific context for SportsTech founders. I think let’s address the current moment. I said this a few minutes ago that yeah, capital is at a premium sporting models and how business models of how you operate are really getting tested. So for you to find ways to survive is the challenge. And if you can do that, you will be rewarded. Within specific areas, look, I think everybody’s always excited about working with Real Madrid and Manchester United and the NBA and you want to work with the elite teams and leagues but that’s actually when you think about it a very like after you sell to Manchester United like there are only 19 other Premier League clubs there are only 4 of and out of those how many can afford the solution that Manchester United can afford. What I mean by that is there’s a tearing in the sports ecosystem. So it’s hard to say that if I sell to 1 club then I’m going to set up a B2B business for which is really large. No, the B2B side of sports is actually fairly small in terms of the size of the market. The American market is a bit different because A, they have 5 professional leagues, but then they have thousands and thousands of colleges. The NCAA is a very wide and rich and rich network because these college grounds all have 100, 120,000 people in them every week. So they have the capacity. So B2B solutions in the US are very different from how they work in Europe. And if you go further to smaller markets, those are bigger challenges where sports teams really struggle. So trying to sell to sports teams and leagues is a tough, is a tough, tough gig. If you’re doing that, great. And if you found traction, but I’d always say try to find sports for the fan. The end consumer is the fan. If you can find a touch point or a way to interact with the end fan, then you’re helping the club make money and therefore you will hopefully make money and build a business that is strong and sustainable. Yeah, that’s 1 specific thing I will say about SportsTech. Other than that, yeah, SportsTech is growing in a bunch of different areas. So you don’t have to worry too much about trends. But as always, some trends are moving faster in this moment than others. So be conscious of that. Be aware of what’s happening around you and then grow from there. But to your earlier question, Jan, you talked about is the popular sports are the only ones. I’ve seen amazing solutions. We just I came across yesterday at AI based, computer vision based solution for surfing, which I thought was super cool. There is stuff for equestrian sports for swimming for like all sorts of different sports. So it’s not that like all of these sports have markets and they might not be as big as football, which is like 3 or 4000000000 people in the world, but they all have big markets. So you don’t have to worry about the sport so much, but understand what you’re doing in that sport. Are you reaching a wide enough audience? Are you really ending reaching the end consumer? I think that’s that’s worth looking at.
Jan Kamiński: just 1 more question. If someone wants to find you, where can they reach out?
Rohn Malhotra: Sure. If anybody wants to know more about sports tech or just generally get in touch with me. LinkedIn is probably the best place you can find me, Ron Malotra on LinkedIn or email me directly, Ron at SportsTechX.com. But in general, I would recommend If you’re learning, trying to learn about the industry, just go to our website. You’ll find a bunch of resources that will help you understand what’s happening in this space.
Jan Kamiński: Thank you for sharing that. And thanks for joining us today. It was a pleasure talking to you.
Rohn Malhotra: It was a pleasure. Thank you for having me on.