League One Volleyball (LOVB, pronounced “love”), a company that operates a network of youth volleyball clubs and is launching a professional indoor women’s league after the 2024 Paris Olympics, recently raised $16.75 million in Series A funding. Verance Capital, along with David Blitzer’s Bolt Ventures, ex-Carlyle investor group VetOne and Alex Cohen’s multi-family office Heights LLC led the round. High-profile investors Billie Jean King and Kevin Durant, along with veteran sports investor Elysian Park Ventures, also participated.
The investor collective is confident in LOVB’s ability to build a sustainable, U.S.-based, full-season, pro volleyball league. Volleyball is the top high school sport in the country by participation, and more than 16,000 fans recently attended a collegiate matchup in Madison, Wis. “There is a nice tailwind around women’s sports generally [and] volleyball in particular,” Lyle Ayes (CEO, Verance Capital) said. Ayes is also vice chairman of both the NWSL’s Houston Dash and MLS’ Houston Dynamo.
This challenger league opportunity is “unique and differentiated” because of the network of youth clubs; they are cash flow-producing and can serve as a financing vehicle for it in the early years. “Other startup leagues that don’t see traction soon enough are faced with having to raise additional rounds of funding and dilution to continue operating,” Ayes said. “In this case, the clubs can provide optionality on financing.”
Regardless of the pro league’s success, investors should have a revenue and profit-generating asset that can be sold and should bring a positive return on their capital.
JWS’ Take: Verance participated in an early financing round for LOVB in 2021, before co-leading this Series A, which shows the growth stage capital firm’s belief in the league. “We thought there was an opportunity for a youth sports rollup in girls’ volleyball, similar to what has been done in soccer and other sports,” Ayes said.
In fact, League One’s progress over the last two years has fortified the thesis. LOVB has signed 32 clubs across 17 states, and collectively, those clubs have nearly 100,000 members. Some of the newly raised capital will go towards growing the club and member count.
“[Company] revenue is scaling nicely, [and] the number of clubs that are part of the ecosystem is scaling nicely. League One Volleyball has become a brand that youth clubs want to be associated with,” Ayes said.
“There is no shortage of clubs out there that are subscale and would benefit from being part of a larger organization like League One Volleyball. We think there is an opportunity over the next 12 months to more than double the footprint.”
Investment dollars will also go towards growing the clubs (think: more courts and programming, back-office tools and admin support), launching the Pro League and driving engagement and awareness of the LOVB brand via “content, media and merchandise offerings,” Katlyn Gao (CEO, League One Volleyball) said. The company expects to double its revenue in ’23.
League One Volleyball is not the only entity consolidating youth volleyball clubs at scale. 3Step, backed by Fiumi Capital (formerly Fertitta Capital) and Juggernaut Capital Partners, is taking a similar approach across a multitude of sports, including volleyball.
But LOVB’s efforts in building a unified grassroots-to-pro system within the sport is unique. “That tangible connection of belonging between the youth and the pro [league] is fundamental to our ecosystem approach,” Gao said.
A strategic acquirer could eventually swallow up League One Volleyball’s club business and give investors the returns they seek. However, if LOVB continues on its current trajectory and successfully executes on its consolidation strategy, the company’s cash-flow profile and revenue could also become attractive to PE firms.
League One has a successful club business. So why there is a desire to add professional league that carries a higher risk profile? The thesis is that the pro league will be symbiotic with the youth sports focus.
“Clubs are excited to be a part of the LOVB rollup because they like the halo effect of a coming professional women’s league,” Ayes said. “It’s better to acquire clubs when you’re not just competing on dollars but competing on brand.”
The established club volleyball business can help fund the pro league’s launch. While most startup pro leagues are reliant on external equity and/or debt capital to sustain themselves early on, LOVB will have the optionality to lean on the operating cash flow generated from the club network to finance and enhance its league until it reaches profitability.
While that mitigates the risk around the launch of the professional platform, the hope is the league can quickly stand on its own. LOVB Pro intends to generate revenues via sponsorship sales, the licensing of media rights and perhaps the sale of franchises down the road.
The junior clubs will also give LOVB Pro a “vibrant group of engaged fans and consumers of the sport as well as the infrastructure and homes for the pro teams,” Gao said. The network of youth clubs should provide a talent pipeline and expanded professional opportunities for the pro players, too.
Standing up a U.S.-based women’s professional volleyball league is no easy task. But Ayes argues the case for it to be successful is similar to the underwriting on U.S. men’s and women’s soccer investments. “There is a massive bottom of the pyramid of youth participation and a massive tailwind of global demand for the sport.”
League One is not the only entity with the vision; Athletes Unlimited also has a professional women’s volleyball league. But the two are not necessarily competing with one another. AU’s short-season format could potentially complement LOVB’s more traditional league schedule. “There are probably ways that the two organizations can work together,” Ayes said.