There are no second acts in American lives. There are only Series B financing rounds.
Four months after Kobe Bryant ended a 20-year career with the Los Angeles Lakers bygoing 6 for 21 from the three-point line against the Utah Jazz, the retired basketball star revealed in the Wall Street Journal that he would be launching a venture capital fund with partner Jeff Stibel.
Bryant joins a growing list of celebrity venture capitalists who, having earned a fortune in one field, are looking to Silicon Valley to lose a fortune in another.
Nine-time NBA all-star Carmelo Anthony teamed up with businessman Stuart Goldfarb in 2013 to launch Melo7 Tech Partners, a venture capital firm that has invested in companies including Lyft, SeatGeek, and Whistle (a GPS tracker that you put on your pet).
Joe Montana, the four-time Super Bowl champion known as The Comeback Kid, is a general partner with Liquid 2 Ventures, a seed-stage venture fund. In 2015, tennis legend Serena Williams was part of a $10m investment round in hair-extension startup Mayvenn, alongside VC firm Andreessen Horowitz and Trinity Ventures.
That’s quite a change from previous generations of professional athletes, who were more likely to follow up their careers with gigs as coaches, broadcasters or car salesmen.
Babe Ruth wiled away his final years fishing, bowling and hunting. Today’s retired hall-of-famers would rather catch deals.
“Why are they potentially interested in it?” asked Steven Neil Kaplan, a professor of entrepreneurship and finance at the University of Chicago Booth school of business. “I think it’s why anyone is interested. It’s sexy.”
“The other question is, ‘Should they be interested?’ and ‘Will they be successful?’” Kaplan added. “That’s a harder question to answer.”
And it’s not just athletes who have caught the VC bug.
Rock band Linkin Park ventured into VC after enlisting a class at Harvard Business School to study the business of the band as an independent study course. Among other things, the southern California band whose hits include In the End and Waiting for the End learned that it needed to “diversify revenue streams across multiple business verticals to mitigate financial risk and extend our brand message”.
The result was Machine Shop Ventures, a “consumer-focused early-to-growth stage” VC fund that invests in companies that “align with the Linkin Park brand of connection people and innovation through technology + design”.
Rappers Snoop Dogg and Nas and actors Ashton Kutcher and Robert Downey Jr have also joined in the froth.
Even Barack Obama has hinted at an interest in a post-White House gig in venture capital.
Josh Lerner, a professor at Harvard Business School, said that the phenomenon of celebrity VCs could be indicative of one of two things. Viewed cynically, it could be a sign of a “market top – where uninformed people are piling into a hot investment area”.
Or, Lerner said, celebrity VC could be viewed as “a natural extension” of celebrities’ inherent ability to influence the public – enhanced in recent years by Twitter and other social media – directed toward selling products. “Hopefully they will stick to realms where this model is more likely to work, and eschew semiconductor deals!” he said.
If there’s one thing celebrity VC funds have in common, it is a desire not to be thought of as celebrity VC funds. “We’re not a ‘celebrity investor’. If we can’t add value, we don’t invest,” is the message on Machine Shop Ventures’ website.
“We don’t want to be in the business of investing in companies so someone can use Kobe as an endorser. That’s not interesting,” Stibel told the Wall Street Journal.
Goldfarb told TechCrunch that while he’s happy to take advantage of Anthony’s celebrity contacts, “help is never, ever in terms a commercial endorsement from Carmelo Anthony”.
That’s all very well, but according to Kaplan, celebrity is the key asset that most celebrities are putting on the table. Venture capitalists do three things, Kaplan explains: find deals, pick the right deals, and add value to the companies.
“The advantage that someone like an Ashton Kutcher or Kobe Bryant has as an investor is if they have some ability to attract publicity and potential customers,” Kaplan said.
A startup founder with a highly technical or business-to-business product does not necessarily want or need the kind of expertise a celebrity can bring to her company.
One venture capitalist, at least, welcomed the competition. Anshu Sharma, a former SalesForce executive who is now a venture partner at Storm Ventures, said that he is pleased to see wealthy people invest in companies rather than sit on their money.
“If more rich people were helping people start companies and fewer people were chasing $100m condos to buy in New York, we would have a better world,” he said.
This article was written by Julia Carrie Wong in San Francisco, for theguardian.com on Tuesday 23rd August 2016 14.00 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010
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