Companies founded by women received less than 2% of venture capital funding in 2022—a decline from the year before. However, when women-led startups are funded, research has shown that they generate more in cumulative returns, compared to those led by men. A new VC fund aims to take this lesson to women’s sports.

On Monday, venture capitalists Kara Nortman and Jasmine Robinson announced the close of a $100 million fund, the Monarch Collective, with a mission to “accelerate equity in global sport.” Nortman is a former partner at the Los Angeles-based venture capital firm Upfront Ventures. Robinson was a partner at Causeway, a fund focused on sports, media, and entertainment.

The Monarch Collective, founded in January, will focus on investing in women’s teams and leagues, along with adjacent industries, such as media and gaming. The duo say they are initially considering investments in women’s soccer teams in the U.S., and in women’s teams and leagues in sports such as basketball, cycling, and rugby internationally.

Last spring, Nortman cofounded Angel City FC, the Los Angeles-based National Women’s Soccer League team—and the first majority female-owned professional sports franchise in the U.S. According to Nortman, professional women’s sports—which are just starting to break through on television, with sponsors, and among fans—present an opportunity for large returns. Nortman calls it “an arbitrage on sexism.”

“There’s an opportunity to get in at what should be historically low valuations in teams and leagues, that are at the beginning of a media rights cycle—which is a very well understood revenue stream,” Nortman says. “So, if you’re disciplined, if you have the right fund size, if you’re showing up and actually doing work, you can get venture-like returns with very low risk.”

Monarch Collective’s advisors include sports industry leaders such as Paraag Marathe, president of 49ers Enterprises, the VC arm of the San Francisco 49ers; Becca Roux, executive director of the U.S. Women’s National Team Players’ Association, for soccer; and DeMaurice Fitzgerald Smith, executive director of the National Football League Players’ Association. Several influential tech executives have also signed on as advisors including Lydia Jett, managing partner at SoftBank; Laela Sturdy, managing partner at CapitalG; and Ashley Still, senior vice president at Adobe. The fund’s investors includes tennis star Billie Jean King and Sarah Harden, CEO of Hello Sunshine.

Nortman, who rowed crew for four years at Princeton University, says she was inspired to start investing in women’s sports as a result of her experience analyzing potential industries prime for growth.

“I went to the 2015 Women’s World Cup finals in Vancouver with my girls and my husband. That’s what activated me as a consumer and, ultimately, as a founder and now investor,” she says. “After the game, I literally couldn’t find a jersey to buy, and I couldn’t find content to watch.” She likens the experience to enjoying, and even paying for, a 90-minute Budweiser commercial, but not being able to buy any Budweiser afterward.

“You have a billion people watching something,” says Nortman, referencing the more than 1.2 billion viewers who watched the most recent Women’s World Cup tournament. “And they have nowhere to go. So, you really have no idea how big the market is, or could be.”

LEVELING THE PLAYING FIELD

The emergence of a fund like the Monarch Collective marks the next big step in the evolution of women’s sports. The past century has been marked by moments of progress: the 1900 Olympic Games, which included women for the first time; the 1972 passage of Title IX, which required federally funded institutions to financially support women’s and men’s sports equally; and the 2019 Women’s FIFA World Cup, which drew 1.2 billion viewers making it the most-watched women’s sporting event of all time.

When the U.S. Women’s National Soccer Team won the 2019 World Cup, the stadium of 57,900 fans chanted for the players to receive the same pay as the men’s team. The high-profile victory on the pitch launched a string of highly publicized legal proceedings, inspired support from lawmakers, and eventually led to the signing of equal pay agreements between the U.S. men’s and women’s teams last September.

Most recently, there has been an influx of investment in women’s sports including from venture capital funds, video game companies, advertisers, governments, and celebrities. Many say that investing in women’s sports can offer high returns, while advancing gender equity.

Danette Leighton, CEO of the Women’s Sports Foundation, a nonprofit dedicated to increasing women’s involvement in sports, says her organization has noticed a “growing groundswell of investment” in women’s sports that she hopes will “pave a path to progress for more sponsorship dollars, media coverage, and pay equity, for women both on and off the field of play—in the front office, the boardroom, and beyond.” Indeed, a 2018 study by Ernst & Young found that 94% of women who hold C-suite positions are former athletes.

CONTENT AND SPONSORSHIPS

For Robinson, who previously served as the manager of investments and business operations for the San Francisco 49ers, as well as a partner at Causeway, content and distribution are the keys to success for professional sports.

Robinson’s father played in the NFL, and she says she’s long studied what made the NFL take off and grow in the way that it did. “To me, it was [because of] their content distribution dynamics, and TVs becoming really prevalent across American households, as well as how the NFL captured the cultural moment,” she says.

Today, it’s women’s sports that are capturing the public conversation. “These cultural moments, combined with new media and content distribution opportunities,” she says, “create this unique moment where women’s sports can scale and grow.”

Sports content distribution powerhouses such as ESPN have seen a dramatic increase in investment in advertising during women’s sports. In 2020, Ally Financial announced a five-year “50/50 Pledge,” vowing to reach parity across its paid media spending in men’s and women’s sports. Ally followed up this March by announcing a multimillion-dollar ad buy with Disney that requires 90% of its investment to be put to women’s sports, through expanding game highlights, branded content, and features across ESPN.

“For too long, women’s sports programming has been treated as an afterthought in the media buying process,” says Andrea Brimmer, Ally’s chief marketing and public relations officer. That doesn’t just limit exposure for athletes; it also makes it harder for teams to land lucrative brand sponsors. Ally wants to change that dynamic: “Every dollar invested in women’s sports helps our brand grow alongside it,” Brimmer says.

Last year, Google announced a multi-year partnership with sports website The Athletic to double the amount of women’s sports coverage. Overall, women’s professional sports sponsorships grew 20% in 2022.

OpenSponsorship, a digital marketplace that connects brands with athletes—and whose investors include NBA team owners and Serena Williams—has facilitated more than 14,000 deals since launching in 2015 for brands such as Walmart, Footlocker, and Fanduel. Roughly 5,000 of these brand deals, worth a collective $6 million, have gone to women athletes. The platform currently has more than 16,000 athletes, including approximately 3,500 female athletes who play 125 sports across more than 65 countries.

The growth in women’s sports sponsorships comes from brands wanting to market to women and to align with the messaging of women’s sports, says Ishveen Jolly, founder and CEO of OpenSponsorship. She adds that sponsorships with women athletes as individuals, as well as their teams, can be relatively affordable and be distributed to large audiences across social media.

“Back in the day, if you were sponsoring an athlete, you would have to do TV commercials and buy billboards and radio ads,” says Jolly, explaining that this led to brands primarily partnering with the most famous, often male, athletes. “Now brands have realized ‘Hey, if you’re a female athlete with 100,000 followers, you have value. And we can just pay you directly and I don’t need media buys and production, all of these extra costs.’”

THE RETURN ON INVESTMENT

Even if women’s sports don’t quite reach the size of men’s in the near future, investors see a period of immense growth ahead, with broadcasters and brands embracing athletes and teams alike.

This dynamic amounts to “the highest ROI opportunity in the sports ecosystem,” says Robinson. “You’re buying into a market size that I would say is heavily depressed . . . [women’s sport] make up less than a 10th of a percent of the size of the men’s sports ecosystem, in terms of the revenue generated. So, even if you believe women’s sports is going to become just 1% of the overall sports market, that’s 10x market size growth.”

“There is tremendous value in women’s leagues, teams, and athletes,that can positively impact the bottom line,” says Leighton of the Women’s Sports Foundation. “It’s high time for women’s sports investments to shift from being a ‘trend’ to being standard practice—that’s just smart business, period.”