Subscribe to JohnWallStreet

June 26, 2023

MVPindex Raises $20 Million in Challenging Environment

MVPindex, a sponsorship measurement and valuation platform, recently closed on $20 million of new funding. Verance Capital led the Series B round. Several of the company’s existing shareholders, including Larry Fitzgerald and R.C. Buford, also participated.

The parties declined to disclose the valuation the money was raised at.

“We were pleased to have the opportunity to invest in this exciting company despite the challenging environment,” Jeremy Hoffman (principal, Verance Capital) said.

The deal shows that investments are still getting done; however the bar for new capital remains high. CEOs and board members must realize that capital is not as abundant as it has been. Many companies may need to become more flexible, and be prepared to demonstrate a longer track record, if they're going to bring on additional investors over the next 12-18 months.

The current fundraising environment remains challenging, even for high-margin SaaS businesses operating in potentially massive and underserved verticals. Many companies have not yet come to terms with this reality.

MVPindex was able to get funding closed in part because CEO Brian Foley, who successfully led an overhaul of the MVP product and oversaw prior exits, understands to get ahead the company needed to focus more on bringing in the right capital partner rather than maximizing valuation at all costs.

Several of the company’s existing investors were glad to participate in this latest round too. They view adding Verance to the cap table as a win for MVPindex. In addition to the capital it brings, Lyle Ayes and Co. can be helpful in making introductions to both strategic investors (think: major sports leagues) and prospective clients.

Verance first took note of MVPindex while doing bottom-up research on the measurements and analytics space several years back.

The company “mirrored the qualities” that it had seen work in other software related businesses, Hoffman said, "and we were impressed with Brian and the rest of the management team."

When it heard the company was in the market for outside capital, the growth stage firm decided to take a closer look.

Verance is long live sports. It also likes playing in the $100 billion dollar plus sponsorship market, in part, because it feels the asset class remains misunderstood.

“Brands still are focused on advertising during the commercials as opposed to in-game,” Hoffman said.

That is despite the game making up 80% of the screen time being viewed by fans.

Look for that trend to reverse in the years ahead. Logic suggests brands will come to recognize they are better off sponsoring assets that are being shown time and time again when fans are engaged (think: in-arena signage, jersey patches, adverts on floor), then infrequently when fans are tuning out.

“As commercials go away, and advertising becomes harder to integrate into social platforms, [it will become] necessary [for brands] to become more integrated into the content that people are there to watch in the first place,” Foley said.

And companies, like MVPindex, are helping stakeholders to understand the value of those integrated sponsorship assets. The ability to define ROI should become increasingly valuable as the economy tightens and corporate accountability rises (i.e. the need to justify investment).

Historically speaking, rights owners, holders and brand partners have relied on third-party agencies, ratings measurement firms and/or point solution providers to try and gauge the value of a sports sponsorship campaign. In fact, MVPindex got its start as a social media measurement company.

But when Foley joined in late 2019, he realized prospective clients did not have budgets for narrowly focused measurement and analytics solutions.

Companies “need to be able to [calculate] value across the spectrum, that includes broadcast, streaming, [social], Twitch, YouTube Live and podcasts,” he said.

Despite the acceleration of cord cutting, linear television remains a core component of sports sponsorship.

“If you’re not calculating TV, you’re cutting off half the value prop of sponsorship,” Foley said.

So, MVPindex spent the last three years building an omni-channel platform capable of providing customers with a single data point that can transparently explain a sponsorship asset’s value based on the exposure it receives and the cost to purchase it.

It measures “all the rights, entitlements, visible signage and branded content that is part of a sponsor’s partnership dynamic with [a] team or league,” Foley said.

MVPindex will use the newly raised capital to build out its sales and marketing capabilities so it can scale business. 

“Based on our customer calls and diligence in the market, the biggest opportunity will arise from building brand awareness,” Hoffman said.

It will also continue to invest in product innovation.

MVPindex is not yet profitable, but the company has a plan to reach break-even over the next year and a half. If it does choose to raise more capital, Hoffman maintains it will be “from an offensive standpoint...We believe this round can get the company to a self-sustaining state.”

“It is about building a scalable engine [where] costs don’t rise with revenues,” Foley said.

Sports is the first use case for MVPindex. But Verance sees much broader applications for the technology within the sponsorship and endorsement arena (think: measuring the media value associated with an influencer or ambassador campaign).

“They’re [already] serving Fortune 500 brands [like Apple and Amazon] and that’s where we think the massive opportunity is,” Hoffman said. “If the sponsorship market is $100 billion plus and brands spend 5-10% of their sponsorship dollars on measurement, this could be a $5 billion to $10 billion software market.”

MVPindex is now positioned to attack this exciting market. The faster other startups realize how best to attract capital in a more challenging environment, the faster they’ll get to their desired outcome.