Sharp Alpha Advisors, a New York-based venture capital firm, has successfully raised $25 million for its second fund, which focuses on early-stage software companies in the sports, gaming, and entertainment industries. The fund, known as Sharp Alpha Fund II, intends to make investments ranging from $1 million to $2 million in approximately 15 startups. Managed by Lloyd Danzig, the fund is oversubscribed and is expected to raise more than $25 million without a specified hard cap.
Danzig expressed interest in companies falling under the category of “competitive entertainment,” such as those involved in sports betting, fantasy sports, streaming platforms, and video games. The fund seeks out investments in technologies that provide consumers with an adrenaline rush, enabling them to feel connected to the content they are engaging with. Sharp Alpha aims to invest in companies that create immersive experiences for users, prompting them to lean forward and become deeply involved in the content.
One recent investment by Sharp Alpha Fund II was made in C15 Studio, a London-based technology startup that operates and distributes streaming channels for Formula 1 and One Championship. Co-founded by Joe Nilsson and Amory Schwartz, C15 is expected to expand its offerings to include partnerships with other sports leagues to create free, ad-supported streaming television channels. The rise in popularity of these channels comes as consumers increasingly seek alternatives to traditional cable TV and subscription services.
The fund plans to continue making investments over the next three to five years while also providing follow-on capital to select portfolio companies over the subsequent three to five years. In addition to the main fund, Sharp Alpha has a sidecar vehicle that allows limited partners to invest additional funds in specific companies within the portfolio. Danzig revealed that investors in the fund include a diverse group, ranging from a large U.S. financial company to owners of professional sports franchises, family offices, fund of funds, and publicly traded companies in the sports, gaming, and entertainment fields.
Building on the success of its first fund, which raised $10 million in 2021 primarily from high-net-worth individuals and family offices, Sharp Alpha has already made 20 investments with an average deal size of around $250,000. Two companies from the first fund, Betcha Sports, Inc., and VicTree, have been successfully sold for substantial amounts. Looking ahead, Danzig expressed optimism about investing in promising founders and solutions to important problems in the current market environment. Despite being a relatively small firm, Sharp Alpha benefits from an advisory board consisting of industry experts to provide guidance and support.
