With sports teams acting as the anchor tenants of real estate developments nationwide, restaurant veteran Mathew Focht expects sports-themed bars and restaurants to be a key part of getting fans to arrive early and linger after the main event, so much so that he’s raised $100 million for his Emerging Fund, a food industry-focused investment fund that is backing F1 Arcade, Puttshack and Batbox.
“Stadiums used to be standalone islands. Now they’re community hubs with live entertainment, retail, mixed-use, restaurants,” Focht said on a phone call. “These environments today can easily be a complement to other forms of entertainment. That’s the draw stadiums see with us, because we can appeal to the younger audience … Sports team owners understand entertainment.”
Focht formed Emerging two years ago as an investment vehicle to capitalize on the steady evolution of real estate away from malls anchored by department stores to open-air developments where live entertainment combined with food and drink are the main draws for consumers. The fund has 50 investors who are mainly CEOs from the hospitality industry, with fundraising expected to be closed early in 2025 with a hard cap of $150 million in capital, Focht said.
Already, Emerging has 14 investments, including the darts- and pub-inspired Flight Club to, most recently, Poolhouse, a tech-heavy pool hall concept from the Topgolf founders that uses projection mapping on a regular pool table to offer more intricate games and provide golf handicap-like adjustments for lesser experienced players. The fund also invests in non-sports themes like Federales, an open-air “tongue-in-cheek” spin on Mexican watering holes as well as restaurant tech like 1Huddle, a gamified way to onboard new and motivate existing food industry employees.
Though he’s not a household name, Focht has been able to raise so much money for his inaugural investment fund given he and his business partners also founded and operate businesses that have relationships with one in three eateries in the U.S. After an early career helping develop retail and restaurant real estate with well-known developers like New England Development and the Walker family of Naples, Fla., Focht helped form Consolidated Concepts, a purchasing platform with 200,000 restaurants as clients, and Emerging Concepts, a real estate expert that uses copious amounts of data on consumers and property development to advise on eatery locations. About half the deal flow the investment fund sees originates through one of those two businesses, a quarter from the 50 LPs in the fund and the rest from cold calls to, or from, new concepts.
The fund’s investment in F1 Arcade is an example of the benefits of the structure. Puttshack cofounder Adam Breeden conceived the Formula 1 simulator and bar-restaurant idea in London and wanted Emerging Concepts to recommend where in the U.S. F1 Arcade should locate. That business identified sites, worked on lease terms and, with Breeden and F1 owner Liberty Media, helped further develop the brand. Focht elected to invest the Emerging Fund into F1 Arcade at a $22 million valuation in fall 2022. The London location performed so well F1 Arcade raised money at a $125 million valuation five months later. Coupled with a $130 million debt fund raise this year, F1 Arcade has all the cash it needs for future growth and continues to increase in value, Focht says. “We helped build the growth plan, put our money in there and we’ve seen now a nearly 10 times return on the initial valuation in about two years of time.”
The types of business Emerging Fund likes hit a sweet spot between accessible entertainment—like the video-enhanced batting cages of Batbox—with elevated food and drink, often formed in consultation with James Beard Award-nominated chefs. “Not Dave & Buster’s or your traditional family entertainment center,” Focht said, “You’ve got elevated food and drink offerings, which pushes your food and beverage sales up.”
Emerging Fund doesn’t care for one-off restaurants; instead it looks for operating concepts with one to six locations that could go national, meaning the restaurant purchasing and real estate businesses can help the concept plan for its future. “It’s our ability to de-risk it with our operating companies before we put a real, sizable dollar on it,” Focht said. Emerging invests $50,000 to $5 million initially with follow-on investments that could bring total investment to $10 million. “We’re not investing in an idea. We want to see a concept that’s highly profitable and that we can scale, like fuel to the fire.”
The next stage for the fund is to work closely with sports team owners who are seeking to maximize planned ballpark village developments and are interested in bringing “sports-tainment” restaurants in the fold. Today, Emerging Fund finds itself as a co-investor in some of its portfolio companies with team owners, and some of its portfolio companies are in discussions to locate in stadium-adjacent real estate projects.
“We want to make sure we’re creating a sustainable model and there’s nothing more sustainable than a sports team in a market,” Focht said. “They’re integrating their stadiums today into community hubs, very different from what was happening decades ago.”