Underdog Fantasy, part of a new class of fantasy sports apps, has raised $10 million from a celebrity-packed group of investors, including Dallas Mavericks owner Mark Cuban, NBA star Kevin Durant and rappers Nas and Future.
The round was led by tech investor Kevin Carter and also involved David Blitzer and HBSE Ventures, owners of the Philadelphia 76ers and New Jersey Devils; ESPN personality Adam Schefter; Dapper Labs CEO Roham Gharegozlou; and the founders of Action Network. Athletes Jared Goff, Matthew Dellavedova and Wilson Chandler are also included.
Underdog Fantasy was launched last year out of a Brooklyn apartment by a group of executives previously behind Draft, the fantasy upstart purchased by Paddy Power and later merged with FanDuel. Their goal was to create a fantasy platform that was simpler to understand and more social-media-friendly, and Underdog has leaned on popular investors and internet influencers to grow its brand. (DJ Kygo, his Palm Tree Collective, and influencer group Sway House are also investors in the round).
“Kevin Carter was the natural choice to lead our round, as he was the first investor in my last company while he was at SV Angel and believed in us before anyone else did,” Underdog chairman and co-founder Jeremy Levine said in a statement. “Once we filled out our round, we knew we had to throw a festival.”
To coincide with the announcement on Monday, Underdog is streaming a 12-hour “Underdogapalooza” on Twitter, with live drafts, giveaways and appearances from Schefter and the Chainsmokers, a DJ duo that also invested. Underdog is also launching a season-long NFL tournament with a top prize of $1,000,001.
Once an extremely popular industry for start-ups, fantasy sports went through a stretch where FanDuel and DraftKings were too large and too wealthy to challenge. Now that those companies are spending (and focusing) more and more on sports betting, it has opened the door for new fantasy companies to innovate and gain traction. That new class, which includes Underdog, has largely focused on less time-consuming versions of fantasy sports, including pick ’em pools, head-to-head matchups and season-long games that require no roster maintenance.
As these companies gain popularity—and user data—they can explore exit opportunities in legal gambling. Monkey Knife Fight, for example, was recently purchased by Bally’s in an all-stock transaction worth $90 million. Caesars purchased a minority stake in SuperDraft, with the option to increase that stake to 100% over time.