Good morning. In this month’s edition of the Startup Month we look at the difficulties faced by female founders in the sector.

• Being a female founder in any sector comes with its challenges but in the betting and gaming space, there are further hurdles that a female entrepreneur will face that add an extra burden on those hoping to succeed. This edition talks to women on both sides of the fence, founders and funders, and asks whether the sector is missing out on innovation due to blind prejudice.

• Next up, the ‘sale’ of Wagr to Yahoo raises questions about what exactly it was that is being acquired and points to the difficulties being faced by growth companies in the sector as they seek further funding.

• A survey of founders from Happyhour has found that their own network is the preferred source for funding.

• We also have an Inside the Raise Q&A with Dean Sisun from Prophet Exchange which managed to pull in over $10m in a recent follow-up funding round.

• Plus, a roundup of the latest funding rounds and growth company news.

Bet you you'll elevate.

Female founders rise

The difficulties for startup founders in the betting and gaming sector are compounded when it comes to gender.

Out with the old: Old attitudes to women in gaming die hard but according to high-profile female founders, funders and well-known executives, the more obvious objectification and sexualization from the recent past have now been confined to the dustbin.

• Yet, within the betting and gaming startup space, more persistent issues still cloud the outlook, meaning that female founders face more hurdles than their male equivalents.

First the good news: There is optimism over what can be achieved by female founders in a sector that at a wider level has often been viewed as struggling with innovation. “I actually think there are amazing opportunities for women,” says Karolina Pelc, CEO and founder at BeyondPlay.

• She says the displays at events sparked a backlash. “I do think that we've seen a massive evolution since then,” she adds. 

• Anna Sainsbury, CEO at GeoComply, agrees. “I have worked in the sector for almost 20 years. I can say the industry has changed significantly and is a place that accommodates a much more diverse workforce and provides a more inclusive working environment.”

More to do: The problem is effectively one of tradition and history. “This space was born and bred by men,” says Kelly Brooks, CEO at Quarter4. “It is a playground where men bet on men’s sport and where men who love sport and lucrative industry, facilitate their careers.”

• Moreover, the investors are predominantly male she notes.

The networking effect: An in-built advantage for men comes from the extent to which startup founders generally have to rely on their network for initial funding. “If you’re not creating that from the very start, from when you’re in the working world before you even have a startup idea, then it’s very difficult,” she says.

• “It's very, very hard to build that network and in the gaming space, it's even harder. It's a case of ‘if you're not in, you're out’.”

• Kehn points to a recent Crunchbase study that when it comes to the board composition of high-growth companies generally there is “network problem”, not necessarily a pipeline problem.

The extra hurdle: Imposter syndrome is one aspect of being a founder that is arguably amplified if you are a woman. Pelc says she still suffers from it, despite the great strides made by her personally and the business she helms.

• “The main thing to do is to remind yourself, it's a syndrome,” she adds. 

• “It's not real, it's not true. It's something that people experience the same as they experience depression or anxiety.”

• She adds that one way of dispelling the notion is to voice these fears out loud.

• It also extends to the investment side. “Rather than thinking, I’m lucky I got this investment, I focus on all the good things I’ve done.”

Role models: Kehn points out that she and others in the All-In Diversity project that she helps run also face the questions of what it means to be a role model. “I think that's a really tough one,” she says.

• Some women, she says, take on the role with relish. “There are women who go into it with that,” she says. “They say to themselves, ‘I don't see anyone that looks like me but I have the support, I have that network, I have that confidence and I can do that.”

• Others, however. are “just trying to get the job done’. They don’t want the added burden”. 

• “Why do I have to talk about being female and a founder? It's tough enough as it is just being a founder.”

The other side of the coin: To an extent, the very fact that being a female founder in the betting and gaming space is seen as being so remarkable comes with its benefits as well as its downsides.

• “There’s an element that you are going to be in focus just because you are a woman, not because of the business idea,” says Kehn.

• “You can use that fact to promote the company,” she adds.

• Brokk agrees: Initially, coming into this space, Quarter4 was a novelty because we were two female founders. It got us press coverage and traction and speaking engagements because of that.”

The diversity push: This also works when it comes to investment, says Pelc. “I feel that I had advantages when it comes to being considered, catching the interest of people because it's no secret that VCs want to have diverse portfolios,” she says.

• “And yes, I'm gonna put that ‘I’m a female founder business’ in the headline of any PR because it's gonna get picked up by more media. 

• “So yes, I do think that they get certain advantages. But I don't necessarily think that it extends all the way to actually getting the investment or getting the job because you do need to prove that you're the right individual to earn that.”

The prize: Sansbury makes the valid point that it is hard to know what the sector would look like if there were greater levels of diversity “as we haven’t seen that yet”. “I have read the studies and believe better decisions are made when there is a diverse pool of perspectives and opinions around the table,” she says.

• But she argues that there are already “many wonderful female leaders in the gaming business who are innovating with distinguished products and brands that players like and choose to play”. 

• “I can only imagine how much better our sector would be if we saw true equality.”

Strength: Pelc says that for all her evident imposter syndrome, he never for one moment believed she only got funding because she was a woman.

• “I never worry about that either. I just know that I'm an entrepreneur with a strong profile,” she adds. 

• “I've done 20 years in the industry. I have a proven track of success, strong relationships in the industry, and a good reputation.”

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A shot to nothing

A key element was missing from the news about Yahoo's acquisition of Wagr – the price.

The hole story: The deal announced last week for Yahoo to buy up the Wagr business was light on key details including the price as well as the current status of the Wgr business. As was noted in coverage of the deal, Wagr has been effectively non-operational for a while now. 

• Sources suggest Wagr, which previously raised $12m in a Series A round in January last year, had been struggling to raise follow-up cash in recent months.

• The Nashville-based Wagr founded in 2019 subsequently launched in its home state of Tennessee.

• It is one of the also-rans in a state where there are 11 operators and where FanDuel dominates.

• Crucially, it didn’t launch in any other states.

Nothing wagered: Wagr’s backers included the Kraft Group, Harris Blitzer Sports & Entertainment, Greycroft and Reddit co-founder Alexis Ohanian’s Seven Seven Six. 

Happyhour startup survey

A survey of founders has found that their own network is the preferred source for funding.

Go to: A new survey of founders within the betting and gaming space finds that nearly half of all founders rely on their own network for funding. Another 20% source funding via referrals, 18% go via searching on the internet and 6% have found funding via contacts made at industry events.

• Road blocks: The biggest challenge faced at present is finding a clear path to funding, followed by finding talent.

• Asked what advice startups would give investors, most mentioned offering support, guidance, mentorship and expertise.

Areas where founders would like help:

How to secure funding.

Where/how to source key hires.

How to build industry awareness.

Product knowledge.

Compliance insights/lobbying new product innovation.

The survey can be sourced via this link.

Inside the raise – Prophet Exchange

The New Jersey-based betting exchange raised over $10m at the start of April. 

Over the line: Prophet CEO Dean Sisum acknowledged that “it’s not secret forms are hesitant to write checks” right now. “They know it’s a buyers’ market and valuations are reflective of this,” he added with a higher number of investors than usual being in “wait-and-see mode”.

• Still, he noted there were still enough that were “looking to be active” including those that stumped up the $10m in this funding round, MIXI Inc, Ninjabet.com and Chicago Trading Company.

• “I'd like to think this is a product of the space we are in and the potential a disruptor has in the sports-betting operator realm,” Sisun added.

Liquid: Prophet Exchange has subsequently announced the addition of the first of two liquidity providers, the matched betting site ProfitDuel, and Sisun said the focus for his company from this point was to focus on providing users with a ”complete, viable product”.

• “Once we have a viable product, we want to concretely prove that we have a viable business model,” he said. 

• This means concentrating on the “highest revenue generating projects” and ultimately proving a “clear path to profitability”.

• Sisun previously told E+M it had turned off the marketing taps but this will increase again as revenues increase.

Full tilt: The addition of the liquidity providers will aid the process. “We have been scaling up their number of markets and liquidity at a solid pace, but there are a lot of little things to go through before both sides are comfortable being at full capacity,” Sisun says.

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Growth company gazette

Sports betting and iGaming developer the Unit will become the front-end development partner for sports betting risk-management supplier 10star. The Unit will feature as a startup focus in next Monday’s Cheat Sheet.

Sports-betting platform Amelco is set to integrate Simplebet’s micro-betting products as part of a supply agreement between the two groups. 

SportsGrid has released its first D2C app, incorporating news, statistics and real-time odds for use by bettors and fantasy sports customers.

ALT Sports Data has partnered with the World Surf League as its official data distribution partner, leveraging its proprietary simulation trading platform to enable sports betting on WSL's Championship Tour events.

Recent startup focuses

• Social betting platform Kutt.

• Fan engagement information provider Data Skrive.

• consumer-facing betting tools provider BettorTakes.

Calendar

• May 2: Caesars Entertainment

• May 3: Flutter, Rush Street Interactive

• May 4: Penn Entertainment, Red Rock Resorts, DraftKings (earnings)

• May 5: DraftKings (call) – E+M Earnings Extra

An +More Media publication. 

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