32 Equity: The Little-Known NFL Venture Capital Fund

AFC Championship - Tennessee Titans v Kansas City Chiefs
AFC Championship - Tennessee Titans v Kansas City Chiefs

A venture capital firm is not something strange in the United States, as the country easily has thousands of them spread across its shores. Things can only start to get awkward when one comes across a professional league-owned venture fund.

From the biggest names like Bain Capital, Tiger Global, Sequoia Capital, General Atlantic, etc., down to the lesser known ones in the business world, what a Venture Capital firm essentially does is gather funds from partners and jointly invest them in private high-potential startups with the aim of generating huge returns.

Many venture capital firms have taken advantage of investing in startup companies in the early stages, and went on to get a massive return on investments when the company became publicly listed. These are the advantages sports leagues, including the NFL, are hoping to benefit from.

This is a new trend not many in the sports and business world are outrightly aware of. Professional sports leagues and associations are establishing venture capital funds in a bid to extend their financial might through investment returns.

One of the first professional leagues to come up with this idea is the NFL. The league is undoubtedly amongst the most financially buoyant in global sports, and it's not relenting in ensuring it always finds itself in a good place economically. The NFL has its own venture capital firm that it calls "32 Equity".

The Launch and Funding of 32 Equity

In what was an innovative but surprising move, the NFL, with its 32 franchises, launched 32 Equity in 2013. The establishment of the venture fund was done quietly by the league but the success of the move is now garnering a lot of attention.

At the beginning in 2013, all 32 NFL franchises were required to contribute $1 million each. The early success of the venture fund led the franchise owners to contribute another $2 million each in 2019 and $5 million in 2022. The fund has thereby raised over $250 in total so far, with a number of investments made, mostly with NFL partners.

Investments and Benefits to the NFL

Huge contributions from NFL teams into 32 Equity have ensured a number of successful investments over the years. The fund bought a 3% stake in Fanatics for $95% in 2017, a stake that has currently been upped to 10 times its value.

32 Equity has also invested in other companies like Hyperice, Genius Sports, and Nobull. The fund has over the years generated an average annual return of 30%, which obviously has proven it to be a successful enterprise with bigger potential.

In the space of 10 years and three rounds of fundraising, the venture fund is now worth more than $100 million per team. That is a massive return, considering they have only invested $8 million dollars each throughout the lifetime of the fund.

The profits made from 32 Equity are not distributed to the teams. They are reinvested for more future earnings. Most of the venture fund investments are also NFL partners, which also offers the league some unique advantages.

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Edited by Krishna Venki
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