Athletes battling career-ending injuries or nearing the end of their careers are increasingly looking to buy themselves a safety net by investing in startups. Hip hop artists are way ahead of rock stars when it comes to making tech investments, according to an analysis of Crunchbase data. Silicon Valley isn’t exactly a bastion of inclusion.
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Less than 1 percent of venture capital-backed startups are black-owned. Venture capitalists do three things. They find deals, pick the right deals, and add value to the companies they invest in, says Steven Neil Kaplan, a professor of entrepreneurship and finance at the University of Chicago. Celebrity is the key asset that famous musicians and athletes can bring to the table when they invest in tech. Their celebrity can attract publicity and potential customers. But if there’s one thing celebrity VC funds have in common, it is a desire not to be thought of as celebrity VC funds, said Josh Lerner, a professor at Harvard Business School.
The phenomenon of celebrity VCs 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 social media.
While mainstream venture capitalists hesitate, a crop of investment firms specializing in marijuana have sprung up to fill the void — groups like Los Angeles-based Casa Verde Capital, co-founded and backed by rapper Snoop Dogg, Daily Democrat reported. Snoop Dogg has backed several cannabis-related startups including Merry Jane, a media site he co-founded for the cannabis lifestyle; LeafsBySnoop; pot packaging provider FunkSac; and marijuana delivery service Eaze. This helped land Snoop on Business Insider‘s list of 22 most active celebrity startup investors. Snoop’s portfolio includes investments in caffeine, another growth sector. He invested in the chain Philz Coffee. He also backs social media site Reddit, sports content startup GameOn and commission-free stock-buying platform Robinhood, according to Telecrunch.
NBA basketball champion and Miami Heat player Chris Bosh is a supporter and advocate of the nonprofit code.org, which works to increase computer literacy in schools. Bosh takes blood thinners for a blood clotting condition, which cut short two previous seasons. He is expected to part ways in the next few weeks with the Heat, and he’ll have money to invest, according to CBSMiami and The Miami Herald.
Bosh, 33, will have the opportunity to play for another NBA team, if he so chooses, with no salary-cap consequences for Miami. The agreement would permanently remove all of Bosh’s $52.1 million in remaining salary from Miami’s cap, regardless of whether or not he plays again in the NBA. Bosh will still receive all the money that he’s due.
Bosh hasn’t played since early 2016 due to blood clot issues. A return to play is in doubt.
Forbes has ranked Bosh No. 75 of the World’s 100 Highest-Paid Athletes.
Bosh grew up in a tech-savvy home and appreciated the importance of technology from a young age, according to a General Assembly blog:
In high school he was a member of Wizkids, a computer graphics club, the Association of Minority Engineers, and NSBE (the National Society of Black Engineers). He began writing computer code in college at Georgia Tech but after his breakout performance on the university basketball team, he entered the NBA before finishing his degree. Programming is still very important to Bosh.
Former Black Eyed Peas member will.i.am, aka William James Adams, has backed everything from Israeli tech firm Shellanoo Group (a technology incubator and venture builder) to Austin-based startup Honest Dollar (offers a platform for small businesses to begin offering retirement benefits to their employees) which was acquired by Goldman Sachs in 2016. These helped land will.i.am on Business Insider’s list of 22 most active celebrity startup investors.
Britain’s first app-based lender, Atom, launched in 2016 and signed a deal with will.i.am to act as an adviser, Medium reported. Atom can use the experience of an American rapper, singer, songwriter, entrepreneur, actor, musician, DJ, record producer and philanthropist. Will.i.am could take a multi-million pound stake in the fintech firm. In return, he’ll have the option to acquire up to 3.55 million shares in the digital bank. His role will include doing public relations, attending board meetings and publishing social media posts about Atom.
AneedA — a new wrist-worn connected device — is the next big thing from will.i.am’s consumer technology brand i.am+. I.am+ has had its share of flops, Wired reported. Like a $400 iPhone case and the bangle-like Puls wearable smartphone:
Despite his failed products and clownish persona, will.i.am is a skilled producer and marketer. It’s easy to forget that he was a founding investor in Beats and instrumental in its inception and success. Still, he’s acutely aware that his celebrity is a help and a hindrance to launching a hardware company. “It’s a gift because it gets you to places you probably wouldn’t have gotten as a startup and it’s a curse because the tech community doesn’t take it seriously. At first it used to bother me. But now, who gives a fuck? Right? Because we obviously have attracted amazing investors and talent.”
After retiring in 2011 with a net worth approaching $350 million, the 7-foot, 1-inch Shaquille O’Neal transformed from basketball player and rapper to investor, Yahoo News reported:
O’Neal amassed a vast portfolio of investments that began with pre-IPO shares in Google, Apple and General Electric, and now includes ownership of 150 car washes, 20 Krispy Kreme locations, a handful of Las Vegas clubs, as well as Uber and Lyft pre-IPO stock. O’Neal also told Yahoo Finance that he once owned more than 155 Five Guys restaurants and 40 24-Hour Fitness gyms before selling them.
What’s his investment philosophy?
First of all, I listen to everybody’s pitch. I like to look in your eyes. I like to listen to the passion in your voice. I try to understand what it is. You have to demonstrate that it works. I know I’m getting all the credit, and it’s cool. But you can never win championships without your team. And the greatest of leaders are the ones smart enough to hire people smarter than them. I’ve got a lot of unknown un-famous superstars in my squad. We make a decision on whether we’re going to invest or not, but it’s about having a great team.
Is there one investment he passed on that he regrets?
“Oh a lot of them. Starbucks got away big time,” he told Yahoo. “Growing up, I never saw a black person drink coffee. Not only that. Growing up I never saw a coffee spot in the ‘hood. So when I met with Howard Schultz, he said, ‘We want to put Starbucks in African American neighborhoods.’ I said to myself, ‘Did that come from not doing the research?’ Nobody in my family drank coffee. We drank hot chocolate. We drank tea. Earl Grey. So if Earl Grey would’ve said, ‘I want to open up (a tea spot), I would’ve said ‘Yeah, that’ll work.’ But Starbucks? That one got away. And then he did the deal with Magic (Johnson), and it just blew up. So I always kick myself when I see a Starbucks.
Willard Carroll Smith Jr. is an American actor, producer, rapper, and songwriter and investor.
Given his success in Hollywood, younger generations may not know he was a popular rapper in the late 1980s under the name The Fresh Prince, alongside DJ Jazzy Jeff. Even fewer people know that he’s an angel investor who is involved with six tech companies, including e-commerce site Julep and social shopping platform Fancy, Medium reported. Smith is one of the top 13 celebrity tech investors, according to a report published by CB Insights.
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), The Guradian reported.
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”.
A superstar basketball forward for the New York Knicks, Anthony is looking ahead to his next act as a venture capitalist, according to Telecrunch. He wants to build a lasting legacy beyond the basketball court:
“The money is enticing but it’s also the thrill of being involved with businesses and companies that’s changing the world today. Tech is changing the world in everything we do, whether it’s sports, fashion, music…. regardless of what it is, tech is changing the world,” Anthony said.
Goldfarb and Anthony connected in part because of Anthony’s exposure to wearable devices. The Knicks were using the wearable device Catapult to provide data and analytics on the team’s performance and Anthony was intrigued. “In the NBA everything is data. Everything is data driven,” he said. “Everybody wants to be heard and technology gives people the opportunity to be heard.”
Anthony’s status and position in the NBA prevent the partners from investing in certain sectors, Goldfarb told TechCrunch. “I’d love to invest in a weed business,” Goldfarb said. “We can’t.”
Having earned a fortune on the basketball court, Kobe Bryant joins a growing list of celebrities investing in tech.
Four months after Bryant ended a 20-year career with the Los Angeles Lakers, he told the Wall Street Journal that he would be launching a venture capital fund with partner Jeff Stibel, The Guardian reported.
Bryant Stibel launched in 2013 with $100 million from its two founders and a focus on investing in tech, media and data companies.
“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.
Many people can’t remember Hakeem “Chamillionaire” Seriki, a Grammy award winning artist who released his big hit, “Ridin,” in 2005. Chamillionaire went on to become one of the most successful celebrity investors to date, Medium reported:
“More successful than Jessica Alba with The Honest Company or Ashton Kutcher with a portfolio of investments including the likes of AirBnB, SeatGeek and Optimizely.
Here are some ways Chamillionaire transitioned into becoming an investor, according to Medium.
He loved tech and played with it himself, building up domain expertise that would serve him well.
He understood the importance of building direct to consumer relationships with his target audience as well as measuring metrics such as engagement and returning customers. Fans were so engaged they were getting tattoos, creating artwork in their bedroom and even wedding cakes with his logo.
In a 2015 interview with Vice‘s Noisey, Chamillionaire summed up how he is trying to increase the pipeline of founders and investors from diverse backgrounds:
In addition to sitting in on pitch meetings, he’s been having meetings of his own, telling friends about venture capital and entrepreneurship. He wants to spread the word that artists no longer have to bend the knee to major labels. With the right investments and ideas, they can claim ownership for themselves.
New York rap legend Nasir “Nas” Jones and manager Anthony Selah have made a fortune as Silicon Valley investors backing tech startups ranging from Lyft to Dropbox, NPR reported.
Now Nas has announced he’s part of a $4 million seed round in Brooklyn-based food stamp startup Propel, which makes the app Fresh EBT, according to Technical.ly. Kevin Durant, Andreessen Horowitz and the Omidyar Network are fellow investors in Propel.
Nas invests both personally and through his venture fund, QueensBridge Venture Partners, which has made 40-plus startup investments since 2011. These include two rounds of funding for Brooklyn-based Genius,
known mostly for offering explanations of the lyrics of rap songs. The technology allows users to copy any article on the internet, highlight sections of it and offer context, opinions, and reactions right in the text itself.
QueensBridge gets its name from the Queensbridge projects where Nas grew up:
The famously violent Queensbridge Houses is the largest housing project in North America, with 96 buildings covering six city blocks. It’s located in Long Island City, Queens. But times, like Nas, have changed. Long Island City is experiencing among the highest levels of development of any neighborhood in America and is now home to two Michelin-starred restaurants.
Jay Z’s new venture capital firm Arrive was introduced earlier this year by parent company Roc Nation. The investment platform will work with early-stage startups, offering investment of capital and help with business development and branding for selected startups.
Arrive’s sales pitch to potential investment targets revolves heavily around its experience in brand building, Telecrunch reported. The company claims to be unique among VC firms for its exposure to managing and building up artists and athletes.
Roc Nation is working with Primary Venture Partners and GlassBridge Asset Management to form the new firm, with Primary acting as a venture advisor to guide investment, and GlassBridge offering business infrastructure support.
Jay Z is launching the VC fund with the help of longtime business partner and president of Roc Nation, Jay Brown, Gizmodo reported. They’ve already been focused on seed-stage tech startups for about five years as angel investors. One of Jay Z’s highest-profile investments has been one of his most questionable:
In early 2015, the rap star bought Swedish holding company Aspiro AB, the parent company of music-streaming service Tidal, with a group of musicians for a reported $56 million. But according to a Wall Street Journal report, Aspiro AB recorded a net loss of about $28 million in the year that Jay Z took control of the service. Pretty much the only silver lining in the deal was that Sprint recently agreed to acquire 33 percent of Tidal for about $200 million in early January. Still, Tidal is struggling to compete against chief rivals like Spotify, which has already topped 40 million paying subscribers compared to Tidal’s 3 million.
Jay Z’s foray into VC dates back to 2011 when Roc Nation invested in Stance, a “premium sock company.”
Although premium socks are most certainly an absurd product meant solely for men who take long vacations on yachts, Stance has since raised $116 million, so things don’t look too bad for Jay Z. But the ridiculous sock investment pales in comparison to what appears to be Jay Z’s most successful investment to date: his participation in Uber’s 2011 Series B funding round, when it was valued at just $300 million. Uber’s valuation has since ballooned to $66 billion.
Some failures attached to Jay Z and Roc Nation include a 2012 investment for an undisclosed amount in a company called Viddy — an “Instagram for video.” The company failed a few years later, but then rebranded as SuperNova before being sold to Fullscreen for an estimated $15 million. Roc Nation also invested an undisclosed amount in the private jet startup BlackJet in 2012, Gizmodo reported. The company has since closed. Jay Z also invested in JetSmarter, an Uber for private jets.
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