Appetite for disruption
Appetite for disruption
Investor hunger, investor interview – Ben Clemes from HappyHour, growth company news +More
Good morning. Welcome to the latest edition of The Startup Month.
Recent funding rounds suggest investor appetite for startups that hope to overthrow the existing order in US sports betting and gaming remains undimmed, as evidence mounts of a monetary thaw taking place.
Next up, E+M speaks to HappyHour.io’s recent recruit Ben Clemes about joining up with his old GiG colleague Robin Reed, moving to San Francisco and plugging into the venture capital scene in the US.
Finally, we have the latest growth company news.
I'm a simple slave of appetite.
The hunger games
Evidence from recent funding rounds suggests investor appetite for disruptive ideas in the betting and gaming space remains undimmed.
Melt: It might not fit with the actual calendar, but the sense of a heavy frost coming to an end pervades the betting and gaming growth company investment space as a handful of high-profile and dollar-heavy funding rounds over the summer set the scene for a renewal of investment activity.
The most recent significant deal came with the $6.4m in seed money raised by startup betting exchange Novig.
That raise came with an impressive – and long – list of investors, headed by Lux Capital and with the involvement of Y Combinator.
The press release made it plain there is still an appetite for companies that might promise to provide disruption, particularly in sports betting.
It spoke about Novig hoping to rectify the sports-betting industry’s “discriminatory and inefficient practices” while also reinvigorating a “stale betting experience”.
The future’s not written: Similarly using the language of disruption is Betr, which was the subject of an even bigger $35m funding round in June. While many remain skeptical – read Dustin Gouker’s The Closing Line, which delivers a pessimist’s view on Betr’s hopes – the company was clearly able to plug into a sense among investors of the sports-betting area being ripe for new ideas.
This is backed up by other sports betting and sports-related fund raises.
In mid-August, fantasy sports and sports-betting startup Fantasy Life raised $2m in seed funding from investors including Jacksonville Jaguars owner Tony Khan and LRMR Ventures, the family office of LeBron James and Maverick Carter.
In the same week, AI-driven sports data firm SportsVisio scored a $3m seed round led by Sapphire Sport.
That fund, which is part of VC Sapphire Ventures, recently raised $181m to plow into sports- and tech-related entities.
Mountain to climb: One notable new entrant is Prime Sports, which has recently been granted OSB licenses by both New Jersey and Ohio. The company is taking the route previously trodden by Circa, Pinnacle and others of attempting to cater for consumers that want more from their betting experience, including better odds.
Acknowledging the task ahead, Prime’s Adam Bjorn posted on X: “I have zero delusion here, as much as I stand by the goals and plans of this venture, we are up against it.”
“Prime Sports just need to keep finding players, no matter their skillset and then we cross our fingers, close our eyes and pray,” he added.
Waiting in the wings: In a wider sense, the possibility that the current landscape for US OSB in particular is about to be shaken is the subject of much discussion with the imminent arrival of Penn’s ESPN Bet and, following the completion of the PointsBet US buyout, the rollout of the Fanatics Sportsbook offering.
Betr’s Joey Levy went public with his own thoughts on the potential for ESPN Bet via a Medium post.
Levy said he “still feels like” the “commoditized legacy sportsbook product experience” is neither simple or intuitive to someone who has never bet on sports before.
He added that a differentiated offering had the potential to “unlock incremental TAM among more of the casual sports fans that have yet to bet on sports”.
“We started this thing to innovate and win on product.”
Stoking the fire: He signed off by noting that the effect of the moves made by ESPN Bet and others was to “heighten Wall Street and VC interest in this category”.
Further reading: See what founder Jacob Fortinsky had to say in last week’s Startup Focus.
Further listening: Fortinsky also spoke to Jesse Learmouth for the Betting Startups podcast.
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Happy together
Ben Clemes left GiG to join previous colleague Robin Reed at HappyHour.io – and immediately upped sticks to the West Coast.
Happy and you know it: The announcement in June that Ben Clemes was to leave GiG to join fellow co-founder Robin Reed at VC investment house HappyHour will have surprised no one. GiG’s strategic review, which has seen it decide to split into two, came at the right time for Clemes.
“It was the natural point for me to think about what I want to do next because the company is doing the same thing,” he says.
Now he has joined his colleague at a fund that has over €130m in assets under management.
Best coast: In opting to hook up again with Reed, Clemes also decided to forge a new path for HappyHour by moving to San Francisco. As much as the expansion of US OSB and iCasino means there are now more investors and VC funds looking at the space, Clemes also feels “there’s more innovation taking place there than we’ve seen before”.
“It's a bit like Europe 10 years ago when things started to regulate and you saw innovations like pay-and-play,” Clemes says.
“Now in North America there are things like micro-betting,” he notes, pointing to HappyHour portfolio company and micro-betting provider Kero Sports.
Still, he is joining at a curious moment for growth company investment. “With inflation on the rise, interest rates going up, the cost of capital is higher, I think people are becoming a little bit more cautious.”
“And maybe they’re doing a little bit more due diligence, studying the viability of deals rather than throwing money out there and seeing what succeeds.”
Plugging in: The US isn’t lacking its own ecosystem of investors in betting and gaming, of course, with names such as Discerning Cap, Benjie Cherniak’s Avenue H, Acies Investments and Lloyd Danzig’s Sharp Alpha being prominent. Clemes suggests HappyHour can plug into that network.
“Being on the ground a little bit more in the US gives us access to more conversations and probably more opportunity,” he adds.
“Business is sometimes about being in the right place at the right time.”
Investment can come from having casual conversations or “running into people that you know, your network and hearing about opportunities that are coming up”.
There is also the potential for joining forces with others. “While we bring a lot of expertise, there’s probably certain areas that we are still learning,” he adds.
Happy coincidence: It is a style of investing that fits with the HappyHour philosophy. “We want to take a strong advisory role into the companies that we invest into,” he says. “It makes sense for us to do our due diligence, make sure that the capital that we’re going to invest is actually going to have the return on investment for us and our investors.”
“I think that's where we add value,” he adds.
“We can take companies that have a good strategic position, good revenue, growth potential and use our network, our experience to really accelerate that growth.”
Not everyone needs the help. “There are companies out there that are just purely looking for capital and if it’s got an interesting return on investment for us, then of course we'll look at that,” he says.
“But then we have the other ones that I think really appreciate and actually benefit from the advisory side that we can offer.”
Clemes energy: “You don't want to say and limit yourself to what you're looking for, because then you'll miss the opportunity,” he adds. “That’s what’s kind of exciting.”
Boom time
Fantasy provider Boom Entertainment acquires NBC’s Sports Predictor game.
Predictable: Having originally developed the Sports Predictor game in association with NBC owner Comcast, the company has now bought the game outright. Until recently, NBC Sports Predictor was sponsored by PointsBet as part of its overarching marketing partnership with the broadcaster.
The press release announcing the news noted Boom had been the development and operating partner for Sports Predictor since launch.
In that time, it added, the game has generated over 2m sign-ups.
CEO and co-founder Stephen A. Murphy noted that the Sports Predictor game had been central to his company’s progress.
“NBC Sports Predictor has been a significant part of Boom’s story since its launch,” he said.
“This was the first product we built that attracted millions of sports fans, and we are honored to become stewards of the product and introduce new ways to play for sports fans."
The game will be rebranded Predictor and is set to continue to offer its popular free contests across multiple sports, with several new game formats to be debuted this fall.
Toss: This includes Coin Flip Live, a free game where viewers can win money just by guessing heads or tails.
Funding note: Boom raised $15m in September 2021 in a Series A funding round led by Sands Capital and with the participation of, among others, Defy Partners, Bettor Capital and the Kraft Group.
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Funding rounds
Pro League Network has announced a seed funding round raising a “low seven figure” amount from Roger Ehrenberg’s VC funds IA Sports Ventures and Eberg Capital. PLN produces niche sports for betting purposes including CarJitsu, a close combat sport, which – yes, you’ve got there already – takes place in a car.
Co-founder Mike Salvaris told Spotico that with three of the four professional sports having an overlapping schedule “we thought there was an interesting opportunity there to really own the other parts of the schedule”.
SharpSports: Founder Ryan Murphy told the BettingStartups newsletter the company has “raised a little bit of additional capital” to expand the team and invest more in new products, as well as sales and marketing. Joining the SharpSports cap table are Chris Grove, Adam Krejcik and EKG Ventures. Existing investors also participated in the round.
Growth company gazette
SharpLink Gaming: The betting and gaming targeted marketing solutions provider has launched C4 BetSense, a sports industry-focused content creation and recommendation engine powered by generative artificial intelligence.
The C4 BetSense platform will leverage generative technologies to produce an “endless array of tailored fan betting offers and recommendations”.
"The sports industry is at an inflection point in the race to deliver fans individualized, specific betting offers that personally matter to them," said Rob Phythian, SharpLink’s CEO.
nVenue: The micro-betting provider has announced a “groundbreaking” multi-year deal to develop in-race micro markets and predictive content for race fans nationwide.
Sporttrade: The sports trading challenger has had a busy couple of months having secured its second state license in Colorado while also passing the milestone of 1m shares traded on its platform.
Former Startup Focus BeyondPlay has been selected as one of TechCrunch’s 2023 Startup Battlefield 200 contenders. CEO and founder Karolina Pelc’s firm will be showcased at TechCrunch Disrupt 2023, a conference focused on startups across a variety of different sectors.
Future Anthem has launched a new bonus recommendation module that identifies players and suggests an optimum bonus award amount.
The company says that by combining proprietary machine learning models with anonymised transactional data, Amplifier AI can rapidly produce personalized bonus recommendations, seamlessly integrated into promotions.
Inside The Pocket: The free-to-play games aggregator has launched a Pro Football Survivor game for industry stakeholders. The winner will receive a cash prize of $50,000 and also get the opportunity to donate $50,000 to the charity of their choice.
Sports gaming technology company Low6 has launched its Million Pound Predictor for Oddschecker.
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Events
GeoComply’s Challenger event, the first edition of which took place in New York earlier this year, is set for re-run during the week of G2E in Las Vegas. The event is set up to provide the learnings from founders and entrepreneurs in the gaming community who’ll be sharing hacks, tips and tricks that’ll help you achieve high-growth.
Those wishing to attend should follow this link.
SBC First Pitch Barcelona: The Yolo-sponsored competition will bring together a number of contenders aiming to win a prize valued at €60k+. The companies, to be announced at a later date, will be given a platform at the show’s Startup Zone.
Hack: BettingStartups.com has a code for startups to get 50% off a full event pass. Click here and find the event calendar.
The month in focuses
Sports media company Sidelines.
OSB predictive analytics program Rithmm.
A revisit with betting exchange STX.
Calendar
Sep 6: Better Collective fireside chat/Jefferies.
Sep 7: Playtech
An +More Media publication.
For sponsorship inquiries email scott@andmore.media.
