Betr, a micro-wagering and sports media company co-founded by social media star and professional boxer Jake Paul and Simplebet co-founder Joey Levy, recently closed on a $50 million funding round. Florida Funders led the company’s oversubscribed $30 million Series A. Aliya Capital Partners and Fuel Venture Capital led the $20 million Series A1. Several current and former athletes, including Ezekiel Elliott, Richard Sherman and Dez Bryant, participated alongside the venture funds. The valuation was not disclosed.
Considering the macroeconomic environment, the precipitous decline in publicly traded gaming company valuations and Betr’s pre-revenue status, $50 million may sound like a big number to have raised so early. But for Florida Funders, the opportunity to back a potentially category-defining consumer gambling and sports media business was too great to pass up.
“The differentiation between the product and what else is out there, plus the differentiation with having Levy as an operator and Jake as a part of everything, we just looked at this as an opportunity of a lifetime,” Saxon Baum (VP of investor relations, Florida Funders) said. It should be noted Florida Funders is also an investor in Simplebet.
JWS’ Take: Launching a DTC betting business in the U.S. market is costly and competitive, which is why Florida Funders typically shies away from consumer-facing opportunities in the sector. But Betr does not intend to outspend the competition. It believes its proven, methodical approach to performance marketing, combined with a differentiated consumer experience, will yield favorable results.
Betr’s efficient customer acquisition and brand development strategy helped sell Florida Funders on the opportunity. “We looked at the overall market and said, well, the reason these [sports betting] companies aren’t making money is because they’re spending so much on marketing and advertising,” Baum said. “[If Betr has] a growth hack in Jake Paul that can truly help get it from zero to one without having to spend millions of dollars, there’s something special here.”
The micro-betting startup is focused on mitigating some of the other costly expenses associated with legalized sports betting, too, including product technology and market access. Simplebet infrastructure will power Betr’s real-money gaming product, and strategic partnerships with license holders, such as the Hall of Fame Resort & Entertainment Co., are expected to save it tens of millions of dollars in upfront costs. “All of the agreements feature a substantial equity component where these market access holders are joining the company as significant shareholders,” Levy said.
To be clear, Betr is not building a DraftKings and FanDuel competitor. The entire user experience and company brand will instead focus on moment-to-moment wagering, like the next pitch or play in a baseball or football game. “If you’re going to build a new direct-to-consumer operator in the space, the only chance you have to be successful is to launch something that is fundamentally different,” Levy said.
A free-to-play version of Betr’s app will go live in all 50 states over the next few weeks. The real money version will follow in select states in the months ahead. Levy said the company has secured market access in “multiple” jurisdictions, including Indiana and Ohio.
The Betr co-founder believes micro-betting will eventually become the “predominant way people bet on sports in this country.” He sees European sportsbooks generating 70-80% of their handle on in-game betting products, and the early returns indicate micro-betting interest exists stateside. A “simple, intuitive and entertaining [product] for a mass market consumer,” he said, is all that is holding up mass adoption.
More than 25% of the in-game GGR generated by DraftKings during Super Bowl LVI originated from Simplebet’s micro-betting products. “That is without a good or dedicated user experience or without any dedicated marketing to the product,” Levy said.
Not everyone is convinced. In-game wagering is not nearly as prominent in the U.S. as it is abroad, and micro-wagering is responsible for less than 1% of the total betting handle in European and Asian sportsbooks.
Levy does not believe those global markets are fair comps. He said unlike soccer, which drives betting action overseas, the start-stop nature of North America’s big four sports, particularly football and baseball, makes them perfect for in-play wagering. The instant gratification micro-betting provides should also resonate with the U.S. consumer.
Betr hopes to convert some existing sportsbook users into customers by providing a micro-betting experience “an order of magnitude better” than what can be found elsewhere. But Levy said, “What’s really exciting is the opportunity to create incremental TAM and bring a more casual user into the ecosystem.”
That includes younger sports bettors. There is a belief the demo does not bet on sports as commonly as prior generations, in part because “the payoff in terms of waiting for a response is actually quite long compared to winning forms of entertainment,” Geoff Woo (co-founder and partner, Anti Fund Investment Fund) said. Think about a TikTok video, for example—a user can get the full entertainment value in less than 30 seconds. In comparison, it could take hours for the outcome of a traditional sports bet to post. Micro-betting changes that. Woo’s Anti Fund, co-founded by Paul, led Betr’s unannounced seed round.
Betr’s media arm will feature premium content initiatives, including a weekly program titled BS with Jake Paul, and should help the company gain awareness among younger, casual sports fans—as will 24/7 social content. Remember, Paul has around 70 million followers across the various social platforms.
Presumably, some fans of Betr content will convert into micro-bettors. But the company is “not really projecting any sort of material conversion,” Levy said. The two primary goals of Betr’s media effort are to generate brand awareness and build brand affinity.
The only sports betting operator to have built real brand affinity to date is Barstool, Levy said, “and it is probably a consequence of not starting as a gambling business.”
Betr’s media arm will also generate enterprise value and revenue for the business, income that will enable it to “invest in other verticals and in [its] product experience as [it tries] to build the most capital efficient gambling and media business in the country,” Levy said. FWIW, the company projects to reach profitability off the current balance sheet.
While their ability to convert awareness into paid customers remains to be seen, Paul’s influence is paying early dividends online. Within the first week, Betr’s Instagram handle surpassed 103,000 followers. For context, Barstool Sportsbook has 614K, while FanDuel and DraftKings have 130K and 132K, respectively.