Basketball superstar Kobe Bryant, who at the end of last season retired after a 20-year career with the Los Angeles Lakers, has joined a long list of athletes diving headlong into venture capital.
In late August, Bryant said he formally partnered with scientist-turned-tech-entrepreneur Jeff Stibel to launch an early-stage venture firm, Bryant Stibel. The Malibu, California, firm is looking for deals in tech, media and data.
Bryant will put up most of the $100 million comprising the firm’s first fund, the Wall Street Journal reported. The sum represents a sizable chunk of his $320 million net worth, as estimated by Forbes.
Before formally teaming up, Bryant and Stibel had invested together for over three years, backing 13 companies and realizing two exits.
And Bryant has done some deals on his own. In October 2015, he personally led a $5.5 million Series B round in The Players’ Tribune, a social-media site for sports enthusiasts founded by former New York Yankees baseball great Derek Jeter.
The site attracted more than 1 million visitors on the day that Bryant announced his retirement in November.
Bryant adds his name to a lengthy roster of ex-NBA players (and professional athletes from other sports) who think they can do as well in venture capital as they did on the court or in the arena.
The list includes Earvin “Magic” Johnson, another former Lakers player with a personal fortune in excess of $700 million, who serves as an adviser to Detroit Venture Partners; Shaquille O’Neal, a commanding center who retired from the court in 2012, has invested an undisclosed amount of his $350 million net worth in the online investment site Loyal3; and Steve Young, a San Francisco 49ers quarterback in the 1990s, is a partner and co-founder of HGGC, a VC and PE firm in Palo Alto, California.
In July, Andre Iguodala of the Golden State Warriors spearheaded a Tech Summit for the National Basketball Players’ Association, with the goal of helping his fellow players in the league learn more about investing in tech and media.
Iguodala says he has developed a close relationship with top-tier Silicon Valley firm Andreessen Horowitz because of his growing interest in venture capital. Marc Andreessen and Ben Horowitz have “helped me out a ton,” Iguodala told CNBC during the three-day summit held in San Francisco. Andreessen Horowitz declined to comment for this story.
Athletes in venture capital are nothing new. John Hummer spent six years in the NBA, including with the Chicago Bulls and Seattle Supersonics, before co-founding Hummer Winblad Venture Partners with Ann Winblad in 1989.
Richard Timber, a McLean, Virginia, business attorney, has advised professional athletes on the formation of Growth Equity Investments, a fund-of-funds that participates in deals with Bain Capital, Carlyle Group and Thomas H. Lee. Timber said success in professional sports doesn’t really prepare one for finding the next best business in the making.
Athletes “are very good at marshaling capital but very likely totally worthless in the VC world of assessing deals,” he said. “VC investments have a 75 percent chance of failure. There are huge risks involved.”
Timber pointed to the failure of investment firm Champion Ventures, which was founded by former San Francisco 49ers players Harris Barton, Ronnie Lott and Joe Montana and later renamed HRJ Capital. The Woodside, California, firm invested in venture capital, private equity and hedge funds.
Founded during the dot-com heyday of 1999, HRJ said that by 2008 it managed more than $2.4 billion in assets gathered from pension funds, college endowments and top athletes, such as baseball’s Barry Bonds and football’s Peyton Manning.
The good times came to an end in part because of a failed business practice. Funds-of-funds typically raise money from investors and then commit the capital to fund managers. HRJ took a different approach, making commitments prior to raising the cash from new clients.
Barton, who now runs H. Barton Asset Management in San Francisco, investing in seed-stage tech startups, said that mistakes were made.
In the recession of 2009, HRJ found itself unable raise the cash it had committed. Creditor Silicon Valley Bank seized the assets and sold them to the Swiss fund-of-funds Capital Dynamics, which was looking to gain a foothold in Silicon Valley.
In addition to dealing with HRJ’s overcommitment issue, Capital Dynamics also acquired HRJ’s legal liabilities, including a lawsuit filed by three former staffers who were let go as the firm was imploding. That suit was settled out of court in 2014 for $9 million.
Montana, who left the firm long before the business fell apart, has had success in subsequent ventures, including investments in Pinterest and Dropbox.
The four-time Super Bowl winner currently is a managing partner at early-stage firm Liquid2Ventures, where he’s helping raise a $40 million fund. The two other general partners in the firm are Mike Miller, who founded cloud-services business Cloudant, which was sold to IBM in late 2014; and Michael Ma, who started TalkBin, later sold to Google.
The day after its launch announcement, Bryant Stibel announced its first investment, an undisclosed amount in Beijing-based startup VIPKID. The company provides online English instruction for elementary-school students in China.
Yunfeng Capital, the investment firm run by Alibaba founder Jack Ma, and Sequoia Capital led a $100 million Series C round in the company in August that Bryant Stibel also joined.
Cindy Mi, founder and chief executive of VIPKID, said Bryant decided to invest after listening to just the first five minutes of her presentation.
“It was a no-brainer,” Bryant said in a release about the funding announcement. “We have to look for companies adding value to society, helping kids learn and grow.”
Whether Bryant’s foray into venture capital will prove a slam dunk remains to be seen, but attorney Timber says the former Laker does have a chance to make it big.
Bryant might be an untested rookie in the VC community, but he has support. Chris Sacca of Lowercase Capital told Business Insider that he was skeptical about Bryant, not only because he wasn’t a basketball fan but because he had witnessed other athletes treat business like tourism, barely dipping their toes into the world and learning how it works.
Sacca said he gave Bryant homework, including articles to read and TED Talks and other videos to watch. Bryant took on the assignment with gusto, according to Sacca, who told Business Insider, “He was bringing the same obsessive work ethic to learning about startups that he does to training. … So I ended up becoming really enthralled by him.”
Tom York is a San Diego-based contributor. He can be reached at email@example.com.
Bryant Stibel co-founders and General Partners Jeff Stibel and Kobe Bryant, giving an interview together on CNBC at the NYSE in New York City on Aug. 22, 2016, when they announced the launch of their firm. Photo courtesy Reuters/Brendan McDermid