Sports performance data startup Fusion Sport, which counts AFL premiership winners the West Coast Eagles among its client base, has raised $3 million in its first-ever round of funding since it was founded 15 years ago.
The raise was led by Equity Venture Partners, and also includes Adrian Di Marco, founder of ASX-listed TechnologyOne.
Co-founder Dr Markus Deutsch tells StartupSmart the Fusion Sport platform collates data on an athlete’s activity, providing dashboards and analytics to “bring meaning to the data” and give coaches an insight into what they can do to maximise performance.
Founded in 2003 by Deutsch and mathematician Dr Douglas Moore, this startup has taken an unusual road to its first bout of VC funding.
It initially produced measurement devices for tracking the speed of athletes, but Deutsch “realised there was going to be a pretty big explosion in data and the sports space”, he says.
Data-generating technologies would be easy to replace, “the key marker would be where the data ends up, not where the data is generated”, he adds.
This was an observation that paid off. This year, the startup will be “nudging towards $10 million” in revenue, Deutsch says.
Perhaps even more importantly, the startup counts AFL premiership winners the West Coast Eagles among its earliest adopters.
And, while Deutsch is reluctant to take credit for the team’s stellar 2018 season, he does say the way in which the team used the software “is certainly a big part of why they won”.
The team is “one of the best in the world in terms of using data”, he adds.
“They have a really integrated approach through the coaching department.”
Fusion Sport is just part of a professional team’s toolkit, Deutsch says, as they use a lot of different technologies and techniques.
“How you use that data and integration and make changes, comes down to their knowledge and experience.”
Now, the startup is working with about 200 organisations in 15 different countries, including a handful of NRL and AFL teams (the past three AFL Grand Final winners have been Fusion Sport clients), and the entire Australian Olympic team.
“We’re pretty dominant across Australian sport,” Deutsch says, estimating that 90% of Australia’s elite athletes are on the platform.
“The challenge now is to replicate that dominance overseas.”
We’ve done it the hard way
This funding will be used to do just that. Although some is pegged for research and development, for the most part, the funding will fuel overseas growth.
The startup already has offices in the UK and the US, with five or six staff in each, but “we’re now going to double those teams”, Deutsch says.
Deutsch himself is relocating to the Chicago office to oversee growth there, with a plan to “proactively impact the market”, he says.
“All of our business to date has come to us through referrals and word-of-mouth,” he says.
While previously the startup has been focused on research, development and “building the capability to really do it properly”, Deutsch is now bringing on sales and marketing staff to target the huge college sports and military markets in the US.
But, when it comes to the timing of the raise, there’s a little more to it than that. Fusion Sports has been on an unlikely journey en route to its first raise.
Up until 2008, the startup had been entirely bootstrapped.
“We wanted to get big enough so that we could raise money without losing control of the company,” Deutsch says.
In order to get some stability, the founders merged the startup into another company.
“That turned out not to be a good move … we were in a situation where Fusion was going really well and the other company was doing poorly,” Deutsch says.
“We couldn’t approach investors,” he adds.
Finally, about two years ago, a restructuring of the merged business meant “we managed to skim Fusion out of it”, effectively un-merging, Deutsch says.
Straight away, the founders started to think about fundraising.
“We’ve done it the hard way, and we will be very frugal with this money — very careful with how we spend it,” he says.
“We’ve already made a lot of the mistakes startups make, and learnt a lot of the lessons,” he adds.
With those experiences in mind, Deutsch stresses the importance of good governance in startups.
“When we started, we had a board meeting once a year to tick a box,” he says.
“I didn’t appreciate the importance of all that stuff until it went wrong … when I’d made serious governance mistakes, by then it was too late,” he adds.
Deutsch advises startups to “upskill in that area as soon as you can”.
He also warns startups it’s easy to have ideas, and even to develop products, but what’s difficult is the selling.
“A lot of people underestimate that,” he says.
In the early stages, startup founders are often told they’re going to make tonnes of money and be incredibly successful, but “then the reality of the commercial world hits”, he adds.
“Most businesses take five to 10 years to even become possible.”
Deutsch has one, final, simple piece of advice, and that’s to “get a good accountant”.
They shouldn’t let an accountant “run their business”, but they should prioritise good accounting and good accounting principles.
“Otherwise, you can run aground unexpectedly,” he says.