Business Angels on the assault on the economics of sport
Updated on 23 September 2020
Business angels are major players in the corporate world. Indeed they invest their financial wealth in the development of innovative start-ups. (4) France has 82 networks of business angels. There are about ten years ago they were still unknown. One of the sectors particularly affected by the phenomenon of business angels is that of sport. Indeed, the attractiveness of sports entrepreneurship is visible with the increase in investments in sport.
For its part, the economic weight of sport represented 1.74% of French GDP in 2012.The French sports market was then the third largest market in value in the European Union. Sport is not just a hobby, it is becoming professional (3). Indeed, sport is increasingly integrating the professional sphere. IThere aremany reasons for this. The decline in public subsidies is both cyclically noticeable. There is also a more structural professionalisation of sports clubs. And to talk about sport in the company that better than former top athletes to grasp all the opportunities of the sports economy.
Business angels sports, entrepreneurs of a new kind?
The sports business market is experiencing a resurgence of interest from traditional investment funds. This can be confirmed acquisition of the Football Club Girondins de Bordeaux by the American investment fund General American Capital Partners (GACP). Thus, the sports market has been growing by 3% per year for the past 5 years and includes about 35,000 companies. However, this market is changing. Indeed it faces new entrants as former sportsmen convert to business angels by investing in sports start-ups. (2)
An investment in sports values
Beyond sponsorship and image association, these business angels of a new kind benefit from a legitimacy acquired in the sports sector. It is then a real investment on their part. They can invest in the know-how, brand and development of start-ups that choose a business angel over a traditional investment fund. Itis not new that former high-level athletes invest their financial assets in their post-career.
However there is a change of direction in their investment decisions. They are moving away from the hotel and restaurant sectors where profitability and brand image are tarnished. They would like to see focus on sports start-ups where they can bring value and credibility to projects. This concern to bring their skills as high-level athletes is quite consistent with the characteristics of the economic market of sport, known for its resilience even in times of crisis. Business angels in general are only for innovative companies. They generally invest in industries related to their professional experience, which is the case with formerly high-level sports business angels.
An original entrepreneurial approach
For these athletes it is not only the capital aspect of owning a part of these companies and that of receiving dividends (economic profitability).They could play a particularly beneficial role in promoting the marketing and commercial products of “their” companies. In this way, contributing tola commercial success of these inherently risky projects. This is particularly the case for the Landes start-up Move your Buddy (1). It boosts the friendliness of the office and unites the teams around their interests (sports and cultural). Thus, it offers service thanks to a recommendation algorithm. For Guillaume Quaetaers, co-founder of Move Your Buddy, choosing a business angel was a real entrepreneurial choice. In 2018, he wanted to focus on raising funds from business angels, including Nathalie Dechy, a former professional tennis player, and Christophe Chenut, a director of the Stade Rennais Football Club, to the tune of 400,000 euros.
Between persuasion and decision- the doubts of business angels
However, persuading a sports business angel about the relevance of his project is not easy. Thus only 6% of start-ups seeking financing receive funds from these business angels. Beyond the status of business angel that some former top athletes acquire, some do not hesitate to embark on entrepreneurship for their careers. This is particularly the case with former cyclist Erwann Menthéour who is 40 years old and has launched his start-up Fitnext. This start-up offers e-health programmes to combat the dangers of doping in high-level sport. It raised 750,000 euros in 2013 for its start-up and recorded in 2017 a turnover of more than 3 million euros.
If business angels are above all risk-taking investors, a societal commitment consistent with the values of the fund and the executive’s background are essential. The partnership between sport in the city and the EM Lyon Business School is part of this perspective. Their joint “entrepreneurs in the city” programme seeks to stimulate the creation of businesses in troubled urban areas by thinking of sport as an integration factor.
Sport at work, a meteoric trend that boosts business creation
Nearly 2,000 companies and 40,000 employees make up the French Federation of Corporate Sport (FFSE). Here’s a symbol of the attractiveness of sport at work. From this entrepreneurial perspectiveand sports boom at work, David Douillet, French judoka and former sports minister helped launch an investment fund Link Sport. The background focuses on cycling (equipment, electric bikes), running, nutrition and e-sports. Thes business angels from the sports world have clearly perceived the profitability potential of this market. It represents 37 billion euros in sales, 2% of French GDP in 2018 according to David Douillet. Not to mention the 17 million French people who have been made redundant from a sports club and the 5 million volunteers who are involved every day in this sector.
Nearly 2,000 companies and 40,000 employees now make up the French Federation of Corporate Sport (FFSE). Here’s a symbol of the attractiveness of sport at work. From this entrepreneurial perspectiveand sports boom at work, David Douillet, French judoka and former sports minister helped launch an investment fund Link Sport. The background focuses on cycling (equipment, electric bikes), running, nutrition and e-sports. Thes business angels from the sports world have clearly perceived the profitability potential of this market. It represents 37 billion euros in sales, 2% of French GDP in 2018 according to David Douillet. Not to mention the 17 million French people who have been made redundant from a sports club and the 5 million volunteers who are involved every day in this sector.
Sport as a factor in business performance
The economy of sport benefits from the fact that sport is described as a factor in improving performance in business. It is from this perspective that the Medef Gironde initiative stems, “my company is moving”. It starts from the observation that the impact of sport in business is beneficial for the well-being at work of employees. In addition, it turns out that it contributes tothe company’s good results.
France Olympique has conducted in partnership with Medef Gironde an commission for a study on sport at work carried out by GoodWill-Management. This study is based on the two variables: the well-being of employees and the competitiveness of the company. The results of the study are encouraging. Indeed for the employee this represents between 5 and 7% savings on his annual health expenses and 3 years of life expectancy earned. For the company, this means a gain of 6 to 9% in productivity and 1 to 14% of net profitability.
With the 2024 Summer Olympics, the Rugby World Cup in 2023 and the dynamics of the sport economy, there is no doubt that the growth of the business angel phenomenon in the sports sector will continue to increase in the coming years.
However, as Hélène Perrin Boulonne, a doctor of economics and a business leader, points out, we must not succumb too quickly to the myth of business angels.La France is not Silicon Valley, the economic realities and the culture of risk are different. Finally, care must be taken to match its financing method with the development phase of the company. Business angels are mainly adapted to the company’s life cycle or development perspective. However, they are not intended to be personally invested partners throughout the life of the company.
Train top athletes to become business angels
So as we have seen it is not uncommon to see former sportsmen convert to business by adopting the status of business angels. They want to support companies and bring them a new vision geared towards their sporting values. So to bring these profiles to new business and train them, there are solutions. Indeed, networks offer their services to connect business angels and companies with a project in the making.
This is particularly the case with the Sport Business Angels network. It offers support to professional sportsmen, investors and entrepreneurs through its private member club. Thus, the network has set itself the goal of creating business opportunities between the corporate and sports worlds. Through a well-established program he wants to train athletes to become business angels through masterclasses but also to create links and encounters between the two environments. By following, the aim is to support these investments around the values of sport. An interesting approach to follow since it allows to integrate the sports dimension, which has become so beneficial in the business environment.
Candice Cibois – Justine Angibaud – BORDEAUX Business
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