Sharp Alpha Advisors closes oversubscribed $25m VC fund

Sharp Alpha Advisors has closed an oversubscribed $25m venture capital fund, Sharp Alpha Fund II, which will invest in early-stage sports, gaming, and entertainment businesses.

The VC firm has already invested in C15 Studio, the company behind Formula 1’s new streaming platform that has recently emerged from stealth mode, via Fund II.

The fund exceeded its $25m capital raise target and will now proceed to target investments ranging from $1m to $2m.

The firm, which is led by managing partner Lloyd Danzig, noted Fund II was backed by “public companies, US financial institutions, pro sports team owners, family offices, top venture capitalists, and funds of funds, among others.”

Sharp Alpha Advisors added it had increased the size of its deal team as a result of securing the capital.

Previous investments from the New York-based fund include lottery courier Jackpot.com, AI-focused supplier Future Anthem, and Almost Friday Media.

The launch of Fund II comes after the VC closed a $10m funding drive in October 2021.

Speaking to EGR North America ahead of the launch of the fund, Danzig explained his view of the current investment landscape, as well as how Sharp Alpha Advisors will funnel the new capital into opportunities.

EGR North America: Why does the fund target investments within that specific $1m to $2m range and what benefits does that give you as investors?

Lloyd Danzig (LD): Our portfolio construction strategy is designed to produce the greatest risk-adjusted returns for our limited partners. Writing $1m to $2m checks into seed stage companies with capital reserved to double down in later rounds allows us to hit the ownership targets that drive the underwriting model for this fund.

EGR North America: What type of companies most pique your interest in the current landscape?

LD: We look for exceptional entrepreneurs who are uniquely positioned to execute on their vision. Thematically, we focus across the competitive entertainment landscape. If it captures your attention and makes you lean forward in your chair, we want to be a part of it. Most of our investments sit at the intersection of sports, gaming, and entertainment. 

EGR North America: Do you have any timeline targets on when you as investors want an exit, or it a case of waiting for the right moment?

LD: We make early-stage investments in companies we want to hold to IPO and beyond. Ultimately, the decision to exit a position relies on many factors; we look for companies and management teams that we want to back for the long haul.

EGR North America: What was your proudest moment from the first fund and what lessons will you be taking into Fund II?

LD: I am most proud of the caliber of investors who backed us and the incredible founders we have been fortunate to work with. Heading into Fund II, we have become more focused than ever on the quality of the management teams we invest behind. We look for founders whose future earnings we’d want to own a stake in regardless of what business they are running.

EGR North America: As you mentioned in comments linked to the launch, why is right now “the most favorable period in the last 15 years” for investors?

LD: The pendulum has swung from the most founder-friendly capital raising environment ever in 2020 and 2021 to the most investor-friendly market since 2009 today. Newly launched companies are infused with profitability-minded DNA that is hard for ZIRP-era [zero interest rate policy] startups to retrofit after years of growth-at-all-costs mentalities.

Compared to recent years, we see opportunities to invest in companies with twice the likelihood of success at half the price. Strategic investors in other sectors experiencing secular growth tell us they are seeing the same.