deal Overview – gymshark

Gymshark’s recent sale of a slice of its equity to General Atlantic at a £1 billion valuation raised eyebrows – see our deal analysis.  Normally, a startup will go through several rounds of funding before hitting this milestone.  Often, it is these earlier investments that pique the interest of later stage investors, moving a business onto their radar for monitoring and, ultimately, pouncing when it fits their investment criteria.  Incredible as it may seem, Gymshark did not raise a penny of capital on its journey to unicorn, so how did it come to the attention of its US private equity investor?

Gymshark is a perfect case study for the increasing importance of alternative data to private equity and corporate investors in identifying the next big thing.  By alternative data, we mean real-time indicators of growth that give valuable insight into a company’s performance long before figures are released. Examples would include live tracking of: social media commentary, job postings, employee growth, reviews and social sentiment.

Using real-time data signals, we’ve identified five other sports brands that are flying ‘under the radar’ but could be set to make a big splash. As well as these undiscovered gems, we highlighted two other UK sports brands with strong alternative data signals that have already attracted their first round of venture capital funding.

These businesses demonstrate that screening for interesting opportunities using conventional metrics such as SIC codes, revenues and prior funding rounds no longer work.  When progress is as rapid as Gymshark’s, relying on stale financial information puts investors at a disadvantage and diminishes the prospects of spotting the next big opportunity.

Wattbike

Before Peleton came Wattbike, perhaps the original ‘smart bike’.  At a price point of over $2,000, it competes head-to-head with Peloton but, unlike its $19 billion market capitalisation rival, there is no requirement to subscribe to a monthly app subscription.  Wattbikes do not have built-in displays and don’t run their own classes.  Instead, the bike connects with fitness apps such as Strava Summit and TrainingPeaks.  The business has been privately funded and we estimate revenues are now nudging £20 million.

Kymira

The confluence of fashion and technology is where Kymira sits.  The brand, founded in 2013, embeds speciality fibres containing natural minerals in its clothing.  These minerals absorb energy expended from the athlete and convert it into infrared light, enhancing human performance.  If this sounds complicated, its why Kymira’s staff roster is a mix of designers and scientists.  ‘FashionTech’ is now a real thing and we think that this brand could be one of the winners.

RDX INC

RDX Inc has capitalised on the growing popularity of combat sports like mixed martial arts.  The company has been self-funded but scores high on growth in customer sentiment and engagement.  We predict that sales are less than £2 million but growing fast.

SNUGPAK

Not unlike the fans of its military-grade kit, Snugpak has flown under the radar since inception in 1977.  The Yorkshire-based firm is one of the last remaining manufacturers of sleeping bags and insulated clothing from its base in a 17^th Century mill in the Yorkshire Dales.  This is a great British manufacturing success story and we estimate sales are now running at £8-10 million.

howies

Howies has been quietly going about its business since 1995, focusing on active wear with an environmental conscience.  Its clothing is aimed at outdoors runners and cyclists and is produced using organic and recycled fabrics.  The ethics of fashion supply chains are in the spotlight.  We expect the brands that are following Howies’ example to benefit from the increased scrutiny of clothing’s provenance.

brands with early investments

le col

When former GB pro rider Yanto Barker hung up his bicycle, he put his experience on the pro circuit to good use by founding Le Col, an upmarket brand of cycling apparel.  The boom in popularity helped advisers Price Bailey persuade Puma Private Equity to take a stake in the business in 2019.

Ruroc

All our indicators tell us that Ruroc is growing rapidly, something that BGF picked up on when they invested in May 2018.  The brand designs snow and motor sports helmets and developed the first helmet system with integrated goggles and detachable face mask.  BGF’s £3m investment has allowed the business to push on and we estimate turnover of around £10 million.

Like this post? Check out our other Insights.