Underdog Fantasy is a US-based company focused on a sports betting social gaming platform, with a business model that sits between traditional sports betting and Fantasy Sports, providing users with competitive prediction game services in a legal and compliant manner.
Underdog describes the financing led by Spark Capital as the largest investment in the sports gaming industry by a top Silicon Valley company.
Underdog disclosed a round of financing, achieving a milestone with the company's valuation reaching $1 billion for the first time.
The $70 million Series C financing sets this online sports gaming company's valuation at $1.2 billion (927.4 million GBP/1.1 billion EUR), nearly three times the valuation of Underdog three years ago. In a press release dated March 26, Underdog wrote that this round of financing led by Spark Capital is the largest investment by a top Silicon Valley venture capital firm in the sports gaming industry.
Spark Capital General Partner Will Reed stated: "This investment aligns with Spark's philosophy of supporting products we love and creators we admire." "Underdog has proven they can win in the most important areas: product. They have also shown they can attract top talent in the gaming, technology, and sports sectors."
"A real accelerator"
About a year ago, Underdog launched a legal sports betting platform in North Carolina. This marked the first time Underdog offered legal sports betting services in a US jurisdiction. The company announced this news before the NCAA Tournament's Sweet 16 games on Thursday.
Despite achieving this milestone, CEO Jeremy Levine is not content with the status quo. According to this sports betting operator, the current financing could exceed $100 million.
"Spark's investment is a real accelerator," Levine said in the press release. "We will continue to invest in talent and products—and at the fastest possible speed. There is still much to build, and we will continue to build."
Bouncing back from a New York settlement agreement
In addition to North Carolina, the company also offers fantasy draft products in most parts of the United States, including California, Texas, and Washington D.C. New York State is one state not listed, where Underdog Fantasy first debuted in December 2022.
Last week, the New York State Gaming Commission (NYSGC) ruled that the company was not operating properly, and subsequently, the operator temporarily removed this fantasy game product.
Series B financing valuation nearly tripled
The last major financing for Underdog was in 2022, when the company announced a $35 million Series B financing, valuing it at $485 million. This round of financing involved funds and accounts managed by BlackRock and Acies Investment. Acies joined the list of Underdog investors, including Mark Cuban, Kevin Durant, Trae Young, and former CEO of Paddy Power Betfair, Breon Corcoran.
At that time, Chris Grove of Acies noted that a typical sports betting company spends about $500 to attract a customer. Grove explained that Underdog's cost to attract customers is just a small fraction of this figure, giving the company a competitive advantage with its "first-class" attraction and retention strategies.
Grove also praised Underdog's focus on developing innovative gaming products, which he believes has resulted in an outstanding customer experience. Three years later, Spark Capital's Reed also expressed the same sentiment, believing that Underdog's "unwavering focus" on product and customer experience explains why he thinks the company has become the most innovative in the sports gaming field.
