Next Play Capital (NPC) managing partner Ryan Nece spent seven seasons in the NFL, even winning the Super Bowl in 2003 with the Tampa Bay Buccaneers. During that time he saw friends and teammates invest countless dollars into ventures that had a low probability of success. “You can understand the types of high-risk early-stage deals that were being shared in the locker room,” he said sarcastically in a recent phone conversation.
Nece now spends his days trying to help current and former pro athletes seeking venture exposure to “get into the asset class and do it in the most appropriate way with the best managers.” NPC, his fund of funds, offers LPs diversified access to “world-class” venture fund managers and venture-backed investment opportunities.
The firm’s commitment to education—which includes a fellowship program, externships in partnership with various pro leagues and the incubation of a coaching and training focused platform called NextPlayU.org—further empowers underrepresented LPs to make smart investment decisions.
NPC recently closed on its third core fund, and fifth overall, at $200 million. The oversubscribed Fund III includes 11 new institutional LPs and is 2.5 times larger than Fund II.
JWS’ Take: Professional athletes who have acquired enough wealth to participate in alternative asset classes will find no shortage of firms eager to take their capital. But Nece explained that there is a “massive chasm” between the top quartile or decile fund managers and everyone else. He estimated that 80-90% of all venture returns are generated by 10% of fund managers.
One might assume it would be easy for millionaire pro athletes to invest with elite fund managers, but that is not the case. The average pro athlete, who may not even have the liquidity to meet the fund’s minimum investment requirements, never has a shot. “Getting access into these funds is extremely difficult for the most sophisticated investors in the world,” Nece said.
NPC exists to change that dynamic. The venture firm was founded in 2014 with a simple mission: to give “our community a seat at the table to invest, work, engage and build relationships with the very best managers and companies,” Nece said.
Today, NPC counts more than 150 current and former pro athletes as investors, and about 75% of those individuals are African American.
Club owners, prominent family offices and larger financial institutions are invested with NPC, because they too are looking for access to the elite managers and opportunities. “Next Play is the cornerstone of our venture allocation strategy,” Noam Abrams (managing director, Vinik Family Office) said. “Not only do they provide access to best-in-class managers and co-investments, they differentiate themselves with some of the best educational programming and industry events we’ve seen. They have a strong team, with solid values we believe in.”
Getting into the top funds is difficult for those investors because there simply is not much room for new money. Early-stage venture funds tend to be small relative to other asset classes—often less than $500 million—and the best managers have long-established LP bases that invest in their funds repeatedly.
Prospective LPs also struggle to get in because their capital is commoditized. As Nece pointed out, there is typically little difference in the value one pension fund can bring to a GP versus another.
As a minority-owned, minority-backed business (the majority of its investors are minorities), NPC stands out amongst LPs. The firm is also able to offer GPs the “halo effect” of its “one-of-one” community, Nece said.
The concept of creating a firm capable of giving professional athletes access to the venture class is not novel. In fact, Nece’s father, NFL Hall of Fame safety Ronnie Lott, co-founded Champion Ventures with a similar premise in the late 90s with partners Harris Barton and Joe Montana, both former San Francisco 49ers teammates. That firm, which later became HRJ Capital, was unable to meet its financial obligations in 2008, and was bought by the Swiss equity group Capital Dynamics in 2009.
NPC now has $425 million under management across its funds, and 70% of the capital has been allocated to 34 outside fund managers investing across a diversified set of stages and sectors. The bulk is focused on “early-stage, pre-seed, seed, series A,” Nece said. “We have a few early growth managers.”
NPC has exposure to every sector, save oil & gas, through those investments. Accel, Andreessen Horowitz, Bessemer Venture Partners, Cowboy Ventures, Felicis Ventures, First Round Capital, Greylock, Lightspeed Venture Partners and Union Square Ventures are among the well-respected GPs NPC has entrusted with its capital.
The other 30% of the capital is allocated to direct investment opportunities. NPC has invested in 54 companies across tech, health & wellness, logistics, cyber security and human optimization. ByteDance, Peloton, Tonal, Impossible Foods, Flexport, Nightfall AI, Rubrik and Guild Education are among the companies in its portfolio.
NPC strives to be a good steward of capital and generate outsized returns. Compliance regulations kept Nece from discussing the firm’s historical performance, but he said his firm benchmarks itself against direct funds and strives to be in the upper quartile amongst them.
However, its value proposition to LPs extends beyond access and returns. NPC has an educational curriculum designed to empower under-represented investors and ensure they have “the ability to compare and contrast and make good decisions,” Nece said.
NPC also facilitates meaningful connections between LPs and industry leaders within its “huddle.” Nece said the goal is to help LPs discern with whom to work and/or partner with.
There are plans to launch an Emerging Leaders Fund in the months ahead. “This strategy will be supported by [other] LPs interested in supporting diverse managers and companies,” Nece said.