Why dealmaking in the sports betting and online gambling world is currently insane
Just a few years ago, sports betting sat in a legally dubious place in the U.S. That was until the U.S. Supreme Court cleared the way for states to legalize the practice in 2018, striking down a 1992 federal law that largely restricted gambling and sports books to Nevada.
That decision arrived just in the nick of time. During the pandemic, as casinos shuttered their doors and consumers looked for activities to eat up their free time, online gambling and sports betting took off. Shares of DraftKings, which went public via a SPAC merger, for instance, have risen 350% since the start of the coronavirus’ spread, valuing the company at about $22 billion.
Now according to a Tuesday morning CNBC report, DraftKings has made an offer to buy Entain, a U.K.-based sports betting company behind Ladbrokes, for about $20 billion in cash-and-stock—yes, almost the entire value of DraftKings itself.
There’s a couple of trends driving this dealmaking: When you have valuable stock, it’s a good time to acquire companies. DraftKings too has followed this trend: It agreed to acquire Golden Nugget Online Gaming, which really does what it says on the label, for about $1.6 billion in stock in August.
DraftKings has also been looking to diversify away from business that concentrates around the sports season. Not to mention, the online betting customer is apparently more valuable than a sports betting customer. But the company independently has had trouble winning customers in that space. Here is DraftKings CEO Jason Robins on that point, per CNBC: “We definitely feel in the iGaming segment that we do better with people who are sports fans, that we can cross-sell, and we’ve been working hard to try to extend our brand and extend our reach into the non-sports fan iGaming audience.”
Reports of the Entain offer alsotoo speak to that.
I also can’t help but wonder to what extent desperation on part of the physical casino operators, which have faced an existential crisis amid the pandemic, have been driving up valuations and the pace of dealmaking.
MGM Resorts International, a major Las Vegas player, sought to acquire Entain for about $11.1 billion in January, though the latter rebuffed the bid for being too low (Entain and MGM to some extent would’ve been a natural fit: The two have a sports betting partnership in the U.S. known as BetMGM). Caesars Entertainment in September announced plans to acquire U.K.-based online betting business, William Hill, for about $4 billion. And to drive the point home on just how hot the space has gotten, media brand Sports Illustrated too has gotten into the online sports betting space.
At any rate, the 2018 Supreme Court ruling unleashed a very active online gambling and casino industry. The pandemic supercharged it.
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Jessica Mathews compiled the IPO and SPAC sections of this newsletter.
- Sorare, a French fantasy soccer, sports trading cards, and NFT company, raised $680 million in Series B funding. SoftBank led the round and was joined by investors including Atomico, Bessemer Ventures, D1 Capital, Eurazeo, IVP, Liontree, Benchmark, Accel, and Headline, valuing it at $4.3 billion.
- Fivetran, an Oakland, Calif.-based-based automated data analytics company, raised $565 million Series D funding valuing it at $5.6 billion. Andreessen Horowitz led the round and was joined by investors including General Catalyst, CEAS Investments, Matrix Partners, ICONIQ Capital, D1 Capital Partners, and YC Continuity. It also acquired HVR for $700 million.
- Cars24, an Indian used motor and car marketplace, raised $340 million in Series F funding, valuing it at $1.8 billion. DST Global, Falcon Edge, and SoftBank Vision Fund 2 led the round and were joined by investors including Tencent, Moore Strategic Ventures, and Exor Seeds.
- SmartLabs, a Boston-based lab space startup, raised $250 million in Series B funding. ArrowMark Partners led the round and was joined by investors including Winslow Capital Management and Onex Falcon.
- TrueLayer, a London-based open banking company, raised $130 million. Tiger Global Management led the round valuing it over $1 billion.
- IVX Health, a provider of outpatient infusion centers, raised $100 million in Series F funding. Great Hill Partners led the round.
- Lightricks, an Israel and New York City-based creator of photo and video editing apps including Facetune2, raised $100 million in Series D funding (an additional $30 million was secondary) valuing it at $1.8 billion. Insight Partners and Hanaco Venture Capital led the round and were joined by investors including Goldman Sachs Asset Management, Clal Tech, Harel Insurance and Finance, and Greycroft.
- Eat Just’s GOOD Meat division, a San Francisco-based maker of sustainable meats, raised $97 million in funding. Investors include UBS O’Connor, Graphene Ventures K3 Ventures, Resilience Reserve, and businessman Fernando Chico Pardo.
- Provi, a Chicago-based online ordering platform for the beverage alcohol industry, raised $100 million across two rounds: $75 million in Series C funding at a valuation of $750 million led by D1 Capital Partners and $25 million in Series B funding by CPMG.
- Cytrellis, a Woburn, Mass.-based medical technology company focused on cosmetic procedures, raised $50 million in Series C funding. D1 Capital Partners led the round and was joined by investors including Sands Capital.
- FloBiz, an Indian-based startup neobank focused on SMBs, raised $31 million. Sequoia Capital India and Think Investments led the Series B.
- bolttech, an insurtech, raised another $30 million in series A funding led by Activant Capital Group.
- 3G, a Shelton, Conn.-based maker of a transportation management and shipping software maker, raised $15 million. Investors included Sumeru Equity Partners and Hercules Capital.
- Niio, a New York City-based digital art platform, raised $15 million. Investors include L Catterton, Entree Capital, Pico Partners, and Saga VC.
- Cloudsmith, a Northern Irish startup focused on software supply chain management, raised $15 million in Series A funding. Tiger Global led the round.
- Metrika, a Cambridge, Mass.-based blockchain intelligence company, raised $14 million in Series A funding. Neotribe Ventures led the round and was joined by investors including Coinbase Ventures, Samsung NEXT, Nyca Partners, and SCB 10X.
- Boom Entertainment, a remote creator of sports gaming apps such as NBC Sports Predictor, raised $15 million in Series A funding. Sands Capital led the round.
- Gramercy Extremity Orthopedics, a Richardson, Texas-based maker of orthopedic medical implants, raised $10 million in Series A funding; Seabridge Capital led the round.
- Gardyn, a Washington D.C.-based homegrown food startup, raised an additional $5 million in funding from JAB Ventures.
- Veracity, a New York City-based personal care and wellness business using hormone testing, raised $5 million in seed funding. Global Founders Capital led the round and was joined by investors including L Catterton, Meridian Street Capital, Great Oaks, FAB Ventures, and Silas Capital.
- DoorLoop, a Miami-based rental property management software company, raised $10 million in seed funding. Investors included DoorLoop's co-founders Ori Tamuz, David Bitton, Adam Mait, Itay Gardi, Matt Cave, and Dean Brodesky along with Irving Weisselberger and Jason Morjain from Dragonfly Investments.
- Steward, a Portland-based funding platform for farms and food producers, raised $8.8 million in Series A funding. The Grantham Foundation, Tripple, and Ponderosa Ventures led the round.
- Sprout, a Brazilian maker of an app for investing in the U.S. market, raised R$30 million ($5.6 million) in seed funding. Investors included Y Combinator, Public.com, Sound Ventures, Liquid2, Geometry Ventures, HOF Capital, Quiet Ventures, First Check Ventures, Investo, and The Marathon Lab.
- Bzaar, a U.S.-based marketplace connecting retailers to manufacturers in India, raised $4 million in seed funding. Canaan Partners led the round and was joined by investors including Binny Bansal (Flipkart co-founder), Sameer Nigam and Rahul Chari , Lee Fixel (Addition founder), and Ashish Gupta (Helion Ventures co-founder).
- FuzzyBot, a Los Angeles-based game development studio, raised $3.5 million in seed funding. BITKRAFT Ventures led the round and was joined by investors including Sisu Games Ventures and 1Up Ventures.
- Maqsad, a Pakistan-based edtech platform, raised $2.1 million in pre-seed funding. Indus Valley Capital led the round and was joined by investors including Alter Global and Fatima Gobi Ventures.
- Aurora Propulsion Technologies, a Finnish spacecraft propulsion startup, raised €1.7 million ($2 million) in seed funding. Practica Capital led the round and was joined by investors including TESI and The Flying Object.
- FountainVest Partners agreed to acquire Ziwi Pets, a New Zealand-based pet food brand, valuing the company at around NZ$1.5 billion (about $1.1 billion), per Bloomberg.
- Advent International invested in Assembly, an ecommerce software and data company, valuing it over $1 billion.
- Avionté, backed by Serent Capital, acquired WorkN, an Atlanta-based staffing software maker. Financial terms weren't disclosed.
- Lightyear Capital agreed to acquire Shellman & Company, an attestation and cybersecurity compliance services company. Financial terms weren't disclosed.
- Boyne Capital acquired A&A Global Imports, a supplier of packaging materials to the medical and recreational cannabis industry. Financial terms weren't disclosed.
- Ardian acquired a majority stake in Florida Food Products, a food products company, from MidOcean Partners for an enterprise value of over $1 billion.
- Classic Collision acquired ProCare Collision, a Texas-based collision repair company, from Kinderhook. Financial terms weren't disclosed.
- CoreLogic acquired Next Gear Solutions, an Oxford, Miss.-based maker of property restoration software, from Serent Capital. Financial terms weren't disclosed.
- F5 is acquiring Threat Stack, a Boston-based security and compliance startup, for $68 million. Threat Stack is backed by investors including Eight Roads, F-Prime Capital, and Scale Venture Partners.
- Walgreens Boots Alliance (Nasdaq: WBA) made a $970 million majority investment in Shields Health Solutions, a health system-owned specialty pharmacy care.
- Freshworks, a San Mateo, Calif.-based business software company, now plans to raise up to $969 million in an offering of 28.5 million shares priced between $32 and $34 per share. The company posted $250 million in revenue in 2020 and reported a net loss of $57.3 million. Accel, CapitalG, Tiger Global, and Sequoia Capital back the firm.
- Toast, a Boston-based restaurant point of sale and management system, now plans to raise up to $782.6 million in an offering of 21.7 million shares priced between $34 and $36 per share. The company posted $823.1 million in revenue in 2020 and reported a net loss of $248.2 million. Bessemer Venture Partners, T. Rowe Price, TCV, and Tiger Global back the firm.
- Olaplex Holdings, a Santa Barbara, Calif.-based hair care brand, plans to raise up to $107.2 million in an initial public offering of 67 million shares priced between $14 and $16 per share. The company reported net sales of $99.6 million in 2020 and a net loss of $22.4 million. Advent International and Mousse Partners back the firm.
- Allvue Systems Holdings, a Coral Gables, Florid.-based alternative investment management software company, plans to raise up to $290.7 million in an offering of 15.3 million shares priced between $17 and $19 per share. The company posted $111.3 million in revenue in 2020 and reported a net loss of $45.1 million. Vista Equity Partners backs the firm.
- Xplor Technologies, an Atlanta-based payments and commerce software company, confidentially filed for an IPO, per Bloomberg. An IPO may value the company at up to $6 billion. Advent International backs the firm.
- Macleods Pharmaceuticals, an Indian pharmaceutical developer and manufacturer, has selected bankers for an initial public offering in the country, according to Bloomberg. The company plans to raise about $1 billion.
- Mattress Firm, a Houston, Tex.-based mattress company, filed confidentially for an IPO, per Reuters. South African retailer Steinhoff International Holdings owns a majority stake in the company.
- WeWork, a New York City-based coworking space, now plans to list on the New York Stock Exchange in late Oct. via its merger with BowX Acquisition Corp., a SPAC. The company had formerly expected to complete its merger by the end of Sept.
- Partners Group, a Swiss-founded private equity firm, raised $15 billion for a private equity fund.
- Steven Mnuchin, the former Treasury secretary under Trump, raised $2.5 billion for his private equity fund, Liberty Strategic Capital. Investors include the Saudi Arabia Public Investment Fund, per Bloomberg.
- Blumberg Capital, a San Francisco-based early-stage venture investor, raised $225 million for Blumberg Capital Fund V.
- Blue Bear Capital, a venture and growth equity firm focused on A.I. applications in energy, infrastructure, and climate change, raised $150 million for its second venture capital fund.
- MPowered Capital, a Minneapolis investment firm founded by Marcia Page, Co-Founder and Executive Chair of Värde Partners, launched with $75 million from Page to back female and other underrepresented talent.
- Fifth Wall, a Los Angeles-based investor focused on the real estate industry, named Peter Gajdoš as a partner, where he co-leads the Climate Technology Investment team. He was previously Head of Venture Capital at IPM Group and Managing Director and Portfolio Manager at Presidio Partners.
- Trive Capital, a Dallas-based private equity firm, promoted Shravan Thadani to partner.
- Northzone, a London-based investor, added Kilian Pender as a partner.
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