Sharp Alpha Advisors announced it has closed an oversubscribed $25 million fund to invest in early-stage sports, gaming and entertainment startups. Dubbed Sharp Alpha Fund II, this is the New York-based firm’s second fund after closing its first $10 million fund in 2021.
With Sharp Alpha Fund II, the firm plans to back about fifteen companies with see investments ranging from $1-2 million. As a result, the VC fund has the flexibility to double down on its investments in subsequent funding rounds. The firm made its first investment from Fund II in C15 Studio, the operator/distributor of Formula 1’s new streaming channel.
“The success of our first fund combined with growing recognition of the competitive entertainment opportunity have been key tailwinds for our fundraising process against a challenging backdrop,” said Lloyd Danzig, Managing Partner at Sharp Alpha Advisors, in an interview with GamesBeat. “Sports, gaming, and entertainment have become increasingly attractive sectors as investors gain line of sight to the profitability potential of new modalities.”
Sharp Alpha’s institutional backing
Sharp Alpha Advisors has a number of institutional backers and industry experts participating in Fund II. These include public companies, U.S. financial institutions, sports team owners, family offices, top venture capitalists, funds of funds, and more. Likewise, this expertise extends to the firm’s advisory board, which includes:
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- Keith Horn, founder of Loring Capital Advisors
- Emanuel Pearlman, former chairman of Empire Resorts
- Daniel Bernard, founder and chairman of Redwood International Sports
- Roy Behren, president and Chief Investment Officer of Virtus Investment Advisers
- Don Kornstein, vice chairman of Caesars Entertainment
While the fund’s gaming experience leans towards gambling and sports betting, its portfolio includes startups that blend these elements with video games. Sharp Alpha has invested into a number of casual skill-based real money gaming startups, including BigBrain and Golden Hearts Games. Additionally, it invested in Players’ Lounge — a skill-based real money gaming platform for popular sports, FPS and mobile video games — and Rimble — an AI-powered fan engagement solution for esports.
On top of capital, the firm provides a suite of resources and opportunities to its portfolio companies. These include fundraising, revenue generation, brand awareness, commercial strategy, financial planning, and product development support. Sharp Alpha also allows limited partners to invest additional capital alongside the fund in select deals via a co-investment vehicle.
Opportunities for Fund II
Sharp Alpha Advisors sees plenty of opportunity for innovation at the intersection of sports, gaming, media, and technology. With its new $25 million-plus Fund II and an expanded deal team, SAA wants to strike while the iron is heating up.
“We are entering the most favorable period in the last 15 years to bet on great founders,” said Danzig in a statement. “The competitive entertainment category is experiencing exponential growth but at the same time is desperate for innovation that early-stage companies are best positioned to supply.”
Sharp Alpha Advisors remains open to the possibilities rather than focusing on a particular category of innovation. Like its investment philosophy, the firm looks for founders that are uniquely positioned to execute on their vision.
“There are numerous sectors offering attractive risk-adjusted return opportunities at the seed stage right now. We invest where we have an edge — we are in a unique position from which to evaluate and de-risk deals in the sports, gaming, and entertainment industries. We are grateful for the support of our existing LPs who have watched us deploy capital behind this edge and re-upped into Fund II,” Danzig also told GamesBeat.