LA-based entrepreneur Brian Lee, who previously co-founded The Honest Company, ShoeDazzle.com, and LegalZoom, has launched a new sports card collection platform that’s likely to make a splash, not least because its co-founder baseball is. Hall of Famer Derek Jeter.
Backed by $9 million in funding from Lightspeed Venture Partners, Defy.vc and BAM Ventures (also co-founded by Lee), the outfit launched today with a somewhat unique and digitally-enabled approach to help collectors sell, store and verify of their sports trading cards.
First off, what it isn’t is an NFT game (shocking), although you could see a future where digital trading cards are basically on the table. Instead, the pair aims to bridge the physical and digital worlds of sports collecting by creating online showrooms where users can buy, sell, trade and display their cards on the platform, while the physical cards are locked in a “state of the art.” art” safe controlled by the company, which is called Arena Club.
If a collector wants their cards on hand after they’ve been verified by Arena Club, the startup will return the cards in protective “plates,” it says. That brings us to another facet of the company. According to the outfit, it will provide users with a faster and more transparent authentication and assessment process through computer vision and machine learning. (They have also spawned a big name in AI as a consultant: Jia Li, an AI Fellow at Stanford and previously head of R&D at Google Cloud, head of research at Snap, and head of visual computing at Yahoo! Labs.)
According to Arena Club, for every card rated on the platform, it will release a transparent rating report to collectors explaining in detail a justification for the rating.
As for how Arena Club is going to make money, Sports Collectors Daily notes the new outfit has a few cards up its sleeve (sorry). You will be charged $25 to rate, vault and list cards for sale on the site, or $35 to rate and return a card. In addition, Arena Club plans to charge a 5% fee to the seller based on the cash value of each transaction.
Lee and Jeter are chasing a large and growing market that has gone into overdrive during the pandemic, as people were trapped in their homes and wanted to spend some of the money held in the bank accounts. To underline some of that growth, Topps, the most iconic card maker, was bought in January by licensed sportswear and merchandise giant Fanatics for $500 million. (Topps actually planned to go public last year through a blank check company, but the deal fell apart when Topps lost a 70-year trading card deal with MLB to Fanatics shortly after.)
It is possible to follow the growing excitement around sports cards by looking at cards from Jeter himself, which have sold for ever increasing fortunes. In 2018, a Derek Jeter rookie card was sold for $99,100 – the highest price ever paid for a modern baseball card at the time. In 2020, another of his rookie cards set a new record, selling for $180,000. Last year, another record was broken when a Derek Jeter rookie card in mint condition sold for an astonishing price. $690,000.
There has been so much foam in the sports card business that the space has become full, which could be challenging for Arena Club, as well as some cards dropping in price. (According to an report last month in The Athletic, high-end collecting in particular remains robust, while other segments struggle.)
While Lee is well known in investor and founding circles, Jeter is increasingly becoming a well-known amount outside of the ballpark as well. In 2014, the year he put up his cleats, he co-founded The Players Tribune, an athlete-powered website that acquired by Minute Media in 2019. For a time he co-owned the Miami Marlins baseball team, which he led as CEO until February. Jeter has also made numerous startup investments since he retired from baseball, including investments in the video conferencing company Blue Jean Networks.
However, he has not yet used either account to promote Arena Club. Tech investors and founders will know he’s completely crossed the Rubicon when he does.