APEX Capital on cold winter, investing in the entertainment space, and the rise of web3
ANOUK DYUSSEMBAYEVA | DECEMBER, 22 / 2022
APEX Capital is an investment company that invests together with elite athletes across the sports, media & entertainment space. The company's connected capital positions it as a leading strategic investor in the industry. APEX has been carving the athlete entrepreneur movement since February 2021, and since then has backed more than 10 companies around the world. Composium interviewed the firm's founder and CEO, Antonio Cacorino.
What distinguishes a great startup from a good startup? What factors do you pay attention to when deciding whether to invest or not invest in a startup?
At APEX, we co-invest with high-performance athletes in the sports media and entertainment industry where we can really add value as investors and not only capital. When we look at startups, it is very important that they offer solutions for big problems within the sports industry ecosystem. This, of course, includes a broad subset of industries. APEX considers startups that range from those focused on sports performance to those focused on increasing fan engagement and improving experiences for fans.
From the companies within the scope we invest in, there are many important factors to take into consideration. We must look at the product being offered in terms of its market potential and scalability. The idea presented to us must have the ability to scale fast and expand, be commercialized, and make money. Knowing that seven in every eight businesses fail, we really need to make sure that the ones that succeed have big exits to compensate for the others that fail.
In addition, when we invest in a product, we also invest in people, and we look for a passionate and strong team. Every product/startup is different so the approach may differ but these factors – backed with an extremely rigorous process of due diligence [and] credible investor validation – are what make the whole process efficient to find those that have more potential.
From the companies within the scope we invest in, there are many important factors to take into consideration. We must look at the product being offered in terms of its market potential and scalability. The idea presented to us must have the ability to scale fast and expand, be commercialized, and make money. Knowing that seven in every eight businesses fail, we really need to make sure that the ones that succeed have big exits to compensate for the others that fail.
In addition, when we invest in a product, we also invest in people, and we look for a passionate and strong team. Every product/startup is different so the approach may differ but these factors – backed with an extremely rigorous process of due diligence [and] credible investor validation – are what make the whole process efficient to find those that have more potential.
Is the current investment market really entering cold winter? How has the current economic situation affected your investing?
It is true that now the macro environment is more uncertain and that we observe interest rate hikes and the stagnation of economic growth due to inflation. Nevertheless, this represents a golden opportunity for VCs to invest. With the stagnation of economic growth, high-quality deals become available at discounted valuations. In addition, with a holding period of three-nine years, our investments become liquid in an optimized economic climate.
There's been an accumulation of capital on the part of investors in the past couple of years. This, combined with the factors mentioned above, leads us to believe that there won't be a decrease in the number of deals done. After all, investors have the money and the incentives to deploy capital and expect larger returns in the future.
APEX has a solid core – from the beginning, we disrupt the way consumers engage and experience the sports, media, and entertainment industry. It is the case over the past several years that tech and innovation have proven to stick even when the stock market collapses. For this reason, we truly believe that we are strategically well-positioned to make the best out of the deals that come to us even with the possibility of a recession on the horizon.
As for our strategy, there's not much that needed to change. With our previously mentioned position and clear focus in the market, the main thing we can further do to guarantee success is to have the most efficient and deep due diligence process possible while being on top of the current market trends driven by consumers, which in these market conditions have more power than ever to drive corporate change.
There's been an accumulation of capital on the part of investors in the past couple of years. This, combined with the factors mentioned above, leads us to believe that there won't be a decrease in the number of deals done. After all, investors have the money and the incentives to deploy capital and expect larger returns in the future.
APEX has a solid core – from the beginning, we disrupt the way consumers engage and experience the sports, media, and entertainment industry. It is the case over the past several years that tech and innovation have proven to stick even when the stock market collapses. For this reason, we truly believe that we are strategically well-positioned to make the best out of the deals that come to us even with the possibility of a recession on the horizon.
As for our strategy, there's not much that needed to change. With our previously mentioned position and clear focus in the market, the main thing we can further do to guarantee success is to have the most efficient and deep due diligence process possible while being on top of the current market trends driven by consumers, which in these market conditions have more power than ever to drive corporate change.
There's a lot of talk around web3 and the metaverse. How is APEX preparing for that shift? Will that impact the areas/startups you're planning to invest in in the future?
We're all aware of the digital revolution that blockchain triggered, and how that allowed the creation of Web3, where people can own digital assets, trade them, and interact with a like-minded community through immersive experiences in branded metaverses. The applications this has across industries are very exciting, especially in Sports.
APEX is surrounded by trusted advisors who have exposure to this space, although we're not experts when it comes to the tech piece, we clearly understand how sports properties can find new ways to monetize their businesses through blockchain-powered solutions. We've already backed two companies in the Web3 space, Real Fevr, and Exclusible. It all comes down to utility and what kind of value can these companies create, both these companies have strong use cases around Sports where APEX recognized value in.
If future generations of consumers have migrated to Web3 environments, then we believe that all stakeholders must have some sort of presence in those same Web3 environments.
APEX is surrounded by trusted advisors who have exposure to this space, although we're not experts when it comes to the tech piece, we clearly understand how sports properties can find new ways to monetize their businesses through blockchain-powered solutions. We've already backed two companies in the Web3 space, Real Fevr, and Exclusible. It all comes down to utility and what kind of value can these companies create, both these companies have strong use cases around Sports where APEX recognized value in.
If future generations of consumers have migrated to Web3 environments, then we believe that all stakeholders must have some sort of presence in those same Web3 environments.
