Venture investment in fantasy sports/online sports betting has been—for lack of a better analogy—a two-horse race the past few years, with rivals FanDuel and DraftKings having completed or nearing the finish line of mega-rounds at $1 billion+ valuations.
Earlier this week, FanDuel raised a $275 million financing to officially earn unicorn status, while DraftKings is believed to be raising $300 million (also at a 10-figure valuation). Combined, the companies have almost exclusively led a surge of venture investment in the space, nearly $600 million since the start of 2013, according to the PitchBook Platform, with more on the way.
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A new, capital-rich competitor has joined the mix, however.
Yahoo recently announced the launch of Yahoo Sports Daily Fantasy, which has surely caught the attention of its two main rivals due to the corporation’s deep pockets, millions of fantasy sports users and a similar betting platform. But competition in this industry has extended beyond big rounds, valuations and user bases; a crucial aspect to penetration in the greater sporting community has come via partnerships.
You may have noticed FanDuel and DraftKings logos popping up everywhere, for instance Floyd Mayweather’s boxing shorts in the big Manny Pacquiao fight, every ESPN show or the starting gate at the Belmont Stakes as American Pharoah raced to a historic Triple Crown. FanDuel has already teamed up with several NFL teams, along with the NBA and others, while DraftKings has inked deals with organizations including MLB, the NHL and the UFC.
So while Yahoo has the capital and clout to grab market share, it will need to do much more than just match the ever-growing piles of cash of its main competitors. Hardly a sure thing.
Here is a side-by-side look at FanDuel and DraftKings, featuring key VC financing metrics, notable investors and partnerships:
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