LA-based entrepreneur Brian Lee, who previously co-founded and ran The Honest Company, ShoeDazzle.com and LegalZoom, has launched a new sports card collection platform that is likely to make a big splash, especially since his co-founder in this endeavor is Baseball 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 launches today with a somewhat unique approach and support digitally to help collectors sell, store and verify their sports trading cards.
First, what it is is not an NFT game (surprisingly), although you could see a future where digitally traded cards are on the table, so to speak. Instead, the pair are looking to bridge the physical and digital worlds of the sports collection by creating online galleries where users on the platform can buy, sell, trade. and display their cards, while the physical cards are locked in a “modern” vault controlled by the company, called Arena Club.
If a collector wants their card closed once they’ve been authenticated by Arena Club, the startup sends the card back in the protected “slate,” it said. This brings us to another aspect of the business. According to the outfit, it will provide users with a faster and more transparent validation and scoring process through computer vision and machine learning. (They’ve also brought on mentoring a big name in AI: Jia Li, AI Researcher at Stanford and formerly 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 each card classified on the platform, it will issue a transparent classification report to collectors explaining in detail the reason for the score.
About how Arena Club makes money, Sports Collectors Daily Note the new outfit has a few tags on its sleeve (sorry). It charges $25 for rating, vault, and card listings for sale on the site, or $35 for card ratings and returns. Additionally, Arena Club plans to charge a 5% fee to merchants based on the cash value of each transaction.
Lee and Jeter are chasing a large and growing market that has been pushed into overdrive during the pandemic, as people are stuck at home and looking to spend some of the money accumulated in their bank accounts. Emphasizing that growth somewhat, Topps, the maker of the most iconic card, was acquired by licensed sportswear and merchandise giant Fanatics for $500 million in January. (Topps had actually planned to list shares through a blank check company last year, but the deal disbanded when Topps shortly after losing his 70-year trading card contract with MLB to Fanatics.)
The growing excitement around sports cards can be followed by looking at Jeter’s own cards, which have been sold for ever-increasing amounts of money. In 2018, a Derek Jeter rookie card 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 another record, selling for $180,000. Again last year, a record was said to have been broken when a Derek Jeter rookie card in mint condition sold for a staggering price. $690,000.
There’s been a lot of ups and downs in sports card trading that have caused the space to get crowded, which could prove challenging for Arena Club, as well as the fact that some cards are dropping in price. (According to a report Last month at The Athletic, the premium collection in particular remained strong while other segments were struggling.)
While Lee is well known among investors and founders, Jeter is also becoming more famous outside of the baseball field. In 2014, the year he hung up his boots, he co-founded The Players Tribune, an athlete-oriented website. buying by Minute Media in 2019. He’s also invested heavily since retiring from baseball, including investing in video conferencing company Blue Jean Networks.
However, he has yet to use both accounts to promote Arena Club. Tech investors and founders will know he’s completely outclassed Rubicon when he does.