The Roles of an Athlete Investor: A Beginner’s Guide
Social media might have you believe that "athlete investor” is a one-size fits all label. An athlete’s name gets associated with a company and then there’s a flurry of posts, edits, and tweets highlighting how he/she is an “investor” when in reality there’s always more to the story. As someone with firsthand experience managing athletes' finances and now collaborating with them as partners and investors in Scout, I have witnessed an array of athlete investment approaches.
We thought it might be helpful to lay out and demystify different ways athletes “invest” and their roles and contributions in the investment landscape:
The Athlete Limited Partner (LP):
An athlete LP is an individual who invests in a fund associated with multiple companies as a limited partner. By writing a check, athletes become an integral part of the fund, providing financial support and serving as a valuable branding tool. Additionally, being an LP may grant them access to exclusive investment opportunities. Athletes can choose the size of their investment, writing small or larger checks, while retaining the freedom to select their preferred investment options.
The Athlete Angel:
The athlete angel takes a more individualistic approach to investing. These athletes personally invest in companies they believe in, aligning themselves with the company's vision and mission. The athlete angel becomes a direct investor by writing a check into the company of their choice. Their investment decisions are personal, and they actively and visibly participate in supporting the company's growth.
The Athlete General Partner (GP):
Athlete GPs play a hands-on role in the investment process. They are actively involved in analyzing and identifying investment opportunities, effectively functioning as investment managers. Additionally, athlete GPs contribute to raising capital for the fund, showcasing their leadership abilities by overseeing and managing the entire investment process. It’s a heavy lift for a full-time athlete, and relatively rare for them to take something like this on during their playing career.
The Athlete Advisor/Investor:
As an athlete advisor/investor, an athlete receives shares in exchange for providing valuable advice and promoting a company. This arrangement focuses more on leveraging the athlete's influence and expertise rather than cash investments. It serves as a mutually beneficial relationship, where athletes receive advisory shares while assisting the company in strategic decision-making and brand promotion.
The Family Office Investor:
Certain athletes possess substantial wealth, enabling them to establish a family office. A family office comprises a group of professionals dedicated to managing all aspects of the athlete's capital. Within these family offices, there are dedicated arms focused on investing in businesses. As family office investors, athletes can explore a range of investment opportunities while benefiting from the expertise and support of their dedicated team.
