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Mercury: Reimagining the Collegiate Fan Experience

Multicoin capital
By Multicoin Capital
October 20, 2022 | 12 minute read

Today I’m excited to announce that Multicoin Capital has led a $7.5M seed investment in Mercury with participation from North Island Ventures, Crosslink Capital, Brevan Howard Digital, and several others.

The convergence of sports and crypto is one of the most exciting, fast-growing areas of the market with strong, early successes in companies like Sorare and NBA Top Shot. Both have onboarded countless new users into crypto. Despite these early success stories, their NFT drops feel superficial and transactional, and the market is showing signs of fatigue with endless, undifferentiated NFT drops. The value proposition around speculation and scarcity is not sustainable in and of itself.

Our thesis is that digital assets can be the key to unlocking a new fan experience. The next generation of NFTs and digital collectibles will be built around utility and experiential elements, in which the creator and the consumer can define a more tightly knit relationship. No one has nailed the fan engagement opportunity yet in sports — and we believe Mercury will be the first that does.

Web3-Enabled Fan Engagement

Mercury is a fan engagement company for collegiate sports programs. They make collegiate fan platforms that build stronger relationships between fans, student-athletes, and universities by leveraging digital assets. Mercury is live in-market today and is working with some of the top athletic programs in the country, including Kansas, Kentucky, Clemson, UCF, Oklahoma, and Villanova, with more on the way in the coming months.

Mercury’s core products are localized, university-branded community platforms that leverage NFTs to deliver memorable fan experiences. Before each platform is deployed, Mercury works closely with athletic programs to customize bespoke features and experiences around the school’s traditions, rivalries, values, and other cultural idiosyncrasies. NFT-based memberships and NFT-gated events are core components of Mercury’s platforms. Additionally, each school platform will integrate native chat and social media components that will reward meaningful engagement while building a cohesive digital community.

Experiential aspects tied to digital assets are at the heart of what Mercury is doing, and they were not previously possible before. Mercury is the right product, in the right market, at the right time. Why now?

Name, Image, Likeness

College sports are unique because of the compensation structure for athletes… there is none! The NCAA has for decades instituted archaic rules that have prevented student-athletes from monetizing themselves. The athletes are what make these programs what they are, and yet they have been unable to participate in the upside. The NCAA rakes in billions of dollars of revenue per year – but the athletes never see a dime. The athletic departments at top universities bring in hundreds of millions per year, but NCAA rules preclude schools from directly compensating athletes outside of scholarships. However, following a landmark 2021 Supreme Court case involving the NCAA, for the first time players are allowed to be compensated for their name, image, and likeness (NIL). This has created a massive opportunity for student-athletes.

When an 18 year old steps on campus and joins a big football or basketball program, they become celebrities overnight. NIL deals open the door for these players to profit off this fame and recognizability, but given how new the concept is, there are no established standards or norms for NIL. Since the NCAA’s NIL announcement, athletes across the country have started to monetize in different ways, but most of the deals are paid endorsements in some form or fashion. Paid endorsements are by definition inauthentic; they are superficial relationships between an advertiser and spokesperson.

Unlike endorsements, NFTs give athletes the ability to monetize themselves as extensions of their own brand, not someone else’s. Universities and college culture tie in closely to enhance the creative opportunity, and we expect NFTs and digital communities to become critical pieces of the NIL playbook moving forward. The design space here is extremely rich, vast, and customizable. Here are some examples of what could be built with Mercury:

  • Fans purchase a NFT membership pass, and get access to an exclusive podcast featuring Will Levis, Heisman hopeful and QB of the #18 ranked Kentucky Wildcats, as well as token-gated athlete and coach chats. This is live today.
  • Fans who collect a certain number of “coach NFTs” can earn the right to call the plays during a possession at a preseason football game.
  • A NFT auction drop of pieces of a digital basketball court in which all holders get access to a closed-door, exclusive scrimmage each season. Those pieces might also reward holders with merchandise if certain key moments from the season (game-winning shot, record breaking basket, etc.) take place on the corresponding part of the real-life court.
  • An athlete can auction off a “white digital sneaker” NFT, which grants the NFT holder the ability to work closely with the player to design and customize the digital shoe. That shoe can then be recreated in the real world, and the athlete can wear it in his/her next game. This builds naturally on the work that Nike and RTFKT are already doing.
  • A basketball player can drop 30 NFTs which grant each NFT holder 60 seconds to try to score 1:1 on that player at the local gym. Fans can then get pictures and videos of their personalized experience, far better than a signed card or selfie.
  • Fans who collect certain NFTs can be eligible to get a tour of the locker room, facilities, and receive custom gear/swag.
  • Point leaders on NFT collecting leaderboards can win tickets to games, where game attendance can award reward holders with further platform points or collectibles.

For the vast majority of college athletes, the four years they spend competing at the collegiate level will be the best time and opportunity for them to monetize their abilities. Mercury’s head of NIL, Adam Breneman, knows this all too well. He was a 5-star recruit and 3x All-American Tight End at Penn State and UMass. Unfortunately, he never played in the NFL as chronic knee problems forced him to retire early. He’s written about his experience and why he joined Mercury here. It’s both an inspiring and sobering message that every college athlete should read – and a core driver behind Mercury’s vision to not only help fans engage with their favorite players and teams, but also to help athletes effectively build and manage their long term brands and collegiate NIL potential.

Mercury has recently launched their NIL Media arm with Adam, featuring sit-down conversations with some of the biggest stars in collegiate sports, including Kansas Football Coach Lance Leipold and Kentucky QB Will Levis.

Rabid Fan Bases

It’s clear that sports fans are incredibly passionate communities. Sports are so powerful that grown adults paint their faces and scream for consecutive hours on end, and it’s widely regarded as a socially acceptable norm. Within sports, college sports have by far the most rabid and passionate fan bases. The reason for this is because it’s explicitly intertwined with identity. Students spend four years of their lives as part of a unique community. It becomes a part of who they are. Furthermore, the community itself grows in both directions. New students enroll annually to experience, shape, and join the community, and alumni prosper throughout their careers and look to give back to the schools they attended.

It’s been almost 15 years since I graduated from the University of Maryland, but that experience is a major part of who I am. I remember rushing the basketball court after Maryland beat Boston College and ending up on SportsCenter Top 10. I remember running onto the football field when we upset Miami and Florida State. I remember the entire stadium chanting for Vernon Davis to stay just one more year. I remember even single encounters on campus and at parties with student-athletes like Darius Heyward-Bey, Greivis Vasquez, and DJ Strawberry. I’ve been emotionally invested in the success of the Maryland program and those players ever since. But I’m not unique - what I described is transferable in some way to just about every college sports fan.

Fans, especially college fans, want to strengthen their connection with their team, university, and its players. Being a fan today is extremely passive—you watch the game, read some articles, and listen to some podcasts. But fans want to be active and desire the new forms of access Mercury is enabling—exclusive interviews and content, custom experiences on-field, meeting with players, chatting with the coaches, etc.

Getting in-depth information on teams and player perspectives isn't particularly easy or uniform. It still takes place on recruiting-focused message board forums, various threads on Twitter, and the local school newspaper – which is often the best beat reporter for a specific team. When you’re on campus, everyone is talking about the teams. When you’re off campus, it’s not easy finding others with whom to connect that share the same passion. College sports are hyper-localized and geography matters. If you happen to be a University of Michigan graduate living and working in Columbus, Ohio… well, good luck. Mercury provides a better, unified digital space for fans to gather.

A Superpower for Universities

Universities are incentivized to foster their community of students, alumni, and fans, and design new ways for them to be maximally engaged with the school and their athletics programs.

Universities benefit from the success of their sports teams, both economically and from prestige. The billions generated every year for NCAA universities are used to fund school initiatives and upgrade facilities to attract new students and athletes. Winning schools generate more publicity and brand recognition, which in turn drives increased applications for enrollment and a higher quality student population. This is widely known and documented as the Flutie Effect.

Universities compete in a cutthroat recruiting environment, whereby coaches go to extreme lengths to recruit players (e.g., Jim Harbaugh famously stayed overnight at a high school kicker’s house to impress him enough to join Michigan).

As part of our Mercury thesis, we think an incredibly important component of the future of recruiting will be a school’s ability to offer “NIL in a box”—i.e., programs that support the continued growth of players’ brands. This includes existing infrastructure for athletes to immediately monetize their brands when they step on campus, and a rabid, super-engaged community of fans, students, boosters, and alumni who are ready and waiting to support them.

Beyond NFTs

As the NFT market has evolved, we’ve refined our thoughts on how we expect it to play out. Earlier this year we published Beyond Verticalization of NFT Marketplaces, in which we posited that NFT marketplaces would organize by industry vertical (e.g., games, sports, art, etc.), be owned by the communities by which they serve, and integrate non-commerce functions (e.g., chat, forums, content, etc.). Mercury embodies all three of those characteristics. It’s hyper-localized by university, with value flowing back to both the university and the athletes, and fosters community through active discussion, exclusive content, and shared passion.

Mercury is sitting at the confluence of several tailwinds:

  • NFTs have opened the gates for new forms of fan engagement that brings the focus back on schools and athletes;
  • The advent of NIL deals are driving innovation and forcing players and universities to rethink monetization;
  • Fans are eager for unified digital experiences that bring them closer to the schools and players they love; and
  • Universities are heavily incentivized to be at the forefront of technological innovation in order to maintain their edge in an incredibly competitive and lucrative market.

We’re extremely proud to back Porter, JJ, and the Mercury team as they introduce crypto, NFTs, and the creator economy to the college sports community.

If you’re as excited about Mercury as we are, and want to build the future of fan engagement, Mercury is hiring.

Disclosure: Unless otherwise indicated, the views expressed in this post are solely those of the author(s) in their individual capacity and are not the views of Multicoin Capital Management, LLC or its affiliates (together with its affiliates, “Multicoin”). Certain information contained herein may have been obtained from third-party sources, including from portfolio companies of funds managed by Multicoin. Multicoin believes that the information provided is reliable but has not independently verified the non-material information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in this blog are subject to change without notice and may differ or be contrary to opinions expressed by others.

The content is provided for informational purposes only, and should not be relied upon as the basis for an investment decision, and is not, and should not be assumed to be, complete.  The contents herein are not to be construed as legal, business, or tax advice. You should consult your own advisors for those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services.  Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by Multicoin, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Multicoin is available here: https://multicoin.capital/portfolio/.  Excluded from this list are investments that have not yet been announced (1) for strategic reasons (e.g., undisclosed positions in publicly traded digital assets) or (2) due to coordination with the development team or issuer on the timing and nature of public disclosure.

This blog does not constitute investment advice or an offer to sell or a solicitation of an offer to purchase any limited partner interests in any investment vehicle managed by Multicoin. An offer or solicitation of an investment in any Multicoin investment vehicle will only be made pursuant to an offering memorandum, limited partnership agreement and subscription documents, and only the information in such documents should be relied upon when making a decision to invest.

Past performance does not guarantee future results. There can be no guarantee that any Multicoin investment vehicle’s investment objectives will be achieved, and the investment results may vary substantially from year to year or even from month to month. As a result, an investor could lose all or a substantial amount of its investment. Investments or products referenced in this blog may not be suitable for you or any other party.

Multicoin has established, maintains and enforces written policies and procedures reasonably designed to identify and effectively manage conflicts of interest related to its investment activities. For more important disclosures, please see the Disclosures and Terms of Use available at https://multicoin.capital/disclosures and https://multicoin.capital/terms.

Disclosure: Unless otherwise indicated, the views expressed in this post are solely those of the author(s) in their individual capacity and are not the views of Multicoin Capital Management, LLC or its affiliates (together with its affiliates, “Multicoin”). Certain information contained herein may have been obtained from third-party sources, including from portfolio companies of funds managed by Multicoin. Multicoin believes that the information provided is reliable but has not independently verified the non-material information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in this blog are subject to change without notice and may differ or be contrary to opinions expressed by others.

The content is provided for informational purposes only, and should not be relied upon as the basis for an investment decision, and is not, and should not be assumed to be, complete.  The contents herein are not to be construed as legal, business, or tax advice. You should consult your own advisors for those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services.  Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by Multicoin, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Multicoin is available here: https://multicoin.capital/portfolio/.  Excluded from this list are investments that have not yet been announced (1) for strategic reasons (e.g., undisclosed positions in publicly traded digital assets) or (2) due to coordination with the development team or issuer on the timing and nature of public disclosure.

This blog does not constitute investment advice or an offer to sell or a solicitation of an offer to purchase any limited partner interests in any investment vehicle managed by Multicoin. An offer or solicitation of an investment in any Multicoin investment vehicle will only be made pursuant to an offering memorandum, limited partnership agreement and subscription documents, and only the information in such documents should be relied upon when making a decision to invest.

Past performance does not guarantee future results. There can be no guarantee that any Multicoin investment vehicle’s investment objectives will be achieved, and the investment results may vary substantially from year to year or even from month to month. As a result, an investor could lose all or a substantial amount of its investment. Investments or products referenced in this blog may not be suitable for you or any other party.

Multicoin has established, maintains and enforces written policies and procedures reasonably designed to identify and effectively manage conflicts of interest related to its investment activities. For more important disclosures, please see the Disclosures and Terms of Use available at https://multicoin.capital/disclosures and https://multicoin.capital/terms.