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Compared to the US and Europe, many sub-sectors in Asia’s sports, fitness and wellbeing industries are still under-funded and under-monetized. Many of these markets are still in the infancy or early growth stage which implies massive opportunities for growth and monetization.
Sports Finance is an emerging sector in Asia with VC (Venture Capital) and PE (Private Equity) playing an active role and propelling rapid growth. In recent years, the profile of investors in sports, esports, sports tech and health & wellness tech has become even more diverse with VC, PE and family offices leading the way with corporate venture capital, as well as hedge funds, mutual funds, pension funds and sovereign wealth funds also becoming more active in our space. Despite interest from these large players VC still remains the core part of Sports Finance in Asia and remains the major source of funding for sports and sports tech-related startups in addition to private equity and the public markets.
In this article, we will dig deeper into the role that VC firms play in transforming the sports ecosystems in Asia and identify future opportunities to invest in the region.
For additional information please watch our recent video discussion on Asia’s Sports & sports tech investment climate here.
VC accelerates innovation and growth in sports
VC is one of the most common ways for early-stage startups to access capital in Asia and powers great ideas and innovation in this tech-savvy region. Sports tech and fitness tech are two popular sectors in Asia for investors as they help fund opportunities to capitalize on the region’s rapidly growing interest and participation in sports-related activities and fitness.
Sports Industry Venture Capital Investment is a type of capital operation that resides at the intersection of sports, finance, media, innovation and technology. In Asia in the past, the sporting ecosystem was often developed and supported by locally manufactured brands and through company-related investment into national leagues and teams in Japan, Korea and China. This is starting to change as more recently sports finance has emerged in Asia, and has created countless opportunities for sports organizations and startups while accelerating the growth of the region’s sports ecosystems.
Globally, the VC investment in sports tech and fitness tech skyrocketed in 2021. According to Crunchbase, US$787 million of venture capital was invested in the global sports tech industry with 103 funding rounds as of August 2021. VC-backed fitness companies also raised nearly US$5.9 billion in funding in 2021.
With the growth of VC firms’ support in Asia, we will see more innovation, resulting in market growth, higher valuations of companies and more unicorns. Asia’s VC investment in sports is still in its early stage, but with the growing number of both investors and startups, this space is full of opportunities, and it will continue to set new records. With Asia’s interest in esports, blockchain, crypto and now the Metaverse and Web 3.0, there will be even greater innovation that will disrupt the sports and fitness industries, providing opportunities for investors to capitalize on the continued growth.
With fewer startups, Asia’s sports tech market still has the potential to surpass North America consistently
APAC’s Sports, Fitness and Wellbeing ecosystems are undergoing a period of great transformation that is accelerating innovation and forming a rich startup landscape that implies huge business potential.
According to data from Tracxn, in the global sports tech market, there are over 1,272 startups in Asia as of 2021, with India dominating the space in the region with 822 sports tech startups and with 235 and 144 startups in Southeast Asia and China respectively. While the number of sports tech startups in North America is over 3,320 (2,957 in the US and 363 in Canada), which is more than double that of Asia.
Back in 2018, Asia’s sports tech market value has surpassed North America with US$10.8 billion vs US $8.6billion, according to the data from GWI.
Although Asia has fewer startups, it absolutely has the potential to consistently generate higher market value in the long run. And as projected by Grandview research, APAC will emerge as the fastest-growing region for sports technology from 2021 to 2028.
Asia’s sports unicorns are backed by top VC firms
Among the top investors of 2021 as listed on ‘CB Insights State of Venture‘, many leading VC firms, investment management firms and corporates investing in VC all have sports tech and fitness tech companies in their portfolio.
Among the top investors, four of them are from Asia including Sequoia (China & India), Tencent (China), Softbank (Japan) and Hillhouse Capital (China) and they helped drive overall venture funding across many industries in the region to US$176 billion with 12,485 deals in 2021, leading Asia’s deal share to surpass the US. These Asian-based VC firms along with a few other US-based VC firms have also placed their bet on Asian sports unicorns.
Although the sports VC market in Asia is less mature compared to the US or Europe, it is producing high-valued companies that become unicorns. In 2021, five of the Sports & Fitness startups in Asia joined the Sports Unicorn Club, three of them are from India while the other two are from China. 2021 was a significant year for Dream Sports – Parent company of Dream11 and for India’s sports market as they closed two major funding rounds, US$400 million in March and US$840 million in November, and pushing its valuation to US$8 billion after the latest round.
China and India are emerging as the two superpowers that are dominating Asia’s sports tech and fitness tech industries, just behind the US. With high mobile phone penetration rates, sophisticated digital ecosystems and 5G networks plus with the ubiquity of super apps, Southeast Asia is likely to become another hotbed to grow high-valued startups as they can easily bundle different offerings together in one platform. There are still many regional and global VC firms that haven’t placed their bets in Asia’s sports and fitness market yet, however, they should make their move as Asia’s sports tech market is outgrowing the US, and the space will get even more competitive. Many of the top global investors who invested in ground-breaking technologies in the early days and helped underdogs grow already have sports tech unicorns in their portfolio. It doesn’t just enable them to make profits but also to demonstrate thought leadership and drive societal impact.
Many segments in Asia still remain under-monetized
While we believe that the highly sought-after categories such as metaverse related sports, immersive sports and fitness, fantasy sports, performance monitoring, analytics and youth sports development are here to stay and will grow larger, there are other sub-sectors that we think possess massive opportunities in Asia:
Biometrics in Sports
Biometrics is reshaping professional sports and now amateur sports. It refers to the science behind measuring data collected from the body, such as through sweat and blood. Biometrics devices or Biowearables enable real-time tracking and analysis of an athlete’s heart rate, glucose level, hydration level, oxygen level and blood pressure, every single factor that could affect their performance. It can also be used for injury prevention.
Digital Health and Wellness
The pandemic has made everyone prioritize health. Sports is no longer just about reaching your peak performance, but seeking balance in our overall wellness and focusing on mental health, rest, recovery and nutrition and social. A recent McKinsey report indicates that the consumer‑centric digital health market in Asia could potentially exceed US$100 billion in 2025. In 2021, the funding and number of deals in this sector reached the highest record with US$10.7B and 782 deals according to CB Insights. Services such as digital therapeutics, remote patient monitoring are highly in demand. Platforms that combine both performance and wellness are also on the rise, such as The Program: All-in-one Youth Athlete Performance and Wellness App.
Health and Wellness Travel
The demand for health and wellness travel will continue to surge in a post-COVID. APAC has been the fastest-growing region of the wellness tourism market, which will double from US$137 billion in 2017 to US$252 billion in 2022. There will be more tourism products bundled with fitness and wellness experiences that enable travelers to stay healthy and active while on vacation such as BODDY, a platform that connects travel, fitness and wellness.
Football Tech
The football market in Asia is huge and fast-growing, but the level of tech adoption in the sport is still relatively low compared to Europe or North America. As we mentioned in our article, football tech can level the playing field at all levels, from the grassroots to professional, making it easier for both players and coaches, such as Next11, to help enhance in-game performance with real-time analytics at an affordable price point.
Cycling Tech
The love for cycling has been emerging in Asia, whether it be road cycling or riding on a connected bike. There are now more tech-based accessories and devices that are designed for both pro and amatuer cyclists to improve their rides, such as Body Rocket, a device that provides real-time aerodynamic data for cyclists and triathletes. The smart bike war is also getting more intense with more innovative products coming to the market, such as the Muoverti TiltBike, an indoor bike that makes you feel like cycling outdoors.
Outdoor Sports
According to another recent McKinsey study, outdoor sports are likely to remain popular. There are a growing number of outdoor sports enthusiasts in Asia accelerated by the pandemic and also the winter Olympics. It offers a favorable investment opportunity for outdoor sporting goods and equipment brands to capitalize in Asia’s market, especially in China.
Winter Sports
As we mentioned in our last article, there were already 13 domestic infrastructure investment funding rounds in China last year worth about US$31.7million. The momentum created by the Beijing Winter Olympics 2022 has accelerated the purchase of skiing equipment, apparel, skiing tech, education and training, and winter sports tourism and we expect to see many more foreign investors entering this space.
Move-to-earn model
Getting paid or receiving rewards through working out such as Sweatcoin, which you can earn crypto through exercising, already existed back in 2017. ‘Move-to-Earn’ NFT Games Genopets and STEPN backed by Solana raised US$8.3 million in October 2021 and raised US$5 million in January 2022 respectively. Investors include Sequoia, Konvoy Ventures, Pantera Capital and Animoca Brands. Now with Metaverse and Web 3.0, the sports and fitness industries are also catching up with the crypto trend and there will be more products that blend fitness, blockchain and gaming.
Down the line
Compared to the US and Europe, many sub-sectors in Asia’s sports, fitness and wellbeing industries are still under-funded and under-monetized. Many of these markets are still in the infancy or early growth stage which implies massive opportunities for growth and monetization.
VC investing in sports tech and fitness tech in Asia can be challenging and requires in-depth experience and insights about the region, the sports ecosystems and overall industry. Having the right relationships is critical to access high potential deal flow and make the right investment decisions at the right valuations that fit your portfolio. The sports tech and fitness tech space is moving quickly and constantly evolving so you need to keep up with the trends and opportunities. Those that do will be able to capitalize on many great opportunities in Asia in the years to come as the sports ecosystems continue to evolve and the fast-growing Asia middle class become even more active and embrace more and more sports of all types across the region.
Connect with us to explore great investment opportunities in sports tech and fitness tech in Asia.
(Please also read our previous piece on Mental Wellness investment in Asia)
