30 experts contribute
to the due diligence of
Dutch Sport Tech Fund

Due diligence is the review that investors conduct before deciding to partner with a company. At Dutch Sport Tech Fund, more than thirty experts are involved in this process, ensuring that risks are thoroughly covered. This is explained by Alexander Janssen (CEO of Dutch Sport Tech Fund) and Ardin Dekker (member of the Innovation Committee of the fund) in this interview. “Our ecosystem is a USP that enables us to scout effectively and help startups grow further.”

Janssen: “A startup seeking investment only highlights the positive aspects of the company. Before I joined Dutch Sport Tech Fund, I was involved in more than forty M&A transactions, and in every case, issues came to light during due diligence that impacted the further course of the acquisition process. That’s why thorough due diligence is important, as it minimizes risk.”

For an investment company like Dutch Sport Tech Fund, due diligence is even more important, since it involves working with other people’s money (investors). “Moreover, we deal with young companies, startups, and scale-ups that have little historical data and have only incurred (initial) losses. This means there is a greater risk (but also greater potential) in these investments,” says Janssen. That is also why Dutch Sport Tech Fund goes a step further in due diligence and also conducts a technical analysis.

Ardin Dekker, one of the younger members of the Innovation Committee, can tell us more about this. He has a background in fintech and private equity, which has involved him in more M&A transactions. Dekker: “At many funds, a few people work full-time scouting new companies, which are then presented to the board. At Dutch Sport Tech Fund, it works the other way around: the board does a quick scan of companies and then presents them to the Innovation Committee and Investment Committee.”

That brings us to the two committees involved in assessing potential investments: the Innovation Committee and the Investment Committee. Dekker: “Once the board has conducted a quick scan, the Innovation Committee is the first to take action.” 

1. Employees and team members under scrutiny: what is their background, work experience, education, and track record?
2. How has the company structured its sales and marketing? Are there areas for improvement?
3. The business model: is there a product-market fit?
4. A technical assessment is conducted to determine whether the product is stable and truly innovative.
5. The scalability of the company. In other words: can it be launched in other countries or markets, and could the company offer multiple products?

For each investment, we look at the expertise of the people in the committees and assemble a committee for each new company, after which we start the due diligence process.

Janssen explains that two parts of the Innovation Committee’s assessment have been standardized:

“We conduct a so-called coding review, which gives us a look under the hood. When we took a stake in Scala Sports, the company was about to close a deal with the American tennis association. This would increase the number of users from tens of thousands to millions. Thanks to the coding review, we were able to investigate whether Scala Sports’ software could handle this.”

The HR assessment is also of great importance. “We are investing a large sum in a small leadership team. That’s why it’s important to discover in time whether the entrepreneurs can grow the company internationally.”

Next, the Investment Committee takes the lead for a financial and legal review. This includes a classic due diligence, carried out by senior accountants. Janssen: “In this phase, we mainly perform a quality check on the financial systems and the legal structure of the company. We also want to validate the robustness of financial forecasts. We have a number of very experienced accountants within our group of investors, and they can pinpoint any potential issues in no time.”

The network of investors does not consist solely of experienced accountants; on the contrary, Dutch Sport Tech Fund has a broad and diverse network of investors. “Of the approximately 150 investors, around 30 are members of the Innovation Committee and Investment Committee because they possess specific skills that are useful during due diligence investigations. In that respect, the ecosystem of experts is a unique selling point (USP).

We benefit from the expertise of specialists in the fields of gaming, esports, finance, entrepreneurship, elite sports, coaching, marketing, product development, media, AI, data, and more. As co-investors, they have a significant interest in the proper oversight of investments.”

Dekker notes that it is precisely the combination of different perspectives that adds value. “A top athlete can accurately assess the value of a particular product, as they might wonder why something like this wasn’t invented earlier. Would he or she have benefited from this application during their sports career? Of course, that alone doesn’t make a company successful: it also needs to have its legal and financial affairs in order. Sometimes, different experts disagree. A product may be well designed, but not meet the needs of the market. In such cases, the combination of market knowledge, entrepreneurship, and product expertise is extremely valuable.”

Janssen shares two concrete examples of investments where the expertise of specialists proved indispensable. “Horizm came up with a solution for a market that essentially didn’t exist yet. That’s why, around this investment, it was important to understand how sponsorship works in the football market. We are very pleased with the knowledge in this area of Marco de Ruiter, CEO of Walt Disney in the Netherlands, the parent company of ESPN. He asked the right questions and gave the green light for this investment, which gave us confidence. Another expert in the field of marketing noted that Horizm was disruptive and had a lot of potential. That turned out to be true: it didn’t take long before major football clubs like Chelsea and Real Madrid partnered with Horizm.”

For tennis and padel app Scala Sports, the fund relied on the expertise of Robert Rutten, an elite tennis player active on the senior circuit and a successful entrepreneur. “His knowledge was not only useful during due diligence; he is now still involved with Scala Sports as a board member. In this way, a portfolio company continues to benefit from the fund’s expertise. Our ecosystem is a USP that enables us to scout effectively and help startups grow further.”