Underdog tops $1 billion valuation following Series C funding round
Underdog achieved a proverbial milestone with a funding round disclosed on Wednesday (26 March), clearing a valuation of $1 billion for the first time in company history.
The $70 million Series C round values the online sports gaming company at $1.2 billion (£927.4 million/€1.1 billion), nearly tripling the valuation Underdog received three years ago. The round led by Spark Capital represents the sports gaming industry’s largest investment from a top-tier Silicon Valley venture capital firm, Underdog wrote in a 26 March press release.
“This investment fits Spark’s philosophy of backing products we love from creators we admire,” said Will Reed, a general partner at Spark Capital. “Underdog has proven they can win where it matters most: product. They’ve also shown they can attract top talent from gaming, tech and sports.”
“A real accelerator”
The announcement came roughly a year after Underdog rolled out a legal sports betting platform in North Carolina. The site’s sports wagering debut in the Tar Heel State marked the first time Underdog offered legal sports betting in a US jurisdiction. The company made the announcement ahead of Thursday’s Sweet 16 in the NCAA tournament.
Despite the milestone, CEO Jeremy Levine doesn’t plan to rest on his laurels. The current funding round may exceed $100 million, according to the sports gaming operator.
“Spark’s investment is a real accelerator,” said Levine in the release. “We’re going to continue to invest in people and product – and as fast as we can. There is so much more to build and we’re going to keep building.”
Rebounding from New York settlement
Beyond North Carolina, the company offers fantasy pick ‘em products in a large portion of US jurisdictions including California, Texas and Washington DC. One state not on the list is New York, where Underdog Fantasy made its debut in December 2022.
Last week, the operator temporarily pulled the fantasy product after the New York State Gaming Commission (NYSGC) ruled that the company had operated unlawfully.
While Underdog Fantasy agreed to a $17.5 million fine, the company did not admit any wrongdoing. Under the settlement, Underdog withdrew its fantasy draft and pick ‘em products in New York.
The NYSGC, according to the settlement, determined that Underdog acted under the assumption that it had operated in good faith.
Nearly tripling Series B valuation
Underdog last conducted a major funding raise in 2022 when it announced a $35 million Series B round that valued the company at $485 million. The round contained funds and accounts managed by BlackRock and Acies Investment. Acies joined a list of Underdog investors that includes Mark Cuban, Kevin Durant, Trae Young and Breon Corcoran, a former CEO at Paddy Power Betfair.
At the time, Chris Grove of Acies noted that a typical sportsbook spent around $500 on average to acquire a single customer. Underdog acquired customers at a sliver of that, Grove explained, giving the company a competitive advantage with “best-in-class” acquisition and retention strategies.
Grove also lauded Underdog for its focus on developing innovative gaming products, which he believes has led to a superior customer experience. Three years later, Reed of Spark Capital echoed Grove’s sentiments, observing Underdog’s “unwavering focus” on product and customer experience explains why he believes the company has emerged as the most innovative player in sports gaming.