Startup funding slumps by two-thirds in 2023
Startup funding in 2023, startup picks for 2024, Yolo funding, Inside the raise – Pro League Network +More
Sector-specific growth company investment substantially down last year.
E+M’s startup picks for the year ahead.
Yolo talks about its latest €100m fund.
Inside the raise features Pro League Network.
We're hungry for a life we can't afford.
Startup funding in 2023
Funding for betting and gaming startups slowed to a trickle last year.
So it came to pass: The truth of the chatter among the founders and funders throughout last year about how much more difficult the funding environment was in 2023 vs. the year before was proven, as fund-raising by betting and gaming entities fell by two-thirds.
According to the deals tracked by Earnings+More in 2023, of those where figures were mentioned a total of $95.5m was raised by betting- and gaming-related entities.
This is well down on the $334m raised in 2022 when companies such as Mojo ($100m in two rounds) Betr ($50m) and Underdog Fantasy ($35m) tapped up investors with multi-million-dollar funding rounds.
Times are tight: As was predicted by many market observers, the interest rate environment and uncertain economic backdrop last year clearly crimped money-raising efforts. Of the deals tracked, only three were in double figures.
Betr once again tapped investors for a further $35m in June, Prophet Exchange raised $10m in April and Picklebet propped up the Q4 numbers with A$15m ($10m).
E+M tracked only 18 funding rounds from betting and gaming startups last year. This compares with 53 transactions in 2022.
🏜️ Well gone dry: the top 10 sector funding rounds in 2023
Heads up: Next month, Earnings+More will take a look at how the experts think the funding environment for the sector will shape up in 2024.
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Startups for 2024
10 to look out for: The funding environment in 2023 might have been difficult, but there were a lot of quality companies that have either emerged or strengthened their positions in the past year. In no particular order, here are the companies E+M considers to be the pick of the bunch.
Pikkit
Pick a winner: Calling itself the “ultimate sports-betting community”, Pikkit provides an app that allows users to sync all of their sportsbooks, monitor and interact with their friends’ picks, share their own bets with the larger community and tail the top performers in the industry.
Pikkit was one of E+M’s disruptors to follow in October last year.
Konquer
Capturing the flag: The LA-based gaming developer announced a couple of licensing deals in September, with Galaxy Gaming and ODDSworks, as the company began to make good on its promise of providing the most innovative and “coolest” games.
Cloud Crafter
Don’t lose your head: It is very early days for Cloud Crafter, which has just released the iGaming industry’s very first headless CMS, Contentless. Headless tech allows developers to keep pace with evolving technology and seamlessly deliver content across multiple platforms and devices. Cloud Crafter has integrated and built a generative AI that will bring a fresh approach to the casino lobby, among other things. Up next is a unified PAM.
Compliable
Uncomplicated: The evolving and complex regulatory landscape is making increasing demands on the compliance teams of organizations large and small. Hence, the excitement around providers such as Compliable, which deploys technology to help clients manage multiple licensing processes via a single platform.
Read Compliance+More’s regtech focus on Compliable from September.
Picklebet
GenZ, mate: The Australian-based next-gen betting and media company positions itself as being at the nexus of esports, sports and internet culture. Having closed a A$15m ($10m) Series A round of financing in late November, the stage is set for the company to make some noise in the year ahead.
Print Studios
Copier cats: Like Quickspin before it, Print Studios’ three co-founders emerged from Kindred Group and hit the ground running with slots that already have it standing out among the crowded field of slots providers. Valuing quality over quantity might seem a basic virtue but it has paid dividends with hits such as Darkness and the Pine of Plinko and Royal Potato series.
10star
Twinkle, twinkle: The sportsbook development space is one where there is understandably a huge level of interest given the sale of odds-provider Angstrom to Entain for over £200m last year. Similarly involved in the area of market making and risk management, 10star was launched in early 2023 by industry veteran Magnus Hedman with the aim of “bringing a breath of fresh air” to the space.
Rithmm
Leveling up: Nothing is hotter at the moment than AI and in Rithmm’s case it is being utilized to provide bettors with the tools to make more informed decisions. A July 2023 $2m Series A fund was led by Boston Seed Capital, a founder investor in DraftKings, which believes Rithmm is set to disrupt by providing everyday bettors with advanced analytics previously the preserve of professionals.
MetaBet
The Austin, Texas-based company provides betting tools to help publishers unlock value in their sports coverage, including widgets that can integrate live scores and stats alongside odds information. MetaBet currently works with 40 partners across sports media, sportsbook operators, performance marketers and betting publishers.
The Unit
Frontend counts as much as backend on sports betting, but standing out from the crowd is easier said than done. Hence, providers such as Ireland-based The Unit, which brings industry expertise to bear on the areas of software development and marketing.
The Unit was an E+M startup focus back in May.
Yolo fund raise
New money: Late in December, Yolo Investments (an E+M sponsor) announced the launch of a second flagship fund with a plan to raise €100m, half of which comes from current general partners and the other half from new investors. The fund is not wholly aimed at betting and gaming and will also look at fintech and blockchain-based enterprises.
Evert Einroos, a partner at Yolo Investments, believes the new fund goes some way to answering fears about the investment climate.
“Although we’re far from clear from the worries [around inflation and interest rates], there is more clarity, which we believe will enable us to find attractive risk-to-reward opportunities for deploying capital at favorable valuations,” he says.
Yolo has enjoyed success with its initial fund, which has invested in more than 100 companies and now has assets under management of over €600m with an IRR in excess of 40%. Einroos says that “substantiates the viability of the underlying investment strategy.”
That strategy has narrowed in terms of focus, he adds.
“We’re doubling down on the sectors where we have achieved the best results to date.”
Gaming, fintech and blockchain are spaces where he says Yolo has identified the “highest edge driven by our investing and operating experience, network and supportive ecosystem.”
Einroos says identifying synergies across sectors is part of the investment strategy. The gaming industry has “long been deprived of having access to cutting-edge financial services due to a perceived high-risk profile.”
“We see great potential in utilizing blockchain technology for gaming operators and financial service providers,” he adds.
The way ahead: Einroos notes Yolo has lined up a target of up to 30% of capital to be deployed in five to seven opportunities across the three sectors. “We’re going to be actively in the hunt for 15-20 investment opportunities in the next three years,” he adds.
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Inside the raise – Pro League Network
Who are you? Pro League Network has just closed $1m fundraise but is keeping the offer open for January in order to further its ambitions in 2024, including the recent launch of its first branded studio set-up out of Branson, Missouri, the home of PLN’s combat sports, which include the SlapFight Championship.
Who’s got the money? The new funding round is led by previous investors Roger Ehrenberg and EBerg Capital, with participation from Chris Grove, and Kevin Garnett and Big Ticket Sports. The latter is also behind PLN’s latest sport, called str33t, a new streetball league.
Media, gambling or both? “We consider Pro League Network to be a sports entertainment company that owns, operates and produces fun, bettable sports,” says co-founder, Bill Yucatonis.
The media and entertainment element “goes hand-in-hand with the wagering component,” he says.
“We’ve purposely focused on sports that are fun to watch and wager on because we think they can be compelling broadcast properties while driving handle during key points in the calendar.
Slap happy: In the past six months, Pro League Network has taken “some significant steps” to broaden its media offerings, including acquiring the SlapFight Championship, which is one of the most viral sports in recent years. It also announced a partnership with BrinxTV, the rising platform for the next generation of sports, entertainment and gaming programing,
“In the past six months, we’ve focused on developing our portfolio of owned sports league IP,“ says Yucatonis.
“By owning and producing our leagues, we can create valuable sports brands that are designed for new audiences and are catered and targeted to meet the demand we see for our brand of sports.”
Meeting demand: Axtman points out the appeal of minority sports to sportsbooks is they help fill the scheduling gap when action from the major leagues isn’t available. “By owning and operating the production of our sports, we’re able to schedule competitions to be offered at under-optimized parts of the sports-wagering calendar,” he says.
Street life: Next up is the debut of str33t. “We’re finalizing some details for the league, including our broadcast partner, wagering offerings, schedule, uniforms, rosters and more,” Axtman says.
PLN also plans to bring Pro Carrom Tour to sportsbooks in the early part of the year and to build upon the popularity of the World Putting League with a second studio, situated on the East Coast.
More watch-n-wager content will be forthcoming. “Most international mature betting markets have seen watch-n-wager successfully implemented and we believe there’s a market for this type of experience in the US.”
“We can create this type of frictionless integration with our portfolio of sports,” he adds.
“We’re working towards this through our partnership with BrinxTV as the official free-to-play partner of our content with an embedded watch-n-wager experience, as an example.”
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