The crowdfunding route in igaming
The crowdfunding route in igaming
From a Doctor Who rap album to Meat Soap you can crowdfund just about anything these days, and it’s something that start-ups in gambling are increasingly turning to as a means of raising funding.
Premier Punt, WantMyBet and Football Index have all engaged in equity crowdfunding in the past 12 months. DFS operator Premier Punt hit their target as did Football Index whilst WantMyBet just fell short.
All three opted to go down the Seedrs route for their campaigns with Football Index raising the most significant figure at £1.13m for a 20% equity. Aberdeen based outfit Premier Punt meanwhile offered 6.6% equity for £200,000, a target which they surpassed with time to spare.
With ICE 2017 around the corner and the annual start-ups pitch competition, those that don’t make the grade may turn to crowdfunding themselves as a source of revenue. This year’s Pitch ICE features 11 shortlisted companies, four of which are esports focused.
GamCrowd, the company which organises the Pitch ICE competition, has helped companies to raise funds in the past. Fenway Games went down the crowdfunding route but with the industry specialised GamCrowd rather than Seedrs. This was for the development of SnapBet (formerly known as SwitchPlayed), the flagship product from the firm which is a developer of real-time, mobile and social products that operate during live sporting events. A total of £25,000 was raised for a 10% equity.
Peter Gough at Fenway Games told Totally Gaming: “Crowdfunding is a fantastic option for all start ups, in particular, in the igaming sector, where there seems to be a strong level of interest and innovation from the grassroots community.
“There are, of course, areas to watch out for and to learn more about. The key question to ask yourself is whether you have an initial 'crowd' to bring to the table, as crowdfunding is very much about momentum and it is vital to hit the ground running. It’s also vital to study the legal side of your campaign to fully understand how this will affect you ability to move forwards in the future and remain flexible.”
He continued: “At Fenway Games, we we very lucky. We raised enough capital to build a v1 of of initial product SnapBet, strengthened our team with the appointments of David Sargeant and Mick Robins, gained huge credibility with investors such as Ian Hogg and Chris North, won awards and generated positive PR and commercial interest. This has enabled Fenway Games to move into 2017 in a strong position with exciting news to follow.”
We also spoke to Adam Cole, CEO and Founder of Football Index, to see why they opted for this route. He commented: “We saw crowdfunding as opportunity to reach a committed audience and raise money at the same time. In the event we had over 500 investors, many of whom have become big advocates and users of the site as well as shareholders.
“Generating a sense of urgency around fundraising is always difficult and a ticking clock and building momentum is very useful from that perspective. In the instance of Seedrs there was little grief associated with the process as they become the single shareholder representing the 500.”
Football Index, in case you’re yet to come across it, is akin to stock market trading for footballers and accordingly it calls itself the ‘world’s first football stock market’. It’s earned excellent reviews, holds gambling licenses from both the UKGC and the Jersey Commission and offers players the opportunity to try it out risk free for seven days.
Cole continued: “We raised £1.13m which was a significant overfund above our initial £800,000 target. Funding always takes off once you hit target. We have since raised a further £1.1m through Burlywood Capital with Mark Blandford as our cornerstone investor. Some of this investment came from a Chinese partner with whom we're developing a product for that territory.
“Trading on the INDEX has been very brisk since the new year with most Football Traders seeing great returns - we called it the Santa Rally! We will be advertising on TV as well as outdoors and on TalkSport in Q1 of 2017 ... so overall it’s a great time to get involved!”
Totally Gaming says: Clearly crowdfunding can work and with so many investors interested in the worlds of igaming and gambling full stop there’s huge potential for it in our industry. As both Cole and Gough note though, it’s a case of fail to prepare, prepare to fail.