Even in the NFL, Ryan Nece has experienced a boom and bust cycle: “I’m the only person in the NFL that won a Super Bowl in his first year, and then went 0-16 in his last year,” he says with a laugh.
Next Play Capital
Super Bowl champion Ryan Nece remembers watching his fellow athletes throw their money away on bad tech investments a decade ago, like a $500,000 check a friend wrote to a Minnesota-based diaper delivery startup that had hardly generated revenue. “Seeing others put their money to work in things that had a low probability of success was frustrating and pretty pathetic, to say the least,” Nece says.
For the past eight years, he has been building out his firm Next Play Capital to help guide the investments of people who are not particularly tech-native. Nece, the cofounder and managing partner, announced Thursday that the Redwood City, California-based firm had raised $200 million for its third fund, which pools together the money of professional athletes, entertainers and non-tech executives to and invests it mostly into top tier venture capital funds. The new vehicle is more than double the size of Next Play’s $80 million Fund II that was announced in 2017.
Nece, who played linebacker at UCLA then spent seven seasons until 2008 in the NFL playing for the Tampa Bay Buccaneers and Detroit Lions (who went 0-16 Nece’s last season), still likes to think about venture capital in terms of football. Hundreds of colleges have Division I programs, yet the same few teams like Alabama and Ohio State make it to the championship game every year. “It’s the same thing in venture,” Nece says. “The reality is that the men and women who are elite are in a whole other category. They have an unfair advantage.”
Peers, like the athlete who invested in the Midwestern diaper delivery service, were drawn to the lucrative performance of venture capital overall. “The asset class generates some of the best returns, but the caveat is: if you can be with the best funds and in the best companies,” Nece says. Next Play Capital’s portfolio includes 34 venture capital firms, including Accel, Greylock and First Round Capital, as well as a small number of startups. The firm’s average initial check size into a VC fund is around $5 million, Nece added, and it has begun to see returns on its earlier investments—about $300 million of its $425 million in assets under management come from the VC fund side.
Those blue chip funds are typically difficult to access for nascent asset managers like Next Play. Even the most highly regarded institutions must walk a tightrope in maintaining their relationships with elite firms because the VCs have enough demand to pick and choose their backers. Accel, for example, blocked the Princeton University endowment’s access to its subsequent funds after the endowment opted to pass on putting money into its 2004 fund.
Nece says that Next Play has been able to make its way into top firms because of its investor network—not because it’s bankrolled by NFL superstars like Drew Brees and Patrick Mahomes. “No doubt we have the advantage that we can give people Super Bowl tickets and courtside seats, but we can also get you right to the CEO of FedEx,” he says. “I think we work really hard to help the VCs when they need it. Most people write the check, show up at the annual meeting and don’t make a lot of noise.”
The network has by now built up enough credibility, Nece claims, that the latest fund was “exponentially easier” to raise than its predecessor. Next Play added 11 new institutional backers including a municipal pension fund and three university endowments as investors into the fund, and shot well past its initial $150 million goal. Despite the windfall, Next Play’s next play won’t look much different than its last. Nece says he expects the size of the portfolio to stay about the same—if he adds any new funds, they’ll likely come as replacements to existing poor performers. And much like with the process of raising funds, Nece expects it won’t be as difficult to find the VCs to take the money.
“The halo effect of athletes, CEOs and corporations is differentiated and it’s diverse,” he says, pointing out that minorities make up the majority of Next Play’s investment base. “People want to be around other individuals that have achieved a level of excellence so that they too can learn from them.”
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