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Local Consumer Brands Investor Launches New Funding Round, Counts Deep Ties to NFL

Nate Raabe, Byron Roth and Aaron Rodgers—yes, that Green Bay Packers quarterback—are in a league of their own in Orange County.

On a recent Saturday at the JSerra Catholic High School football field in San Juan Capistrano, the three founders and namesake Rs of Newport Beach’s RX3 Growth Partners private equity fund hosted their own flag football charity fundraiser.

Besides Rodgers, the NFL’s Most Valuable Player of the Year for the past two seasons, other quarterbacks included the Buffalo Bills’ Josh Allen and Kyle Allen of the Houston Texans. The only college quarterback was Desmond Ridder, who played in the college semifinal championships Dec. 31 for the University of Cincinnati and is expected to be a top round draft pick this spring.

Also playing were four former University of Southern California quarterbacks who have or had notable careers in the NFL: Sam Darnold, Carson Palmer, Mark Sanchez and Matt Leinart.

The event was more than a collection of athlete celebrities.

“Most of the quarterbacks are investors” in RX3, Raabe told the Business Journal.

“The idea is that we have such a unique community at RX3, instead of doing a traditional charity golf event, we said we have all these athletes, let’s do a charity flag football event.”

The event, emceed by former NFL quarterback and local businessman Jordan Palmer, raised $400,000 for the charity.

Roth Conference Returns

The football event was held just before the Roth Capital 34th Annual Conference, held March 13-15, which re-started in person at Dana Point’s Ritz-Carlton after a two-year hiatus due to the pandemic.

The conference, long Orange County’s biggest investment banking event, attracted 3,000 participants, including representatives of 454 companies. It held 22 industry panels and 130 analyst moderated fireside chats.

“Coming into it, I was nervous,” Roth Capital Partners Chief Executive Roth told the Business Journal. “You’d think after decades of doing these events, I wouldn’t be.”

Because of the omicron variant, Roth wasn’t sure the event would come off and his company had a contingency plan to pull the plug if necessary.

It did things differently this year, such as holding more events outside on the Ritz’s lawn. Past attendees from Europe and Canada skipped this year’s event, Roth said.

“It was exciting to be in front of other people instead of on Zoom,” Roth said.

Investment Winners

In 2018, Roth, along with two other Rs, Raabe and Rodgers, began RX3, raising $52 million in its first round, with a focus on “culturally relevant” consumer brands that typically have more than $10 million in annual sales.

The investment firm’s website says its typical investment is in the $5 million to $7 million range.

The fund 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.

Some winners have included Hydrow, a rowing machine business which has a valuation topping a billion dollars and is similar in respects to Peloton; Nom Nom Now, a dog food provider that in January was sold 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. In February, 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 as of last year.

“It should be a good return to all of our investors,” Raabe said of the Nestlé deal.

Other notable RX3 investments include Newport Beach fintech Blast, which is backed by Walter Cruttenden, who founded the investment banking firm that’s now Roth Capital.

RX3’s most recent round raised $75 million, and the firm now plans to open a third round of funding.

The Orange County base for RX3 serves a purpose: the area has a lot of professional athletes and high-net-worth individuals, Raabe said.

“We see RX3 as a platform to bring them all together so we can have a common interest in investing in consumer brands that we all know,” he said. “It’s more than just an investment fund. It’s a community.”

Charity Event

Raabe said the idea for the flag football event, originally scheduled for 2020, came from NFL Hall of Fame quarterback Kurt Warner, who has held similar fundraisers.

“We wanted to keep this event small, do it right and then expand on it from here,” Raabe said. “Feedback so far has been really positive. I’m very excited.

“Next year, I can see us getting much bigger and going over $1 million (in donations).”

At the flag football game, eight teams played four on four for a game of about 20 minutes duration using half of a typical football field. All the players wore jerseys with RX3 prominently displayed.

Quarterbacks weren’t rushed but given a few seconds to get rid of the ball or take an “imaginary sack.”

Two referees in the black-and-white-stripe shirts blew whistles as though it was a real game. There was no hitting except a few accidental ones that drew plenty of oohs from the crowd of about 300.

“A lot of these guys are local,” Raabe said. “You do it in a way that’s fun for them and hopefully they’ll come back.

“This is the first year of something that will be really special.”

Besides the quarterbacks, there were current and former NFL players such as safeties Donte Whitner and Chris Conte and cornerbacks Antoine Cason and Josh Norman.

The veteran NFL players played as both receivers and defenders. A few college level players also joined.

Oh, and in the championship of this new league, Ridder outdueled Rodgers.

“What a blast,” Sanchez said. “It was so fun to see Aaron and Carson and Josh Allen and the dark horse—you couldn’t have scripted any better games.” 

Local Businessman Plays Ball Against NFL Pros

Alex Bhathal is a well-known Orange County businessman as the co-owner of Newport Beach investment firm Revitate and the NBA’s Sacramento Kings.

Bhathal went from sports team exec to player this month; he was on Matt Leinart’s team as part of the RX3 flag football charity event at JSerra Catholic High School on March 12.

The Business Journal caught up with Bhathal, who also serves as a senior operating partner at RX3, to ask him questions about his play:

OCBJ: Why did you decide to participate in a flag football game against some of the world’s best football players?

BHATHAL: It was a great opportunity to support a good cause, the Alder Foundation, while having a ton of fun with friends. It was an exciting and unique experience to play with and against current and former legends of the game.

OCBJ: What was it like?

BHATHAL: Our team didn’t excel on the field but given the competition we didn’t worry too much about the scores. Matt Leinart was a gracious and patient QB for our team.

OCBJ: Were you exhausted? Sore afterwards?

BHATHAL: Oh my goodness, I was sore for two days! I used muscles that I hadn’t in many years. And I’m still recovering from some turf burns and have been keeping the Neosporin close to my desk.

OCBJ: Did you catch any balls?

BHATHAL: I mostly played defense but got in a few plays on offense. I didn’t score any touchdowns but did pick up a first down on a third down conversion.

OCBJ: Deflect any passes?

BHATHAL: I had a shot to intercept Sam Darnold in the first game and just missed it. Overall, it took a while to get back into the flow of the game. While our defense improved over the course of the games it was still tough for me to keep up with the pace of the game.

OCBJ: When you played defense, did the QBs take advantage of you?

BHATHAL: Yes, for sure!

OCBJ: What is your level of experience in football?

BHATHAL: I played football from ages 8 to 18. I went to UCLA for undergraduate studies and was nowhere good enough to play there so high school was the end of my football career.  

That said, I learned many valuable lessons from my playing days that have been essential in building a career and family. I really loved contributing to a winning culture and enjoyed the challenges that came with the playing football. We learned how character, work ethic and grit can produce success on the field and those values have translated well to life beyond the gridiron.

OCBJ: Will you play again next year?

BHATHAL: If my body can keep up, I’d love to play again. It was a blast.

OCBJ: Did any player in particular impress you?

BHATHAL: Aaron Rodgers is so fun to watch. He flings darts downfield while looking like he is barely making an effort. Such a cool experience to see in real life. Also, it was really fun to see Donte Whitner in action and talk a little trash from the sideline!

OCBJ: Which team did you play on? Why that team?

BHATHAL: Team Alder. Alder (formerly known as Gen Next) is a group of business leaders that seek to make an impact through philanthropic and civic pursuits. Our team was entirely made up of members of the organization. While now deep into our journeys in business, most of our team had a background in sports, including Josh Childress who is a retired NBA player. He was definitely one of the stars of our team and made a spectacular touchdown reception.  

I was also really impressed with Ryan McClellan’s performance. He sacrificed his body to make two great touchdown catches.

OCBJ: How old are you?

BHATHAL: I am a little older than Tom Brady so I should definitely not be in a tournament with NFL players!

Mark Sanchez Makes Mezcal Play

Mark Sanchez wasn’t initially a fan of mezcal liquor.

“It was too strong, like drinking lava; it never appealed to me,” Sanchez told the Business Journal.

Then a friend, Ivan Garosi, sent him a bottle of Mezcal Campante, where it sat for three months before Sanchez tried it.

“I was absolutely blown away,” he said. “You can taste the vanilla and lot of the flavors without being smacked in the face.”

The former Mission Viejo High School quarterback, who rose to fame playing for University of Southern California and then the New York Jets, decided to become a minority investor in Mezcal Campante, which has its U.S. headquarters in Miami. The liquior is produced in Oaxaca, Mexico, where its main offices are located.

On a recent Friday evening at his home in Dana Point’s Monarch Bay, Sanchez introduced the liquor to a small group of friends and investors from RX3.

“It’s a passion project,” he said. “As a former athlete, you’re always very competitive and you see the potential.”

The company’s principal owners are Jose Luis Bustamante, Luca Longobardi and Shirley Leigh Wood Oakes.

The latter has worked extensively on building brands in Europe like W Hotels, Omega Watches and Remy Martin. Oates knows well the liquor industry as she managed communications in Europe for Casamigos, a tequila brand founded by George Clooney that was sold for $1 billion.

“That’s rarefied air” to reach a billion-dollar valuation, Sanchez said.

“I’d sure love to try. It’d be like winning the Super Bowl.”

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