Venture capital fund raises $ 10 million for investments in sports betting and online gaming technology companies
In early 2018, Lloyd Danzig thought he would one day accept a quantitative trader position for a major hedge fund or investment manager, a position that seemed natural to him given his academic and professional background. After all, Danzig had earned an undergraduate degree in economics from the University of Pennsylvania and a graduate degree in computer science from Columbia University. And he had experience as a fixed income trader and data scientist.
Yet Danzig’s career path changed in May 2018 when the United States Supreme Court overturned the 1992 Professional and Amateur Sports Protection Act, helping to pave the way for the legalization of sports gambling. in line. It also led Danzig to change his career goals. Two years ago, Danzig launched Sharp Alpha Advisors, a company that serves as a strategic and financial advisor to startups, casinos and professional sports organizations to better understand the evolution of the sports betting industry.
Sharp also recently broadened its ambitions and raised $ 10 million from high net worth individuals, family offices and institutions for a venture capital fund that invests in early stage technology companies focused on sports betting and gambling. money online.
The vehicle, Sharp Alpha Fund I, has so far made 11 investments and deployed $ 2 million in Seed and Series A funding rounds. It plans to participate in follow-up rounds for some of the portfolio companies and invest all of the capital by the end of 2023. It also has a co-investment vehicle through which fund sponsors can invest in specific companies.
Danzig rated the Goldman Sachs
Instead, they acquire technology start-ups or license technology to those companies, some of which are not part of the traditional sports betting industry, where people bet on the results of sporting events. These startups could focus on e-sports, online casino games, fantasy sports, or other areas. For example, DraftKings acquired in April Blue Ribbon Software Ltd., a software company that develops technology jackpot promotions. Danzig expects the big casino operators to follow suit and acquire technology companies rather than develop the technology on their own.
“One of the things that excites me the most is the startups that are building the products and infrastructure that will allow DraftKings and FanDuels around the world to speak better to sports bettors who like to put some cash on the game. to have a little extra rooting interest to make it more fun, ”Danzig said. “In my opinion, not all social and entertainment aspects of sports betting have been addressed by mass market products yet. Many of the companies we invest in will be the vehicles that make sports betting one of the most compelling products of the next decade. “
The fund’s investments include Players’ Lounge, a platform that allows people to play video games against each other and bet money; GridRival, a fantastic motorsport platform; PickUp, a social prediction platform; and Prophet, a company that develops a peer-to-peer sports betting exchange.
Danzig anticipates in the coming years that DraftKings, FanDuel and other major players will seek to expand their offerings into what it calls “competitive entertainment”, which encompasses sports betting, fantasy sports, online casinos, video games, the trade in non-fungible and digital tokens. collectibles and connected fitness like Peloton where people compete against each other.
“It’s all going to be part of a great digital online ecosystem,” Danzig said. “All of these competitive entertainment activities are digitized, streamlined, socialized and gamified. We believe that the sports betting industry and its current growth is one of the main catalysts for the future of competitive entertainment. “
Although Sharp is the general partner of the fund and owns 100% of Sharp Alpha Advisors, he has formed an advisory board that helps him decide which companies to invest in and provide advice. The board is made up of Roy Behren, co-chairman and chief investment officer of a $ 5.2 billion asset manager; Daniel Bernard, general partner at Mindspring Capital, a venture capital firm; Adam Davis, former commercial director at Harris Blitzer Sports and Entertainment; Keith Horn, former COO at Elliott Management, Corp., an investment management firm with $ 48 billion in assets under management; Don Kornstein, vice president of Caesars Entertainment Inc.
Recently, Danzig was at a sports betting conference with industry executives to discuss how much has changed since May 2018.
“On the one hand, it feels like we’ve been here for so long and we’ve knocked over every stone and thought from every angle,” Danzig said. “And then we take a step back and we do an audit and everyone agrees that we are at the end of the first or at the top of the second run. There are at least five or 10 years of exponential growth ahead. It’s the very first days.