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How Coronavirus Has Impacted Sports Investments and M&A Activity

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Investors pumped $12.6 billion into sports technology related businesses between 2014-2019, but with the novel coronavirus bringing the sports world to standstill and the global economy headed towards a recession, investment activity has begun to slow.

One well-respected industry advisor explained to JohnWallStreet that “investors tend to sit on their hands during periods of uncertainty. The immediate reaction is to get liquid and hang tight. Unless there is an amazing opportunity, most will wait to do a deal until they see some light at the end of the tunnel; until they have some more visibility in terms of when the leagues are going to start playing again and what the timeline for economic recovery looks like.”

Shelter-in-place orders across the nation have stymied the investment activity that was flourishing just a month ago. With in-person meetings on hold and many companies insistent upon spending quality time with management teams before making an investment, capital has become difficult to come by.

It’s also not a great time to be a sports-centric business looking for capital. As one prominent early stage venture capitalist explained, “technology companies targeting the live experience or selling to teams and leagues are going to face some short-to-medium term pain as the revenue hit from Covid-19 [will likely] temper the consumer's willingness to pay for non-core business products or services.”

As event-oriented and advertising sales driven businesses fall into distress, there will be attractive investment opportunities. There will also be parts of the sports-tech industry that flourish under with the population under quarantine.

Esports, sports betting and mobile/fitness/wellness businesses are all verticals expected to come out of the Coronavirus lockdown with some momentum.

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