Luckbox exceeds expectations with CAD$3.8m funding round

Esports betting operator Luckbox has raised more than CAD$3.8m ((£2.2m/€2.5/2.8m), well above expectations, in the first tranche of a funding round ahead of its initial public offering on the TSX venture exchange, prompting the business to launch a new funding round.

The business said the round was “heavily oversubscribed” due to high demand and vastly exceeded the expected proceeds of $2m to $3m.

“Due to overwhelming demand, we have opened a second tranche for potential investors to get involved,” Luckbox said.

This tranche will close on 15 June and, like the first round, will be co-led by Gravitas Securities and Beacon Securities.

“We’ve been thrilled with the response so far and I’d like to take this opportunity to thank everyone who’s supported us so far,”  Luckbox chief executive Quentin Martin said. “These are extremely exciting times.”

In May, Luckbox signed a letter of intent with capital pool company Elephant Hill, a TSX-listed shell company through which private businesses can go public.

“We will become only the second publicly listed esports company in the world, so our offering is an extremely rare opportunity,” Martin said.

Luckbox’s shareholders will receive 32,200,142 Elephant Hill shares, priced at CAD$0.42 per share, and 2,076,143 Elephant Hill share purchase warrants.

When the deal closes, Elephant Hill’s current directors will resign and be replaced by a five-member board jointly appointed by the two companies.

Luckbox said the increased interest in esports betting after the disruption of traditional sports due to the novel coronavirus (Covid-19) pandemic played a major role in convincing the business to go public.

“It’s been a phenomenal first half of the year for us and that’s been reflected in the interest from investors,” Martin said. “We’ve seen a 500% increase in betting volume since March. Turnover has risen to almost 13 times that seen in November 2019, while deposits are up tenfold since then.”

“Esports is one of the hottest sectors anywhere right now and investors are clearly seeing the opportunity, especially with many alternative forms of entertainment badly affected by the coronavirus outbreak.”