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Tuesday, May 21, 2024
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Aaron Rodgers’ RX3 Raises $150M

Aaron Rodgers, the four-time NFL Most Valuable Player, may help a San Juan Capistrano investment firm score more exposure in the world’s financial capital.

Rodgers, who was recently traded from Green Bay Packers to the New York Jets, also aided the firm he co-founded, RX3 Growth Partners, raise nearly $150 million for its second fund.

“It’s a great platform for the fund to have that New York visibility,” RX3 Managing Partner Nate Raabe told the Business Journal after the raise’s completion, which was announced last week.

“It’s a little bit bigger financial market than Green Bay,” he quipped. “There will be intangible benefits.”

Rodgers and college friend Raabe in 2018 co-founded RX3 with another prominent “R”—Byron Roth, executive chairman of Newport Beach-based Roth MKM, the biggest investment bank headquartered in Orange County.

RX3 has shown the ability to attract international superstars, athletes and high-level executives as investors, including Christina Aguilera, Colson Baker (aka Machine Gun Kelly), Jared Goff and Josh Allen.

RX3’s senior operating partner is Alex Bhathal, co-owner of Newport Beach investment firm Raj Capital and the NBA’s Sacramento Kings.

OC Athletes

Orange County has become a hotbed of well-known athletes and sports executives who live and work here in business ventures, such as former Jet quarterback Mark Sanchez.

Laguna Hills-based Athletes First, one of the nation’s largest football agencies with 450 clients, including Rodgers, was purchased in February by Mastry Ventures and General Catalyst for an undisclosed amount.

Another prominent former sports agent is Newport Beach resident Jeff Moorad, principal of MSP Sports Capital, which has ownership stakes in several sports teams across the globe.

“It’s a really strong community,” Raabe said. “We’re proud to be based in Orange County.”

62% IRR

In March, RX3 hosted its second annual flag football tournament that raised $1.5 million for charity. Besides Rodgers, other star players who participated included Football Hall of Fame receiver Terrell Owens and former Heisman Trophy winner Matt Leinart.

The night before the tournament, RX3 hosted an event to inform its investors about their investments. It raised $50 million in its first fund in 2018.

The firm focuses on “culturally relevant” consumer brands in industries like health, wellness active lifestyle, beauty and pets.

The investment firm’s website says its typical investment is in the $5 million to $7 million range in a company with a more than $10 million revenue run rate and a pathway to profitability.

It’s averaged a 62% internal rate of return among its five successful exits to date, Raabe said.

Some winning exits have included Nom Nom Now, a dog food provider that was sold last year to Mars Petcare; and Chemical Guys, a maker of car waxes, that was sold last year to private equity investor AEA.

RX3 invested $3 million in Irvine-based Orgain Inc., a provider of protein power, drinks and snack bars, with annual revenue around $400 million. Last year, a majority stake in Orgain was purchased for an undisclosed amount by Nestlé Health Science, a unit of the giant Swiss-based food manufacturer. Orgain was reportedly valued around $2 billion in 2021.

The Pitch

The winning pitch for the second fund was its strong track record, Raabe said.

“We’ve shown our ability to get strong access to the deal flow,” he said. “You’re only as good as the deals you see.

“The people involved are confident that we can continue.”

­Raabe said exciting new investments include Full Swing, a golfing simulator that tracks balls and analyzes swings, and Therabody, which sells message and skin care devices.

The investors in its latest round include institutional investors and family offices as well as a mix of athletes and celebrities.

“There’s a lot of capital sitting on the sidelines,” Raabe said. “We are well positioned to take advantage of the current market. There’s been a healthy correction on the valuation side.”
The investment firm has turned the typical model of athletic endorsement on its head.

Rather than athletes being paid to endorse a product, the athlete backers of RX3 often look to invest in the company to get a piece of the
equity.

RX3 said its second fund is supported by prominent advisers, including Vanessa Hudgens and Kevin Hart’s Hartbeat Ventures.

“Our family of athletes, musicians, actors and business leaders not only adds to the unique RX3 community we have built, but also allows us to invest in and support category leading growth-stage, consumer brands,” Rodgers said in a statement.

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