REDWOOD CITY, Calif. – Professional athletes are not your typical venture capital investors, but former professional football players Ronnie Lott and Harris Barton are trying to change that.
The pair recently launched Champion Ventures I, a fund-of-funds with a $30 million target, which could reach a first and possibly final close by the end of June, said Chief Financial Officer Mark Greenough.
Messrs. Lott and Barton, who both have a history of personal investments in venture capital, turned to their friends in the industry for advice before setting up the fund. Mr. Barton has invested with Sequoia Capital, and Mr. Lott has backed Crosspoint Venture Partners.”I’ve learned a lot from the Crosspoint folks,” he said.
Champion I is not expected to grow beyond $40 million, said Mr. Greenough, who expects the fund-of-funds to be fully invested primarily in information technology deals in the next year or two. The fund managers already secured promises of access to seven top-tier firms based in Silicon Valley, including Mayfield X (story, page 20). Mr. Greenough would not name other venture groups, except to say that Champion will back firms of similar a stature.
L.P. Line-Up Grows
Messrs. Lott and Barton marketed the fund to their acquaintances in professional football, and, based on word of mouth, basketball, baseball, golfing and hockey players also wanted to take part in the vehicle, the CFO said, declining to name limited partners.
Sports figures and venture capital are an unlikely combination, Mr. Greenough said, and until now there were no such vehicles for athletes to back. The roster of Champion I limited partners likely will be more than 30, with a combination of active players and retirees, said the CFO, describing backers as a “Who’s Who of the nation’s best athletes.”
“We wanted to help athletes preserve their capital,” explained Mr. Lott.
Unlike most funds-of-funds, which first round up capital and then decide what funds to back, Champion had to first gain entry into high-end venture funds before it could successfully market the vehicle to the athletes, Mr. Lott said.
Because wealthy professional sports figures often lack investment savvy, they can be prime targets for scams. Potential Champion L.P.s asked numerous questions ranging from the definition of venture capital to the qualifications of the fund’s principals to make sound investments.
Champion Ventures allowed L.P.s to invest as much as 5% of their investment portfolio in the fund, but Mr. Lott is hoping the limiteds will get more than just a return on their investment, including an opportunity to find a career in venture capital after a life in sports.
The name recognition of its limited partners has gained Champion access to quality venture firms, but the athletes want to protect their privacy and will not back endorsements or make appearances for VC portfolio companies, Mr. Greenough said.
The firm has retained Wilson Sonsini Goodrich & Rosati for its legal advice and PricewaterhouseCoopers for accounting services. Mr. Greenough, a former CFO at US Venture Partners, is a partner at The Brenner Group L.L.C., an interim management and financial advisory firm.