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There’s an aphorism FC Cincinnati co-founder and co-CEO Jeff Berding tells his staff now and again: “’If you’re the smartest person in the room, you’re in the wrong room,’” Berding, 57, said on a recent phone call. “Get in the room with the really smart people.”
That maxim has been part of Berding’s mindset since a long stretch as an executive with the NFL’s Bengals to his 2015 co-founding, with Carl Linder III, of the Queen City’s top-tier pro soccer franchise. It’s also the thinking behind the club’s recent move into venture capital.
FC Cincinnati will be announced later Wednesday as the first pro franchise venture partner in Lead One, a pre-seed venture capital fund from Lead Sports, the Germany- and Florida-based venture capital manager founded by the Dassler family of Adidas fame. The Lead One fund aims to back 10 startups a year in sports and health, including efforts in women’s health, fan engagement, healthcare accessibility, youth sports and media, among other fields.
“This partnership with Lead gives us an opportunity to be in the room with super smart people who can help us with our growth mindset,” Berding said. “We can learn and we can help them learn.”
The Lead One fund is a new venture that replaces Lead’s accelerator program in Lake Nona, Fla. The accelerator’s convention of limiting investments to founders who could relocate to the Orlando area meant they were excluding potential opportunities, Lead principal Justin Driscoll said in a phone call. Partnering with professional sports groups such as FC Cincinnati is part of a design to both broaden the universe of potential investments as well as tweak the VC model, having investor-organizations more actively participate in evaluations and providing test markets of portfolio companies, rather than simply being passive investors.
“Our thesis was to go find the most innovative organizations that have the desire and the commitment to really push the boundaries and be willing to test, not be ‘wait and see, try this on another company first,’” Driscoll said. “We could have chosen a European club as the first to showcase, but specifically around that reason, FC Cincinnati has their track record of innovating and being friendly with startups.” Other organizations are expected to join the MLS club in the fund, with perhaps 12 partners in total.
The move into VC is part of FC Cincinnati’s design to be a “best-in-class organization driving positive disruption in the sport,” Berding said. “It gives FC Cincinnati very unique access to cutting edge sports and health tech startups, to be able to integrate their technology across the organization, enhancing the experience for fans, our partners, our community.
“We’ll be able to work closely with the startups to enable them to test things in the market, get real-time feedback and really find what works to take their business to the next level.”
Berding says it supports his organization’s target of being considered one of the best-in-class sports groups overall by 2031. What does that mean? He points to examples in other leagues, from the Cleveland Cavaliers’ great reputation for data and analytics operations, to the 49ers’ own VC efforts, to the success of the Dallas Cowboys and New York Yankees both on the field and as partners in Legends. Separately from the Lead investment, FC Cincinnati is taking a page from all those examples and building out its own recently formed consulting, events and business development arm, Lion’s Ventures Powered by FC Cincinnati.
“I’m not trying to copy [those organizations], but the concept is the same and we’re making it work for FC Cincinnati, in this market,” Berding said. Lion’s Ventures is ambitious, encompassing long-term plans to build Atlanta Battery-like mixed use real estate north of the club’s three-year old TQL Stadium and foster sports tech innovation. It also lends its expertise to other groups seeking to boost fan engagement, build brands and create and operate things like sports tournaments and other events. The group recently worked with country star Kenny Chesney, for example. “It all speaks to the talent and capabilities that we have and our growth mindset,” Berding added.
With Lead One, the club’s capabilities are probably more important than they would be in later-stage venture capital funds, where businesses and ideas are more fully developed. Pre-seed VC funding means it’s the first money a business is raising, usually with no revenue to point to, meaning largely all investors have to go on is their evaluation of the founders and their business idea.
“We say source for quantity, filter for quality,” Driscoll said. FC Cincinnati’s participation will feed into both sides, by suggesting areas of need the fund can explore and also vetting ideas in a back and forth flow of ideas. There is a “value exchange—we become smarter investors, find the knowledge they share, and then we then share the things we’re seeing, the access to innovation, back to the partner.”
The total Lead One annual capital spending of $1 million across 10 investments means there is relatively little risk of failure to an organization like FC Cincinnati, estimated to be worth $645 million by Sportico. Not that the club is worried.
“Making a mistake is a sign of growth,” Berding said. “We are trying to be the jet fuel that helps some of these startups bring their ideas to bear.”
