RX3 Featured on Sports Business Journal
“Back in March, Southern California’s Mission Viejo welcomed a star-studded lineup of current and former NFL quarterbacks including Aaron Rodgers, Josh Allen and Bryce Young, among others. They’d come together to participate in the third annual charity flag football tournament organized by RX3 Growth Partners, the private equity firm Rodgers co-founded with Nate Raabe and Byron Roth in 2019 that has pooled athlete capital for larger-scale PE deals.
The presence of so many bold-faced names helped the event raise a total of $3 million and highlight a core piece of the firm’s strategy.
‘There’s a really strong relationship and connection among the NFL [players] in general,’ said Raabe, a managing partner. ‘It was cool to see that, and I think that’s why we were able to raise as much money as we were in a short period of time.’
This week RX3 reaches the one-year anniversary of the launch of its oversubscribed $150 million second fund (the firm had initially targeted a $120 million raise). The large roster of celebrity investors includes Jared Goff, Allen, legendary swimmer Michael Phelps, actor Miles Teller and musician Machine Gun Kelly, among others. RX3’s core underlying thesis is that those investors’ celebrity provides additional value to portfolio companies, and by pooling their capital, RX3 is able to enter larger-scale deals that athletes don’t typically have access to.
RX3’s $50 million debut fund was deployed across 19 investments; the first five exits generated a 60% internal rate of return. The second fund has been slow to deploy capital, which Raabe says is due to turbulent macro conditions over the last year, such as high interest rates and gaps in valuations. The fund has thus far deployed around 10% of its capital across three investments. All of those deals happened earlier this year — RX3 joined a $30 million funding round led by Anthos Capital for video game studio Mountaintop in January, and did the same two months later for L Catterton-led investment in adventure vehicle maker Storyteller Overland and TAXA Outdoors.
RX3 partner Andrew Costa noted the firm did diligence on around 600 companies last year. ‘That’s not to say those won’t be investments down the road,’ Costa said. ‘The biggest thing is that most of these brands have been 22, 24 months without capital and had to make some difficult cuts to get profitable and really hone that revenue engine. As they’re coming back to market now … we’re seeing much more optimized companies.’
Raabe said the firm’s near-term priority will be pursuing liquidity events for RX3’s first fund, which has a stake in Therabody, among others, and further deploying the second fund’s capital. ‘We have four or five [companies] that we’re in deeper diligence on now,’ Raabe said. ‘We expect the rest of this year and 2025 will be a lot more active.’”