Earnings+More - Is the funding tap running dry?
Is the funding tap running dry?The number of founding rounds for Q1 suggests something of a drought, gambling's exposure on banks +MoreGood morning. In edition #9 of the Startup Month:
The funding droughtBetting and gaming-related funding rounds as tracked by E+M hit a low point. The dirty half-dozen: According to the Earnings+More startup funding tracker, the number of deals announced in the first quarter came in at a mere six, raising a combined total of less than $20m.
🏜️ Funding rounds dry up in Q1 Excluding the undisclosed deal amounts, the $18m figure represents a ~60% drop on the $46m that E+M tracked in Q1 last year.
** SPONSOR’S MESSAGE ** Founded in 2013, Metric Gaming is based in Las Vegas and London and developed the industry’s first truly multi-tenant sportsbook platform, purpose-built to support operators across multiple territories, regions or States. Metric is proud to be partnered with both Racebook HQ and Lacerta Sports (powered by Starlizard) and will roll out innovative MTS solutions for both racing and sports in 2023, including soccer and four main US sports. To find out more, please visit www.metricgaming.com River runs dryA predicted outcome: A slowdown in funding has been anticipated since long before the turn of the year as the economic backdrop worsened and interest rates rose. But it isn’t so simple as to suggest that simply the well has run dry, suggest the market commentators, with a variety of factors playing into the apparent slowdown in activity. Under the radar: One issue is rounds that go unannounced. This may include bridge rounds, whereby current investors stump up more cash, or new money rounds at higher valuations.
Put that in your pipe: Then there is the issue of timing. As Chris Grove from Acies Investments points out, normally in the first quarter work we would see activity driven by work done at the end of the preceding year. “But there simply wasn't that pipeline coming out of 2022 this year,” he says.
Heads turned: Kelly Kehn from Happyhour.io says the sector might also be suffering right now from investors turning their attention to the innovation happening elsewhere, particularly in AI. This could lead to a reduction in the number of funding rounds for iGaming start-ups, as investors seek out companies with more unique and innovative ideas,” she says.
Heading for the high ground: Peter Heneghan, senior associate at Bettor Capital, says there is a “valuation sensitivity” that also comes into play with a “flight to quality” evident right now.
Hope springsKeep smiling: Heneghan remains positive, though, that there is “significant funding available” for startups, and more broadly, for the gaming space as a whole.
** SPONSOR’S MESSAGE ** Huddle is a next-generation technology provider for iGaming operators, dedicated to unlocking the full potential of this rapidly growing industry. Huddle’s cutting-edge automated odds feed solution offers fast, accurate pricing and trading services, helping operators increase turnover and drive margin; whilst reducing costs and managing risks. To find out more, please visit: https://huddle.tech/ Gambling’s Most Valuable BankThe collapse at Silicon Valley Bank left sector startups largely untouched – but highlighted a collective reliance on a West Virginia bank. Most wanted: In part, the collapse at Silicon Valley Bank was a problem happening elsewhere, only tangentially touching on the betting and gaming space. Few sector companies banked with SVB and any issues were resolved by the US government stepping in to guarantee all deposits.
Persona non grata: The dependency isn’t through choice. As Dean Sisun, founder and CEO at Prophet Exchange, says gambling companies “don;t have many options” when it comes to where they bank. “It’s MVB or no one,” he adds.
Stand by me: Recalling his time as a DFS start, Joey Levy, founder and CEO at betr, says that when “everyone was running away from the sector” due to the regulatory uncertainty MVB was the “one bank which stepped up at the time”
👀 Hard to avoid: MVB’s clients in betting and gaming Treasury questionsFollow the money: Both Levy and Sisun confirm that a question that has shot up the priority list for startup management teams across all sectors is the treasury question. That is, where have they stashed their cash?
Eggs/basket: This will be the legacy of the SVB near-death experience, suggests Cherniak from Avenue H. “Startups will surely diversify their banking portfolios moving forward so as to be less dependent on any one institution,” he says.
💡 Be the bank: Of course, this desire for diversification runs slap bang into the aforementioned problems the sector faces when it comes to banking.
Further reading: How safe are America’s banks? ** SPONSOR’S MESSAGE** BettingJobs is the global leading recruitment solutions provider to the iGaming, Sports Betting and Lotteries sectors. Boasting a 20-year track record supporting the iGaming industry, and with a team of experts and world class knowledge, it’s no surprise BettingJobs is experiencing rapid growth with outstanding results. Does your company have plans to expand teams to cope with strong growth and demand? Contact BettingJobs.com today where their dedicated team members will help you find exactly what you are looking for. Growth company gazette
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