As the trading card/sports collectible realm is experiencing a digital transformation, startups are sprouting to meet this demand. Los Angeles-based Arena Club is one of the newest entries in the field.
The company's goal is to bridge the gap between the physical and digital worlds of sports collecting, Brian Lee, co-founder and CEO told L.A. Inno.
Arena Club has taken all the elements that make card shows “special,” he said, and digitized them into a platform so aficionados all over the world can participate.
Collectors can buy, sell, trade and display their cards on the platform.
One of the co-founders is baseball hall-of-famer Derek Jeter, who spent his entire athletic career playing shortstop for the New York Yankees.
The sports trading card market was valued at close to $8 billion in 2021 and is projected to exceed $20 billion by 2030, growing at a compound annual growth rate of about 9% from 2023 to 2030.
Foundation
Arena Club officially launched in September. Jeter is a co-founder, along with Lee, who serves as CEO. Another co-founder, Jesse Glass, serves as CFO and COO.
All three share a love of sports, which brought them together to create the company.
“Sports provide a natural connection to cultural moments and current events, leading to social conversations about rookies, key players, broken records, statistics, etc.,” Lee said.
For his part, Jeter still has memories of being a kid, opening a fresh pack of baseball cards and dreaming of being on one of them one day, as a Yankee.
“To now be able to run a company with him, based on that shared passion in cards, is something that means a lot,” Lee told L.A. Inno. “It is an absolute dream come true to be able to work with him.”
Target demographic
Arena Club caters to card collectors, including those passionate about sports, famous athletes and video games.
For example, the Pokémon Trading Card Game (Pokémon TCG), which mimics the popular video games, can be traded on Arena Club’s platform as well.
“TCG trading cards seem to always have relevance, and right now is no different, with record-breaking sales and a younger generation active in this space, always on the search for the best cards to add to their collection,” Lee said.
Funding
Some of the initial funds to start Arena Club came from Lee’s prior successes as the co-founder of LegalZoom.com and The Honest Co., as well as being the founder of ShoeDazzle.com.
In 2014, European private equity firm Permira acquired between 47% and 50% of Legalzoom, Lee’s first startup venture, for $200 million.
Lee said he learned from his experience with LegalZoom that “you can build a brand name in industries that do not have a brand name.”
He also tapped into “longstanding and strong relationships with key individuals,” he told L.A. Inno.
All three co-founders declined to disclose how much of their own money they initially invested in starting the company.
Arena Club closed a $10 million Series A round in September. Lead investors included M13, with Defy.vc, Elysian Park Ventures, Lightspeed Venture Partners and BAM Ventures also participating.
Those funds will be used for growth, including advertising, targeting new partners and enhancing platform functions, Lee said.
The startup’s total funding is more than $20 million, he told L.A. Inno.
How it works
Arena Club collectors can choose to either keep their physical cards in the company's vault, which is in an undisclosed location in Los Angeles, or hold onto them and send them in a protective “slab” when making a transaction. All cards are ultimately added to a blockchain, where they can be viewed, bought, sold and traded via Arena Club's platform.
All users on the platform have their own showroom, even Jeter.
The company makes money by grading cards and also charges transaction fees.
A pricing tool introduced recently was designed to help collectors understand the value of their cards, along with the change in that value over time, Lee said.
It does this via “a quicker, more accurate and transparent grading authentication process,” using computer vision and AI, he explained.
One of the challenges of creating the platform was using blockchain technology and AI to underpin Arena Club's digital marketplace, he added.
Competition
Arena Club's competition includes companies like eBay, Goldin Auctions, Heritage Auctions and Fanatics.
Lee said that one way Arena Club differentiates itself is the individual showrooms where users can display their cards.
Another is the grading process.
“This proprietary process will provide collectors with a solution to a lingering issue in the hobby, regarding consistent and transparent grading of trading cards,” Lee told L.A. Inno. “Our grading process is transparent and consistent, and will give collectors a detailed explanation on why their card received a specific grade.”
