How This Entrepreneur Introduced Collectively Among the Greatest Names in Sports activities and Enterprise
Mark Patricof understands both the power and pressure of celebrities – and the potential opportunity.
After founding and running Mesa Global, a boutique investment bank that invested early in startups like AirBnb and FanDuel and was acquired by Houlihan Lokey in 2015, Patricof was asked to host a TV show with four professional athletes per episode. (Think Shark Tank, but with athletes as sharks.)
Spending time in the green with very successful athletes helped identify a major advisory gap: Many athletes invested in high-risk startups and alternative investments that their agents and financial advisors often did not understand … and sometimes even advise against. In addition, the athletes had no access to high-quality private market offers.
In 2018, for example, he started Patricof Co, a private investment platform that is tailored to the business requirements – and above all to the opportunities – of professional athletes. The result is a company that acts as an investment platform and advisory practice.
The company is also tapping into these investors in ways that help leverage its own brand, and offers fascinating opportunities for anyone interested in using influencers. And if you ask Patricof, the model is 100 percent deliberate and possibly even repeatable – you should look for clues.
Along with the capital invested in the fund by JP Morgan, the athletes pledge to make substantial (at least for me) annual investments in private equity deals like TopGolf, Orgain, RealReal … and Chalula Hot Sauce, a company that was recently acquired by McCormick Brands for $ 800 million.
“My idea was to offer tailor-made investment banking services with jointly invested capital to help our smarter, faster, and better athlete customers be smarter, faster, and better business people,” says Patricof. “One way is to provide access to transactions and opportunities, such as larger private equity deals, that are off-market, oversubscribed, or late-stage.”
By providing advisory services, Athlete clients can better avoid receiving a warning of extremely early, theoretically highly rewarding investments – some made without their knowledge – that fail spectacularly.
And can make their own decisions about whether to invest. While clients commit to having a certain level of investment in the fund, they can choose to go or decline any deal. Your money is not tied up automatically.
To date, Patricof’s roster includes around 90 current and former professional athletes. Like Patrick Mahomes, Victor Oladipo, Venus Williams, Todd Gurley, JJ Watt and Henrik Lundqvist. Miami Dolphins defender Byron Jones, currently the highest-paid cornerback in the NFL, is also with the club.
“I was the guy who always brought my financial advisers into alternative investments,” says Jones. “And even though they had expertise … they didn’t necessarily have expertise on whether to invest in a startup or a three to five year company. That’s the vertical lineup of Patricof Co: They have more connections that I can ever have . and the deal flow is much bigger and better. “
Invest like a pro
Like many athletes – and I’d bet entrepreneurs think similarly – his goal in investing is to create wealth and opportunity for his family – and for future generations of families.
“Growing up,” says Jones, “a young, poor black boy in America … you don’t really get that opportunity. It wasn’t until I started reading personal finance books, reading articles, that I realized there was a whole. ” Another world out there to meddle in. When I signed my first contract, I thought, “How can I grow and pay for college for my future children and grandchildren? And what about their future children and grandchildren? How can I change? the flight path for my family? “
Oddly enough, Jones’ first corporate investment was in a clothing company whose founder sold clothes outside of his home.
“I saw the passion and love he had for his shirts,” says Jones, “for his clothing brand, and I thought, ‘I want to help this guy. I want to be part of it.’ Meeting someone who has an intense passion for their company and for what they want to be … I could relate to this: I have the same passion for football. “
So far, Jones has taken advantage of all of the investment opportunities offered by the fund. And other services, like conference calls with people like the former president Bill Clinton, JetBlue founder David Neeleman and David Falk, Michael Jordan’s old agent.
“You’re constantly around people who want to try to get better,” says Jones, “who want to be a moving force. To sit down with people like that, there are so many benefits, crossovers, and connections with being. ” an athlete.
“I have a thirst for knowledge. To sit down with someone and have them teach me their ‘things’, I’d pay for it,” laughs Jones.
Which Jones does in a way. The Patricof co-model is customary in the industry: The fund receives a management fee of 2 percent and 20 percent of all profits as a performance fee.
The rest – the advice, networking, commitment to opportunities offered by the advisory board, and analysis of potential investments directly available to Jones (and the fellow athletes) is part of the package.
Why the model matters
A similar package was opened a little over a year ago: another bucket of capital comes from the PCO membership program, non-athlete investors who can participate in the rest of the business allocation after the athletes invest. While the fee structure is slightly different – members are charged an annual access fee and then a percentage of the interest carried over – PCO club members take part in the conference calls and can also access sports content created exclusively for them. For example a detailed interview with Mike Tannenbaum, the former EPP for soccer operations at the Dolphins and current front office commentator at ESPN.
One club member is Andrew Nathan, co-founder and CEO of real estate company MCRE Partners.
Real estate is a lagging indicator; What is happening today will affect the industry in six to nine months. By participating in the fund, investors like Nathan can analyze opportunities in other industries and hear what other company leaders think and predict. The deal flow is important, but the flow of information is also important.
“I’m an information and knowledge junkie,” says Nathan, “and when you are with people who all want to learn and grow, this is the ultimate opportunity.”
Which leads to one final point. Unless you’re a professional athlete or a person with significant resources, Patricof’s business is interesting – but largely irrelevant.
Unless you think deeper about how to apply his approach to your business. Patricof not only met the need for an audience willing to pay – that’s Entrepreneurship 101 – but also encountered something fascinating in today’s world of influencers.
Investment firms tend to be cautious about including outside investors – since involving outside investors dilutes their ownership stakes. But professional athletes are also high-profile celebrities who, when they become investors, are often eager to use and promote a company’s products.
In fact, a slide in Patricof’s first deck described how an athlete shareholder is much more beneficial to a company than an athlete endorser: in short, what you earn is always better than what you get paid.
“Hence the belief that we could get access to these transactions,” says Patricof. “We invested in Chalulah Hot Sauce. Several players leaned forward. The company sold a few months ago and they will tell you that having our players involved made a difference.”
Instead of looking for so-called influencers to promote your brand, spend this time connecting with people who believe in your brand.
Because earned is always better than paid.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.
Comments are closed.