Sharp Alpha Raises $25 Million For Sports, Gaming And Entertainment Fund

Sharp Alpha Advisors, a venture capital firm based in New York City, has raised $25 million for its second fund that is primarily targeting early stage software companies in the sports, gaming and entertainment industries.

The vehicle, Sharp Alpha Fund II, plans on making investments of $1 million to $2 million apiece in 15 startups, according to managing partner Lloyd Danzig. Danzig said the fund was oversubscribed and will ultimately raise more than $25 million, but he declined to provide the fund’s hard cap.

Sharp Alpha is interested in companies that are in the category of what Danzig refers to as “competitive entertainment.” Examples include technology firms that are catering to sports betting, fantasy sports, streaming platforms and video games.

The companies Sharp Alpha is evaluating for investments give people “an adrenaline rush that make you feel connected to the content that you’re engaging with, that make you really lean forward and become enraptured in whatever the activity is and the people that you’re enjoying it with,” Danzig said. “That’s what we think is one of the most economically and experientially desirable places to build technology and therefore to invest.”

The fund recently invested in C15 Studio, a technology startup based in London that operates and distributes streaming channels for Formula 1, an open-wheel racing league, and One Championship, a mixed martial arts league. C15 was co-founded last year by Joe Nilsson and Amory Schwartz, who previously worked together at SportsTribal TV, a free, ad-supported streaming television (FAST) service.

C15 expects to strike deals with other sports leagues to create their FAST channels, which are becoming more popular as people cancel their cable television contracts and do not want to pay for subscription services. FAST services include Pluto TV, Tubi and Amazon Freevee.

Fund II plans on making additional investments over the next three to five years and providing follow-on capital to some companies during the ensuing three to five years. It also has a sidecar vehicle where limited partners can invest more money in individual companies that are housed within the fund.

Danzig claims investors in the fund include a large U.S. financial company, owners of professional sports franchises in the U.S., family offices, fund of funds and publicly-traded companies tied to the sports, gaming and entertainment industries. However, Danzig refused to disclose any specific names of individuals or companies.

“We think it’s a great time, possibly the best time in recent memory, to invest at the early stage in great founders who are building compelling solutions to important problems,” said Danzig, who worked as an analyst, fixed income trader and data scientist before founding Sharp Alpha in 2019. “We are incredibly appreciative and grateful of the limited partners who backed us and believed in us to achieve the level of financial returns and strategic returns that they’re looking for.”

The fund is a follow-up to Fund I, which raised $10 million in 2021, primarily from high net-worth individuals and family offices. Sharp Alpha made 20 investments in the first fund with an average deal size of about $250,000, according to Danzig, who added the fund has additional capital remaining for follow-on investments.

Two of the companies that Fund 1 invested in have already been sold: Betcha Sports, Inc., a sports gaming app, was sold for $25 million in December 2021 to Vivid Seats Inc., while VicTree, a Web3 gaming company, was sold for an undisclosed amount in November 2023 to Divergent Yield Group.

Danzig said Sharp Alpha is a “small firm,” but he declined to disclose how many people work for the company. He noted that he has an advisory board that provides counsel.

The board is comprised of Roy Behren, a co-president and chief investment officer of Westchester Capital Management, an asset manager; Daniel Bernard, founder and chairman of Redwood International Sports; Keith Horn, founder of Loring Capital Advisors, an investment advisory and consulting firm; Don Kornstein, vice chairman of Caesars Entertainment, Inc.; and Emanuel Pearlman, a former executive chairman of Empire Resorts who holds board seats with several companies.