SPAC-ing Into the Future of Sports Tech

David Dow, CEO, Sportsmap Tech Acquisition Corp, Gow Media

Know what a SPAC is? If you are interested in novel ways to raise money for a company, you certainly should. I recently interviewed David Gow, CEO of Gow Media, the largest media company in Texas with properties like SportMap Radio Network, 2 ESPN local stations, a lifestyle site, an automotive and a sports site. He recently created a blank check company through a SPAC (Special Purpose Acquisition Corp) IPO with the NASDAQ raising $100 million. SPACs have been all the rage over the last 24 months, with over 850 of them taken public.  Is this just another risky way to find funding or a sound plan going forward?

First off, how exactly does a SPAC work? As David recounts, it’s the opposite of the typical money raising process which involves an operating entity, a business it grows up, and becomes large enough to then go public, or list on an exchange like the NASDAQ and raise a lot of capital through an IPO. “In the SPAC world, it's backward. We’ve created a hollow company listed with NASDAQ that can raise a lot of capital. But now we've got to go find the operating business. And that's why it's often referred to as ‘a blank check company.’ We've been given over $100 million to go identify and acquire or merge with a great operating business. Our special purpose is sports tech.”

With so much private equity currently available, why would you go this route? As David sees it, the opportunity brings together capital, a board which has great expertise and that public stock. “For some businesses, having a public stock creates a great currency for additional acquisitions. So we are a time and cost efficient way for a private entity to get to the public realm.” He has a point there. The planes, trains and automobiles of the roadshow process and all the filings required for an IPO are not for the faint of heart or wallet.

So what is his SPAC looking for (contact me if you want in!) are companies where technology is innovating the sports industry: eSports; health and wellness including wearable devices and businesses like Peloton which are both software and hardware; fan engagement including smart stadium technologies and fantasy and gambling.

David is particularly bullish on esports because the business models are still being defined and he and Gow Media can play an active role in that. As college athletes become able to monetize their name, image and likeness, he plans to build a platform to connect athletes with brands. NFTs also hold huge promise when connected to athletes.

One thing that David believes is a big part of fueling innovation in start-ups in his region is The Cannon, which provides support infrastructure and colocation of support resources. The Cannon offers “an angel network of investors, a mentor network, shared services of fractional CMOs and CFOs to help businesses who couldn't afford a full time employee community building programmes when somebody gets a big VC round.” Having participated in a similar project in Chicago, 1871, I can attest to how essential this sort of support is.