Good morning. In this edition of the startup month:

• We provide a guide for startups at ICE, including how to navigate the expo floor, who to listen to and how to prepare for a Pitch competition.

• In our investor interview, Lloyd Danzig from Sharp Alpha talks about why the sports-betting sector is ripe for innovation. 

• “It is worth noting that there are startup-like operators among the top 5 in the US,” he says.

• Plus, there is the latest funding round and growth company news.

Show me a gray sky, a rainy cab ride.

A startup guide to ICE

The chaotic nature of one of the biggest expos in the sector poses problems for startups hoping to meet the right people.

Bright lights, big city: “Big expos like ICE can be super overwhelming,” says Kelly Kehn, partner at HappyHour.io and co-founder of the All-In Diversity project. “With 35,000-plus attendees, hundreds of stands, millions of flashing lights, conference sessions and, of course, the networking dinners and parties, the week can be both exhausting and incredibly productive.”

• If customers or partnerships are the aim, Kehn suggests startups should pre-book as many meetings as they can. 

• “The majority of the industry will be at the show, so make it count,” she adds.

Call me if you get lost: “It‘s not just a case of rocking up to a conference and hoping to bump into someone,” says Darragh Toolan, co-founder, Fortuna Edge Media. A big expo takes preparation. “Have a clear understanding of the layout of the conference,” he adds.

• “Get familiar with the floor layout and where you are meeting people. It‘s a huge space and with so many stands and people, it can get disorientating.”

• “Do your homework, you should know all the latest developments of the company or person you are meeting. It‘s not about you, it’s about how others perceive you,” Toolan suggests.

• Benjie Cherniak, principal at Avenue H Capital, agrees: “It is important to set a schedule. ICE is about doing deals and gaining more contacts.” 

Fitbit: “Wear comfortable shoes,” is Kehn’s advice. “Schedule in some time to walk the floor. You’ll always find something that surprises you.” Toolan agrees, pointing out that walking the floor will happen as a by-product of moving between meetings. Among the Gaming Boardroom’s Kate Chambers’ tips for ICE are blister plasters along with Vitamin C tablets.

• Whisper it quietly: Don’t sit in on the session unless someone you want to speak to is on a panel. 

• “If someone has been ignoring your advances, but they’re speaking on a panel, use the opportunity to make a beeline for them after they speak,” says Adam Wilson, CEO at SplashTech.

Net work: Late nights are part of the game, no matter how you approach the week. “Transform yourself into a networking animal and have as many relevant conversations as possible,” says Ben Robinson, co-founder of RB Capital. 

• “Our industry is still small enough that connecting with the right company or individual is only a few connections away,” he adds.

• “If you're totally green,” then an event such as ICE is all about networking and “uncovering the right individuals to speak with post-conference”.

• But there are multiple warnings about taking the conference spirit too literally. 

• “Try not to stay out too late at industry events networking as you need to be ready to practice your pitch to everyone you meet from the start of the day,” cautions Chambers.

• “Get a good night's sleep,” says Robinson. “Late-night networking may seem like a good idea at the time but drinking late into the night will kill your meetings the following day.”

The wash up: Wilson says a good conference can give startups a “surge of confidence”. “You should come away with a healthy balance of new contacts, firming up existing relationships, competitive intelligence and market research,” he adds.

• “If capital is the main focus, look to meet investors,” says Kehn.

• Meanwhile, Toolan says that big expos can also be the place to do deals. 

• “We have done a lot of deals at ICE, SBC Americas and other conferences like these.”

• “You should have already had some sort of conversation in flow, so that by the time you meet at these conferences it‘s about putting a face to the name and instilling confidence in your prospect.” 

• “If you have meetings lined up to close deals, yes, that can and does happen, but if you’re an unknown quantity, you’ll need to turn those ‘conference optimism’ conversations into actionable follow-ups and persevere,” says Robinson.

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Pitch tips

Too late for the participants this week, but here are some tips for those looking at future Pitch competitions.

First impressions: Fourteen companies are duking it out in the Pitch competition taking place over the next two days. It has to be hoped all will be well-prepared and have honed their presentations down to the second. That at least is the hope.

• “Your prep for your pitch should have started months before, with a full real-life rehearsal with your colleagues,” says Toolan.

• “Keep it short and succinct,” he adds. Advice that E+M can fully endorse. “Make every moment count and remember that less can sometimes be more,” adds Cherniak.

• “Create a short, punchy and interactive presentation that will resonate with investors,” says Robinson. 

• “Ensure you know your numbers back to front and clearly outline the problem you‘re trying to solve, your solution and the ‘so what’,” he adds.

• What’s the ‘so what’? The TAM and what percentage of that you are aiming to grab.

One piece of advice above all: Don’t go over time. “It looks unprofessional and shows that you haven't taken this seriously by being unprepared,” says Toolan. Kehn adds that there are three aspects of pitches that she looks out for:

• Quality: “Your deck/presentation should be clear and concise and of the highest quality,” she says. “You are on stage, make it count. It’s also really important to articulate the quality of your team.”

• Competitive positioning: “Make sure to articulate what makes your company special. We want to hear what makes your brand stand out and how it will remain as a stand out long term.”

• Scalability: “Be clear about the addressable market for sure, but focus on how large your business can be and how quickly you can get there.” 

Investor interview – Lloyd Danzig

Having spotted an opportunity post the fall of PASPA, Lloyd Danzig has quickly established a name for himself as one of the leading backers for gaming-related startups.

Unready: The Supreme Court decision in 2018 took by surprise a gaming and betting industry that was ill-equipped to deliver the innovation needed to fully exploit the opportunity. Such is how Sharp Alpha’s managing partner Lloyd Danzig views the post-PASPA environment.

• “I really don’t think the tech ever evolved beyond a minimal-viable product,” he says.

• By this reckoning, operators were busy enough just going live and attempting to work out their unit economics.

The innovator’s dilemma: The market concentration at the top of the market has worked against innovation, in particular at larger businesses, Danzig argues. “It makes more sense if you are a large incumbent or market leader to focus on hitting your next quarterly targets and beating expectations,” he adds.

• This explains some of the top five, notably BetMGM and Caesars. 

• But it is different with the “startup-like” FanDuel and DraftKings. 

• For the average US sports fan, betting is a ”form of entertainment” and the pair have been honing their offerings ever since they first rose to dominance in DFS.

• “They were able to spend years catering to that customer and, fast forward to today, they are now leaders in micro betting and same-game parlays,” Danzig adds.

Feeling the heat: A big question for this year is the extent to which innovation might come from new entrants. As with DraftKings and FanDuel, Fanatics, for instance, also has “startup-like features”.

• “Sometimes it’s just a matter of semantics,” Danzig says. 

• “It’s a product which did not exist a year ago, being built by a completely new team that is doing all sorts of things that people will be doing for the first time.”

• But unlike fellow new market entrant betr, Fanatics has a”gigantic pool of capital” and an existing database.

It remains to be seen what the Fanatics product and UX will look like. But the idea of being a one-stop shop for sports fans – with betting being one part of the offering along with apparel, collectibles and (rumored) ticketing – could bring true disruption.

• If this “one-stop-shop [ahem] flywheel” shows signs of working, it will cause all participants to consider their own strategies.

• “Executives will be looking at how their businesses are positioned,” he adds. “That means startups are likely not the only ones thinking about this.” 

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The process

The numbers game: Safe to say, Danzig passes on more opportunities than he gets involved in. “We have around 20 companies in our portfolio, but we have passed on over 1,000 decks.” What he is looking for, first, is exceptional founders and, second, the opportunity size.

• “The likelihood of success is very low, so if you know that you would much rather they have a 10% chance of a $100bn market than a $10m market,” he points out.

• Chasing the outsized opportunity is effectively how venture capital works, with a reasonably high failure rate being compensated by successes that bring in multiples of the money invested.

• “You can only lose one-times your money,” Danzig notes. “In a VC portfolio only one or two companies will provide a return, with the others going to zero.”

The management team is the other central building block of any startup investors’ process. In any given sector or space, there will be many companies that will have similar ideas or be chasing the same opportunity. What differentiates them will be the who behind the company as much as the what.

• “It really comes down to the people,” says Danzig. “I make investments in people where I would like to own a percentage of their future earnings regardless of what they are interested in.”

• The secret sauce: “It’s a combination of grit, motivation and tenacity,” he says. “With the ones we have invested in, we think we have found the right people.”

• “You want to play the long game with long-term people,” he adds. “Because it is only over the long term where you get the compounding effects.”

• “VCs like to invest in lines rather than dots, the saying goes.”

A final word: Good founder/investor relationships are “based on trust,” Danzig concludes.

• “Building something from scratch is never something that doesn't come without difficulties, but as long as you are making a bona fide effort, we’re always in your corner.”

The month in transactions

Grilla: The Miami-based esports and skill-games platform has raised $3m and gone live with a beta offering.

Jackpot.com: Secured a tranche of $7m in new cash from investors, including Aurum Partners, Detroit Venture Partners and Bettor Capital.

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Growth company gazette

• The micro-betting provider Simplebet says it is gathering data about NCAA games with an eye on launching a College game-focused product.

• Narrativa and Quarter 4 will provide their AI-generated sports-betting content and data to the Associated Press.

• Odds On Compliance and U.S. Integrity have established the joint venture ProhiBet.

• A new pricing, trading and risk-management service for licensed sports, gaming and lottery operators called 10Star, led by Magnus Hedman, has launched.

• SimWin Sports has signed a deal with Sports Illustrated to be a presenting sponsor. 

• Betting content publisher Tallysight will supply its editorial, publishing and monetization services to The Athletic’s sports fantasy and betting teams.

• Former startup focus subjects WagerWire and Sparket have teamed up and integrated their platforms, allowing Sparket users to trade using the WagerWire platform.

• Gaming Society has partnered with the International Gaming Institute to support betting’s relationship with women’s sports and provide betting education.

Startup focuses

• AI and automation provider humble.ai.

• Full-service NFT development agency and marketplace IO Stadium.

• Multi-series fantasy motorsports gaming platform GridRival.

• Sports-betting platform allowing bettors to browse picks Outlier.

What we’re reading

A new app is letting soccer fans bet on the long-term future of players from around the globe.

Calendar

• Feb 6-9: ICE London

• Feb 7: Red Rock Resorts

• Feb 8: Kindred, MGM Resorts, Wynn Resorts

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