It’s game on at Sport Ngin.
The six-year-old northeast Minneapolis company that makes software to automate the administration of youth-to-adult amateur athletic leagues, recently raised $25 million in private equity, bringing the total to about $39 million.
The company has grown in four years from about 40 to 220 employees in software, marketing, sales and customer service. It plans to be the national consolidator in a fragmented, but growing business.
Sport Ngin (pronounced “Sport Engine”) puts thousands of amateur sports teams and leagues on the Internet. It builds websites, aggregates team scores and other information, sells advertising and merchandise, and processes payments. Its software is the invisible wizard behind websites for hockey teams, youth athletic associations and media organizations.
“We believe [we] can build an enormous company, a $1 billion-revenue company built on youth and amateur sports technology,” CEO Justin Kaufenberg said in an interview. “That’s our aspiration. My management team’s goal is to build the largest youth and amateur sports technology company in the world.”
No small ambition for a guy who launched a web-design predecessor to Sport Ngin with co-founder, Carson Kipfer, in a dormitory in 2002, while attending the University of Wisconsin-Eau Claire.
The pair worked hand-to-mouth for several years on Web-based projects at what they called TST Media. Meanwhile, they spent long hours planning a company built around their passion, amateur sports.
The first iteration of Sport Ngin launched in 2008, and the company has grown rapidly.
The most recent round of investment from Piper Jaffray Merchant Bank, Boston’s Causeway Media Partners and existing investor Icon Venture Partners is designed to scale up the model as quickly as possible. That includes acquisitions. Kaufenberg said his mandate also is to generate positive cash flow from operations by 2016.
Each new customer pays $400 to $4,000 for a league or tournament website and software setup, and a fee of at least $60 per month. And that is just the start of a revenue-producing relationship that includes everything from sponsorship sales to a slice of tournament-registration fees.
Privately held Sport Ngin has grown from $3 million in revenue in 2010 to what may be more than $20 million this year. However, the company refuses to cite specific revenue figures.
Kaufenberg, a onetime UW-Eau Claire hockey player, envisions one day being a Minnesota-based public company. Yet his big investors know there’s a chance that if the growth plan works, Sport Ngin could be acquired by a big media company or sport league looking to diversify.
“I think this company will have multiple options,” said Tom Schnettler, vice chairman of Piper Jaffray and managing director of its merchant bank. “The challenge is to continue to iterate and improve the software platform and the product capabilities. We have to stay ahead of the competition in terms of function and value for our customers: the teams and tournaments.”
Sport Ngin is considered the largest youth-amateur sport-technology business among hundreds in North America. Most began as volunteer organizations where a technology-gifted person automated the registration process. Some of these efforts grew into businesses covering several dozen leagues
“We’ve done quite a few acquisitions of these types of companies,” Kaufenberg said.
That includes the former e7 Sports, a Southern California soccer organization that brought about 400 new customers to the Sport Ngin software platform in 2013. Sport Ngin has opened regional offices in Boston, Madison, Denver and Los Angeles. Sport Ngin’s clients range from Edina Hockey to USA Hockey, USA Wrestling, USA Fencing and Hockey Canada, and thousands of local clubs and associations, and media organizations, including the Star Tribune, and online prep sports “hubs” in many cities.
Sport Ngin also serves youth and amateur sports governing bodies, such as Minnesota Hockey. The Colorado Avalanche uses the company’s software to promote the professional hockey team to Sport Ngin customers in that state.
The company has suffered growing pains. In 2012, Sport Ngin had to reconstruct an inconsistent software platform at the same time it was expanding. Kaufenberg says Sport Ngin now has the multipurpose “predictable machine” that it needs to build out a national system that works seamlessly for hundreds of thousands of tournaments, leagues and players who want to connect.
“We’ve done a lot of things right, but there were mistakes,” Kaufenberg said.
Kaufenberg, 33, and Kipfer, 32, didn’t pay themselves a regular salary until the business started to ramp up five years ago when Kaufenberg attracted his first outside professional investor at a conference. The chief technology officer is Greg Blasko, 32, a graduate of UW-Eau Claire, and the third hire.
Sport Ngin employees tend to be young and tech-savvy. The headquarters in a refurbished warehouse has a game center, full kitchen and beer cooler.
John Tedesco, chief operating and financial officer, is the experienced adult in charge. He holds an MBA in business and information systems from the Wharton School at the University of Pennsylvania and has built and run several consumer-technology businesses.