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Open Sports back for another round of venture capital
Published May 10, 2010
Open Sports is pursuing a third round of venture-capital funding after the online startup spent through its first two rounds, totaling $14 million, since its July 2008 launch.
Former SportsLine.com executive Mike Levy, who founded Open Sports, is now funding the company’s operations personally. He said he anticipates closing on the new funding round in the coming weeks.
“I’m still absolutely gung-ho about what we’re doing, and it’s still not easy to raise money in this environment,” Levy said. “When we started, we didn’t anticipate the [venture-capital] markets would turn like they did.”
The funding search comes amid some turbulence in recent months for the company, which combines fantasy gaming with sports news, commentary, social networking, user-generated material and other content. Open Sports last July announced a high-profile fantasy games partnership with Fox Sports to create a commissioner-style football game as well as a more casual, pick-’em-style game. The deal provided a major boost in prominence for Open Sports while giving Fox Sports a partner to pursue fantasy market share.
But the Fox/Open Sports commissioner-style game struggled last fall with network stability issues, even as it drew about 500,000 participants. The pick-’em game never launched, and initial plans to extend the partnership to baseball fantasy games this spring have not materialized.
A NASCAR fantasy game, however, did successfully launch in February, and registration began last week for the 2010 commissioner-style fantasy football offering.
Fox remains committed to the fantasy partnership but does not plan to participate financially in the future funding of Open Sports, focusing instead on the operational, advertising sales and co-promotional components that make up their partnership.
Beyond a 50-50 sharing of net revenue from the fantasy games, there is a provision in the Fox deal in which the company becomes a 20 percent equity holder in Open Sports.
“The first year wasn’t as smooth as we could have liked, but this is not something you can be perfect with the first shot out of the gate,” said Jeff Husvar, Fox Sports Interactive Media executive vice president and general manager. Husvar and Fox Sports Chairman David Hill are Open Sports board members. “We have confidence in Mike and his determination.”
Open Sports started with $10 million in private funding and then did a second round last summer in which the company’s original investors were asked to reinvest at 40 percent of their original commitment.