Q&A: Mark Locke, CEO, Genius Sports Group
You received a £10m investment from THCP late last year. Why did you opt for a private equity raising at this stage of your development as a company, as opposed to an IPO?
It was felt by the management and shareholders that having a funding partner that had a real interest and understanding of our business and sector and who approached funding provision in a flexible and pragmatic way was more appropriate than executing an IPO at this stage of our growth. THCP provided a debt and equity structure that suited the needs of the business exactly and have since worked in a very close and supportive fashion to allow us to pursue the key opportunities that we have identified in order to further develop the business.
You also reorganised the business as part of the private equity raising. What impacts will this have, if any, on the strategy and operation of the business?
As the business has grown we have continually increased our focus on partnerships with sports. As a result of this and to manage the next stage of growth more effectively it made sense to more formally separate the business into two divisions: Genius Sports and Betgenius. To briefly explain the changes Genius Sports is our sports-facing entity and will provide technology and services, ranging from league management and data capture and integrity services, to data and IP commercialisation. Meanwhile Betgenius will of course continue to offer its established services to bookmakers and lotteries.
What performance targets have been set for the business within the lifetime of this PE cycle?
One of the great things about working with THCP is that they recognise the growth trajectory that the business is on. As such, they are supportive of the various avenues, both organic and acquisition-led, that the business has available to it and work closely with us to make sure we capitalise on those opportunities rather than spend time focusing on metrics that often rapidly become obsolete.
Why is the demand for integrity services increasing of late? Is it down to growing incidences and risks in this area, client demands or regulatory pressure?
I think all of these factors have had an impact. However, more importantly, there has been an increased awareness amongst sports bodies of the value that an improved integrity structure has within their operations. By safeguarding the integrity of sporting events, fans are always treated to a fair and transparent game, players have the utmost belief in having a winning mindset, and league representatives are equipped with information and tools to maintain a clean, honest and exhilarating sport.
In terms of new markets and international aspirations, is there an opportunity for sports integrity services in the US given the attention on sports betting right now?
Well there is definitely an opportunity for SportIM in the US market but that’s not simply down to the increased attention on sports betting among certain sporting bodies and politicians. Aside from the popularity and interest in sports increasing in general, the opportunity is also about the attention being given to the integrity of sports – and actually that applies to any market which is regulated or plans to regulate in the future. Both the sport and betting sectors need to be smart and protect integrity, and we’re well positioned to do that.
You recently acquired Sporting Pulse, which operates in the highly competitive area of data-collection and commercialisation. Why did you choose to bring this service capacity in house now, given many of your clients have already integrated established scouting/ data services?
We believe the collection, protection, integrity and commercialisation of sports data is key to the continued success and growth of the sports industry. Our role in that is to use our knowledge and technology to try and become a trusted partner of sport, so bringing that piece in-house was a natural step.
What does the future hold for the sports data industry?
It’s pretty obvious to anyone interested in sports that sports data is a sector seeing significant growth – just look at the amount of analytics, game and player info, health and biometric data already being produced by teams, leagues and federations. But as the volume and complexity of this data grows, the more intelligent the technology powering it needs to be. So companies like ours will become integral in allowing sports to flourish, in part by helping organisations realise the commercial value of their data but also by protecting their integrity too. On the betting side, the growth of sports data industry simply means all parties, from fans and punters to bookies, will benefit from a more immersive experience.
The supplier ecosystem has undergone significant change of late, with consolidation at the upper end and a huge number of smaller suppliers flooding into the market at the other. How do you see this shift in the supplier landscape impacting the industry, and the challenges it presents to a business of your legacy and scale?
As you say, we have seen a rapid emergence of a lot of smaller suppliers out there which are new to the business and have been attracted by a gold rush-type mentality rather than delivering sustainable longterm business returns and growth. In our space, frankly some of these start-ups lack the experience and expertise necessary to understand that you can’t provide a high quality, scalable service without having all the necessary parts in place. You can appear nimble and tech savvy but the reality is that you can’t scale and don’t have the requisite capabilities to compete at the top.
Leading on from this, how do you propose to grow your share of what is an increasingly crowded and competitive supplier marketplace?
By keeping on doing what we’re doing. We’ll build the business organically and grow our client base by delivering the highest margins for our bookmakers. But we will also grow by continuing to make intelligent and value-enhancing acquisitions where appropriate. Watch this space.
Innovation appears to have become more of a focus for operators in the post-POCT consolidation environment, as they look to turn to other areas to drive growth. How do you go about fostering this culture within the group, and how does this involve operators and partners you work with?
Innovation lies at the very heart of everything we do. From the way we structure our business and development teams to fostering an open and collaborative work environment, we constantly encourage free and independent thought. In fact, our development teams are given dedicated time to pursue their own interests in the sector, which has allowed some really exciting innovations to come about.
As CEO, you are about to embark on your most ambitious phase of growth to date as a company. Which aspects, if any, of the challenge ahead keeps you up at night?
With the industry growing so rapidly and so much new technology entering the market, one of our biggest challenges is making sound decisions on which new opportunities we should invest in and which developments we should follow. Whether it is through in house development or M&A, the key challenge is always understanding which areas will help our clients develop and grow the most without getting drawn into following fads or short-term distractions – no matter how exciting they may seem.