A relatively unknown tech company is well on its way to becoming the UK’s next billion dollar firm has revealed the great lengths it had to go to in order to raise capital.
FanDuel, a fantasy league platform for fans of US sports that was founded in Edinburgh but is now headquartered in New York, pitched to over 80 investors before finally closing a $4 million (£2.56 million) deal as part of a Series B funding round in summer 2011. More recently, it raised $70 million (£45 million) in a Series D funding round, bringing total investment in the company to $88 million (£56 million), with the vast majority of that coming US venture capitalists.
FanDuel co-founder Lesley Eccles said: “In the US, more and more people have heard of FanDuel but in the UK we’re still relatively unknown. Nobody realises we’re building a billion dollar business on their doorstep.”
The four-year-old company, which has just moved into the same office block as travel-booking platform Skyscanner, charges sports fans to compete in one-day fantasy leagues across the NFL, NHL, the NBA and other sports. It’s expecting to take $600 million in entry fees this year and $1.5 billion next year. Of the $600 million (£384 million) it takes in 2014, $540 million (£345 million) will be paid out in prize money and $60 million (£38 million) will be pocketed.
Despite the promising numbers, FanDuel has found it hard to raise money from UK investors for its web and mobile gaming platform.
“It’s definitely harder getting investment in the UK,” FanDuel CEO Nigel Eccles told Techworld as the company launched it's new office (see below). “I’ve been down to London and pitched all of those guys. There are certain brand name VCs that have turned us down every round but I couldn’t mention names.
“It’s quite funny. I think one of the problems with the UK VC is they’re not familiar with the US market, which is fair. They don’t see the opportunity around fantasy sports. I’d also say, without being critical, that by they’re nature they need to be slightly more conservative and we were always a very risky bet.”
Eccles said that he dedicated an entire year towards raising the $4 million round. “It’s a full time job,” he said, echoing the sentiments of Huddle CEO Alistair Mitchell last week. “I was fortunate enough to have a strong co-founding team that allowed me to walk away from the business and it would still run,” said Eccles.
Eccles added: "I found it challenging to raise money. For Series B, we pitched 84 different VCs on one term sheet. Maybe it was 86."
Earlier this month FanDuel signed a strategic four-year deal with the NBA, which will see the sports body promote FanDuel's platform, in addition to offering a series of free games on FanDuel throughout the 2014/15 season and beyond.
Eccles described the deal as "phenomenal", adding that it's a major landmark for the company.
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