The Startup Month #2
A deeper dive into betr, Inside the Raise with Kinectify, a startup (re)focus on Gaming News Canada +More
Welcome to edition #2 of the startup month, sent every first Tuesday.
This month we talk to Joey Levy, the co-founder of betr which made a splash in mid-August with the launch of a new micro-betting offering assisted by that social media shrinking violet Jake Paul.
We also have an Inside the Raise feature talking to Kinectify CEO Joseph Martin as well as investor Seth Young from Fifth Street Gaming.
Then we talk to Steve McAllister, editor-in-chief of Parleh Media’s Gaming News Canada on its evolution alongside newly-regulated Ontario.
Plus the latest fundraising news and recent growth company activity.
A betr bet
The Joey Levy and Jake Paul-backed micro-betting app hit the headlines with a $50m raise before launching a F2P app late on in August.
None but the brave: During a recent episode of the All-In podcast discussing WeWork founder Adam Neumann’s return with the a16z-backed real estate business Flow, participant Jason Calacanis pointed out Neumann had “credible audacity”. The phrase has resonance when it comes to Joey Levy’s new venture betr. As one source suggested: “I like the bravado”.
Levy lowdown: Levy comes from a venture capital background with the Miami-based early-stage fund 305 Ventures. He is also the co-founder of micro-betting-supplier Simplebet and his previous credits include DFS operator DraftPot.
The penny drops: Central to the Simplebet and betr propositions is micro-betting and Levy told E+M that the “holy-shit moment” came when he first launched Simplebet and encountered a supply-side that was more geared for European sport as opposed to US sports.
Joey Levy: “We went to get API feeds to design simple user experiences. We were assuming that this existed. Then we quickly realized that it didn’t exist.”
A betr proposition: Micro-betting can “simplify” the betting experience, Levy suggests. “I remember when I loaded up my first betting app, it felt like I was interacting with a spreadsheet.”
Once you’ve popped: Instead, micro-betting is more naturally fitted to the cadence of US sports and its stop-start nature while also meeting what Chris Bevilacqua, Levy’s co-founder at Simplebet, told E+M is an “unmet need” for instant betting gratification.
Chris Bevilacqua: “Patrick Mahomes is going to throw 280 yards, yes or no? That’s a wager where you have to wait three hours for an outcome. Whereas, is Patrick Mahomes’ next throw going to be 10 yards? That’s instant gratification.”
The harder they come
Making a splash: Levy says “the constant pushback” from industry figures was that a direct-to-consumer offering was “too hard and too expensive”.
Outgunned: “How will you compete? You can raise $50m but FanDuel could spend that on marketing on the opening weekend of the NFL.”
De-risk: For market access, betr has signed partnerships in key states involving small slices of equity; for the product, it has built the micro-betting platform and will rely on FansUnite for the PAM.
Just too lavish to post on the ‘gram: When it comes to marketing, it has co-founder YouTuber-turned-boxer Jake Paul and his 20m Instagram followers. Lloyd Danzig from Sharp Alpha Advisors says betr has “clearly leveraged” Paul's following and noted it already has 100,000 Instagram followers.
Media angle: Levy believes the publicity generated around Paul’s involvement is just a taster of what he can bring in terms of brand affinity. To do that, he says the company has “morphed into a bona fide sports media company”.
“I think we will be the first sports-betting media brand with its own exclusive content.”
Noting FanDuel’s “super smart” move to launch its own TV channel, Levy notes that the difference is FanDuel is “potentially building a version of ESPN” whereas betr will be the “future of social media”.
Jake vs. Dave: The only other clear rival is Barstool with Dave Portnoy where Levy says it is “the only one with brand affinity”.
Conversion: Danzig pointed out that “time will tell exactly how the LTVs of these users stack up against the CAC and what those unit economics look like at scale when compared to more established operators”.
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I wouldn’t do that if I were you: Levy acknowledges the potential for competitors to attack betr in terms of product but suggests any existing operator will be “very cautious”.
Joey Levy: “I think it would be too risky for any of the existing operators for them to fundamentally change the look and feel of their experiences,” he says. “If I were them I probably wouldn't do that.”
Out of the blocks: Levy notes that betr - via Simplebet’s efforts - has a multi-year headstart and is “executing very quickly”. To that end, it launched last week with a free-to-play offering and is preparing to enter the Ohio market.
DraftKings and micro-betting
Micro-betting in the wild: DraftKings is the only major operator to date in the US that has a deal with Simplebet for micro-betting. Asked whether he was surprised that DraftKings hasn’t made more of micro-betting, Levy suggested it was a “textbook innovator’s dilemma”.
Joey Levy: “You have something that’s working and you are making billions of dollars. So why innovate?”
At the plate: Still, Bevilacqua noted that “with one operator alone” in baseball - which he believes might be the “best sport” for micro-betting - Simplebet was seeing $1m of GGR per week “with no marketing”.
“We think football will look a lot like that once people get into it,” Bevilacqua added. “The numbers speak for themselves.”
Bevilacqua also noted Simplebet will be signing up “the biggest global operator” in a matter of weeks. He didn’t divulge the name but there aren’t many likely candidates….
The $50m question
Been there, done that: The skepticism over betr relates to the potential size of the micro-betting opportunity, a question where Levy fully admits the answer is unknown. To European eyes, micro-betting sounds like just another name for the kind of in-play available on sports such as cricket for many years.
Different name, same game: At the same time, betr will be entering a space where many now see single-game parlays as ‘the killer app’. But as Paul Leyland from Regulus Partners puts it, “everyone will now be looking into micro-betting”.
Power play: “What will kill betr is if micro-betting is not a segment but the whole product,” Leyland adds. “If micro-betting is a part of a broader consumer offer, it might be powerful.”
“Is it on to something? Can it adapt its business model? Yes, it absolutely can. There is a credible path.”
Paul Leyland:“This is the thing; if they are a high-value disruptor, if they can turn all the high value customers in the market, who like in-play, into their customers first, if they can do that, then it can work.”
Further listening: Joey Levy talks micro-betting with Florida Funders.
The month in fundraisings
Not the only micro game in town: Predictive analytics company nVenue has received $1m in new strategic funding from the Eastern Band of Cherokee Indians bringing total investment to $4.5m. nVenue’s NextPlay API uses historical data and real-time inputs to make MLB and NFL predictions for in-game micro-betting.
Kinectify, a compliance and AML startup, has secured Seed round investment from OpenBet, Acies Investments, the Eastern Band of Cherokee Indians, Fifth Street Gaming, and Eilers & Krejcik. The amount was not disclosed. See Inside the Raise below.
Esports-betting odds provider Oddin.gg raised $4.5m via a Series A funding round led by current investors as well as Genting Ventures and Velo Partners.
20Shots: The company behind the Fantasy5 F2P games has raised £400k from venture capital firm Animal Capital, valuing the business at £5m.
ALT Sports Data, a San Diego-based pioneer of trading and consumer data for action and alternative sports, announced the closing of a Seed Round funding led by Trinity West Ventures.
Inside the Raise - Kinectify
In August gaming regtech firm Kinectify announced it had completed a Seed funding round.
Kinect 4: CEO Joseph Martin told E+M that Kinectify started seriously engaging with investors in November of last year when it targeted “premier” strategic gaming investors with whom it hoped to build relationships rather than simply finding groups willing to give the company funds. He noted Kinectify saw no sign of its fundraise being affected by any funding crunch.
Joseph Martin: “We ended up throttling back investment contributions of some investors to make space for others and turned some investors down because we were focused on strategic partners as opposed to simply raising funds.”
The cap table: The round was led by OpenBet, Acies Investments and the Eastern Band of Cherokee Indians while Eilers & Krejcik Gaming, Quinton Singleton and Seth Schorr and Seth Young, CEO and chief strategy officer respectively of Fifth Street Gaming, also participated.
Adds up: Young notes that investing alongside other names in the sector is “part of the calculus” for any investment but in this case, he “wrote the first check without even considering who else might participate at the time”.
On the funding crunch, Young says investors are now “more discerning which their checkbooks”.
Insider knowledge: Martin points out Kinectify was “born from inside the gaming space” with the founders coming from having worked in compliance departments at Caesars, William Hill, the Morongo tribe, MGM and others.
This “domain experience” meant Kinectify could see the potential in applying AML compliance software in a relatively small market such as US gaming.
Joseph Martin: “We understood that while the market is limited, we can go deep inside compliance departments building and deploying numerous modules to modernize a wide range of critical compliance functions.”
The wider picture: Gambling-related regtech provision is a hot area for investment with the interactive opportunity in the US driving the search for technology-driven solutions in areas such as AML and problem gambling. Seth Young from Fifth Street says the space “has been begging for modernization”.
“Compliance is one of the last pillars of a gaming operation that was stuck in the stone age,” he adds, pointing to opaque, hard-to-audit and time-consuming processes. “That is until Kinectify came along.”
Says Martin: “Compliance has largely lagged in this evolution, but recently that has begun to change. Interactive gaming is expanding the market opportunity.”
Seth Young: “I can’t envision a scenario where Kinectify does not become the market leader in compliance services based on what is built and planned.”
Long-term goals: Martin says Kinectify’s aim is to be the “compliance lynchpin of the gaming industry” with the longer-term aim of building an “industry leader of risk management”.
Have faith: Young says he doesn’t need a founder to spell out an exit plan. “That should be somewhat intuitive to the investor if they know their market.”
“The most important thing for a founder is to do what they say they’re going to do, and to either build towards revenue, a clear path to revenue, or whatever that north star metric is that makes the business valuable and relevant.”
The takeaway: Young says Kinectify has “genuinely impactful technology built by extremely credible people, and it’s a major innovation in an area that every gaming business struggles with, whether they’ll admit it or not.”
Growth company newslines
Prophet Exchange has launched its exchange product in New Jersey following licensing approval from the New Jersey Division of Gaming Enforcement.
U.S. Integrity has signed a partnership with Thrill One Sports & Entertainment to monitor for betting-related fraud.
BetSwap has signed an agreement with PlayUp to launch its online secondary marketplace technology. The offering will be launched for PlayUp users ahead of the new NFL season.
BetDEX, the decentralized sports-betting platform effort launched last year by Nigel Eccles of FanDuel fame has revealed an open-source technology platform called the Monaco Protocol which it says will power the BetDEX exchange beta and also its “mainnet” exchange.
Startup (re)focus - Parleh Media
What’s the latest news? With the regulator finally releasing its Q2 data, all eyes were on Ontario last week and what many suggested were somewhat disappointing totals for GGR. But Steve McAllister, editor-in-chief at Gaming News Canada (as the Parleh newsletter was recently renamed), suggested there are clear signs that the situation will improve in the months to come.
“I'd suggest they're OK,” he said of the GGR figure of C$162m on a handle of C$4.08bn.
“We'll get a better indication on the Ontario market in the fall with NFL, CFL/Grey Cup, MLB postseason, the start of NHL and NBA regular seasons, and the World Cup,” he added.
Building momentum: As for Parleh Media, it continues to go from strength to strength. “Our multi-year deal with NorthStar Bets is up-and-running,” says McAllister. “So we’re now providing social media support and original video content to another regulated sportsbook in Ontario.”
The group is also in discussions with several sportsbooks in Ontario “as all players try to navigate the unique bonuses and inducement marketing rules”.
It also rebranded its B2B newsletter to Gaming News Canada to reflect its focus on the Canadian industry.
Funding update: Parleh raised additional funding from existing and new investors in May and June and has added a couple of advisors to supplement the existing group of executives, says McAllister.
The outlook: Parleh Media continues to add sportsbooks and casinos to its roster of clients while it continues to work with operators on further partnerships.
Steve McAllister: “Seeing the industry play out as forecasted, especially with the number of operators, has increased the level of enthusiasm for the company’s existing and potential partners, the investor group and staff.”
What we’re reading
Y don’t you: Sometimes accelerators need disrupting too.
Fail upwards: “In Silicon Valley, there is always money for the repeat founder.”
Scott Longley firstname.lastname@example.org
Jake Pollard email@example.com