A VC unpacks the why and process of deciding to invest in a sports tech startup

Investor Rayn Ong pointed out recently that “VCs (and angels) say no to 95% of the founders they meet with”.

That’s ignoring the many more no responses over emails and even DMs (from some brave founders). As anyone in startup land will attest, the no comes in many forms.

There is of course the quick, near-instant no which is the most common no. There is the not now – which for some optimistic founders can be interpreted as a ‘maybe’ or even ‘we’re on for next time if we hit our targets.’

There is also the full consideration process no which is often the hardest for founders to swallow – this no typically entails proper due diligence and is obviously a longer, crueler wait time making things doubly painful for founders who might quite rightfully grow optimistic and fairly or unfairly lament the experience as a big waste of time, energy and effort.

As a founder myself, I know every form of no all too well.

And then there’s a yes. So I wanted to break down why we said yes to Optimize Mind Performance and its founder, Jack Preddey.

Every investor worth their salt should have a comprehensive investment criteria – even if “instinct” is a factor in the decision. Riverbend is no different.

However pragmatism is at the forefront of this process and so variables like stage of company, sector and complexity of mission play significant roles in first forming an appropriate investment criteria prior to committing to due diligence.

In Riverbend’s orbit, the few companies that proceed past the gate receive their very own customised investment criteria, fuelling a process that entails much discussion, debate and deliberation in order to ultimately determine decision-making.

In the ultra high-risk world of super-early-stage investing, there are 1 million+ good reasons to say no to almost any investment opportunity that comes across your desk.

However, five factors are typically essential in order to trigger the next steps for us:

1. Can we trust the founder and team to grind, perform and deliver to an acceptable standard (our 100 point test)

2. Is the company’s product and vision sufficiently innovative (as opposed to being easily repeatable, already existing in the target market or lacking in value creation),

3. An obvious one, ignored all too regularly by some – is the business model viable and growth prioritisation aside, is there a conceivable path to profitability – this also entails additional must-pass considerations like willingness to pay, expected level of demand, and competitor/landscape threat analysis to name a few

4. Do we actually understand this company, the sector and their mission and if not, will we quickly curb the knowledge gap (understanding our own limitations is essential. Ego hurts the pockets)

5. Are we excited enough about this journey?

Here’s how Optimize answered answered them.

Trusting the founder and team

I played university cricket with Jack who went on to captain the 1st grade team at my cricket club.

Even if I was unaware at the time that Jack was carving out a terrific career (first in financial services and then his own successful consultancy business), it would still have been obvious to anyone at the cricket club that Jack has an extraordinary work ethic and appetite for success.

The fact that he was promoted to the captaincy at a young age speaks volumes about his leadership attributes, commitment to the cause and reliability.

Jack was able to balance semi-professional cricket with a full-time finance job and then his own profitable consultancy firm is a testament to his insatiable drive and elite capacity. His experience as a high performance athlete would also make for a compelling case study for the very concept he was pitching, but more on that later.

The character assessment was an easy tick made even simpler by Jack displaying acute instincts, strong business acumen and for lack of a better expression, literally having runs on the board.

Is the product sufficiently innovative?

Perhaps the most compelling attraction of Optimize is its ambition to help fill what is a blatant void in a space primed for exponential growth.

Riverbend loves companies that recognise flawed or outdated systems and cleverly seeks to reinvent and/or significantly enhance these systems.

The gap in mental performance is abundantly clear – in short, athlete access to quality sports psychologists and mental skills training is not only outdated in its predominantly person-to-person approach but vastly inaccessible in terms of both affordability and scarcity of supply.

Sports psychologist, Dr Ross Flowers records for the Optimize app

The notion of making quality mental skills training totally accessible, extremely affordable and readily available is sufficiently innovative and undoubtedly reinvents a process that is crying out for optimisation (pardon the pun).

In terms of direct competition, upon an exhaustive global search of companies playing in this subsector, we deemed that there is currently no company that operates with the same premise, vision and mission as Optimize. There is of course overlap like the boom of wellness and mental health products like Calm and Headspace which in many ways act as convincing case studies supporting Optimize’ vision but are in no way stepping on OMP’s toes nor is there a significant threat of these products going all in on sport, sports psychology and mental skills training, routine setting and associated analytics/ insights for athletes and organisations.

Then there are the rapid recent advancements in neuroscience which again could and should be seen as heavily advantageous for Optimize who plan to make tremendous inroads and carve out its own niche with big data and analytics – eventually unpackaging game-changing correlations between mental performance and routines of athletes vs their physical performance.

In earlier iterations of the product, it is clear that OMP will still prove invaluable in terms of informing coaching techniques and management of players based on their mental skills routine – not to mention the immense value in gaining a mental performance competitive edge for individual athletes. Companies like Whoop and Catapult are examples of sports technology companies that are making tremendous strides but chasing far different end goals and outcomes that don’t encroach on Optimize’s specific territory.

In early pitches with Jack, he described his vision for Optimize as being at the forefront of the incoming wave in mental fitness just as companies who successfully pioneered the explosion in physical fitness (gyms) in the 80s went gangbusters.

We think he’s right. We do think the wave is coming and there is more and more evidence accumulating each day pointing to the growth explosion. Moreover, Optimize sits perched alone at the summit waiting for the optimum conditions to ascend to the peak.

On the execution of this premise alone there would be sufficient value creation and in this instance there are benefits to a headstart in terms of the threat of being copied.

We worked on the assumption that there are likely to be multiple winners in this pursuit and so with an advantage in acquiring elite talent, as well as taking an early lead in market share and credibility in this field, Optimize finds itself in pole position to win.

For Optimize to become a unicorn level business, it would either need to scale rapidly in its current form without congested competition or achieve its ultimate mission of having the most comprehensive, advanced mental performance analytics in sport as part of its dashboard. The power of being able to customise coaching approaches, management, training plans and decision-making based on an athlete’s mental skills training performance and insights is the holy grail for OMP – simply put, it would mean OMP is a must-have for any sports organisation worth their salt and of course a no brainer for any aspiring athlete.

Every iteration and release version that takes the product closer to achieving this goal creates immense value not only for the company but also for its growing tribe of customers and users. Whilst there’s a very modest entry price point for both B2B customers and consumers alike at the moment, the scope to raise the price point in alignment with the inevitable injections of product roadmap value makes for a particularly lucrative outlook on the 3-year financial forecast.

The business model

Jack’s personal experience as an athlete makes for a strong narrative as to why this specific product is needed and why there is a market for it (trust me, I’ve heard this part of the pitch countless times and it rarely elicits anything but smiles and nods)

Unfortunately (or perhaps fortunately as it turns out) Jack came ever-so-close to realising this dream and played plenty of semi-professional cricket, without ever clinching the ultimate goal. The ability was there and the hunger was definitely there, but by his own admission Jack put too much pressure on himself and was a victim of overthinking and having a noisy mind. Armed with the Optimize App with customised mental performance content tailoring an optimal mental performance routine and it might have been a different story… you get the point.

In assessing path to profitability, we also had to consider whether there existed a sufficient level of willingness to pay.

The Optimize view is never underestimate an aspiring athlete’s appetite for success and hunger to ascertain any edge to help them. Nor the enthusiasm of parents wanting to see their children realise their dreams (or the parent’s dreams too). Research data on willingness to spend in this specific category validated this position.

In terms of why the pricing made sense, an hour with a sports psychologist typically costs in excess of $350 and so the $20 a month price point for unlimited access to an unprecedentedly vast, quality content library comprising of the world’s leading sports psychologists is fundamentally mouthwatering for the target market.

The same principle applies for the B2B sell. Whilst sports organisations will typically have their own psychologists, there’s a glaring need for a complementary platform for athletes to utilise outside of the very limited physical time they spend working with them. The opportunity to have a dashboard where they can not only understand their athletes at a significantly more advanced level but also to help inform coaching techniques and customise mental skills programs and targets is a complete game-changer.

We were impressed with Jack’s exhaustive level of research on both consumer and organisation willingness to pay. He compiled comprehensive evidence proving beyond doubt to us the defensibility of the initial pricing structure and confirming that there is indeed an enormous TAM itching for a product of this nature. In fact, as mentioned we concluded that within the next decade this specific space is likely to have several big winners.

Do we actually understand?

The answer is a resounding yes. As self-confessed sport tragics, who over-analyse player performance, alongside the fact that I founded and co-run a sports technology company specialising in player-related data and analytics, and worked in athlete talent management where I developed an in-depth understanding of the current resources available to professional athletes. We were also well acquainted with OMP’s content curation and distribution process having built and overseen several CMS systems.

In Optimize’s case, the process is already seamless and cost-efficient which is an early feather in the company’s cap.

This level of understanding made Jack confident Riverbend would be a good fit as an initial investor and partner on the journey.

The competitive landscape for Optimize

Are we excited enough?

The opportunity to be a disruptive force for positive development in a space that welcomes innovation is the clincher.

We formed a view early on that Jack’s idea was clever and not just because of its innovation and gap-filling but because it was patently clear to see how Optimize could swiftly gather momentum with both its B2B and B2C forays.

Furthermore, it’s easy to get excited about the customer lifetime value – Optimize’ vision and the model + mission’s applicability extends beyond the realms of sport. There are several verticals where Optimize’s product carries near-equivalent utility including corporates, the military, and artists/ creatives of all types.

Of course another major factor was Jack’s contagious energy and level of commitment to the mission ahead. We believe it is always a terrific sign when a founder is willing to make substantial sacrifices and is acutely aware of the time, energy and effort required to realise the vision.

He is one of the hungriest and most committed founders we’ve come across – working tirelessly for a minimal salary in the early days and more than willing to pack up a rich, full, comfortable life in Sydney in order to ensure the business is located where it has the most chance of success and exponential growth.

Riverbend is extremely excited about the journey ahead for Jack and the Optimize team.

Where is Optimize Mind Performance at now?

Headquartered in New York, Optimize has gone from strength to strength in the last 12 months in particular.

Having successfully raised in excess of A$3 million, Optimize is primed to scale its already impressive product offering. They are already generating revenue from both its B2B and B2C revenue streams (both on track for +100% YoY growth) and boast an exceptionally impressive initial B2B customer list, including University of Nebraska, University of Louisville and Cronulla Sharks, to name a few. This list looks set to include many more high-profile names by the end of 2024…

Most importantly, critical foundations have been set. Optimize successfully secured many of the world’s leading sports psychologists to exclusively contribute content to the platform and has set up a seamless, scalable content delivery process.

Some very prominent NFL and NBA players have signed on as athlete contributors and/or investors in another vote of confidence.

The next 12 months will see the product make major leaps as the company looks to cement itself as the clear pioneer and sole standout in what is increasingly recognised as a critical tool for athletes to have at their disposal.

In the unlikely event that wellness giants or prominent sports brands wanted to encroach on this space the execution of Optimize’s product roadmap should see it ascertain substantial competitive advantage and likely a huge lead in terms of both innovation and clear points of difference as well as market share.

With a great team on board (current headcount: 12), an excited group of committed shareholders (over 25 investors), a home run reaction from initial (and prospective) customers + users, a lucrative climate for this high growth space and an ever accumulating avalanche of momentum, the sky’s the limit for Optimize Mind Performance.

Optimize is in the process of closing its Pre-Series A round, with a view to launching a hefty Series A towards the end of 2024 or Q1 2025. Contact founder & CEO Jack Preddey for more information.

The pre-Series A will close on April 30 . Email: [email protected]