Los Angeles-based entrepreneur Brian Lee, who previously co-founded and ran The Honest Company, ShoeDazzle.com and LegalZoom, is launching a new sports card collecting platform that’s likely to cause a stir, not least because his co-founder in the venture 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 team launched today with a somewhat unique and digitally enabled approach to helping collectors sell, store and verify their sports trading cards.
First, what it isn’t is an NFT game (shocker), although you could see a future where digital trading cards are on the table, so to speak. Instead, the two aim to bridge the physical and digital worlds of sports collecting by creating online showrooms where users of the platform can buy, sell, trade and display their cards, while the physical cards are locked away in a “state-of-the-art” controlled vault. from the company it is called Club Arena.
If a collector wants their cards on hand after they’ve been authenticated by Arena Club, the startup will ship the cards back in protective “plates,” it said. Which brings us to another aspect of the business. According to the team, it will provide users with a faster and more transparent authentication and scoring process through computer vision and machine learning. (They also brought on a big name in AI as an advisor: Jia Li, a Stanford AI fellow and former 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 graded on the platform, it will issue a transparent collector ranking report that explains the rationale for the grade in detail.
As for how Arena Club will make money, Sports Collectors Daily notes the new outfit has a few cards up its sleeve (sorry). It charges a fee of $25 to rank, store and list cards for sale on the site, or $35 to rank a card and return it. In addition, Arena Club plans to charge a 5% seller fee based on the monetary value of each transaction.
Lee and Jeter are chasing a large and growing market that exploded during the pandemic, when people were trapped at home and wanted to spend some of the money sitting in their bank accounts. Underscoring some of that growth, Topps, the most iconic card maker, was purchased by licensed sports apparel and merchandise giant Fanatics for $500 million in January. (Topps actually planned to go public through a blank check company last year, but the deal fell apart when Topps soon after lost a 70-year trading card deal with MLB to Fanatics.)
It’s possible to trace the growing excitement around sports cards by looking at Jeter’s own cards, which have sold for ever-increasing fortunes. In 2018, a Derek Jeter rookie card was sold $99,100 — the highest price ever paid for a modern baseball card at the time. In 2020, another rookie card of his set a new record, selling for $180,000. Last year, another record was broken when a mint condition Derek Jeter rookie card sold for an astonishing price $690,000.
There has been so much froth in the sports card trade that the space has become crowded, which could be a challenge for Arena Club, as well as the fact that some cards are falling in price. (According to a report last month in The Athletic, high-end collectibles remain steady while other segments struggle.)
While Lee is well-known in investor and founder circles, Jeter is also becoming an increasingly well-known figure outside the baseball field. In 2014, the year he hung up his hangers, he co-founded The Players Tribune, a sports website that was acquired by Minute Media in 2019. He was briefly a part owner in the Miami Marlins baseball team, which he led as CEO until February. Jeter has also made numerous startup investments since retiring from baseball, including an investment in video conferencing company Blue Jean Networks.
However, he has yet to use either account to promote Arena Club. Tech investors and founders will know he’s completely crossed the Rubicon when he does.