FanDuel has closed on a $275M Series E round of venture capital financing, giving the company a valuation in excess of $1B. Existing FanDuel investor KKR led the funding round, alongside previous investors Comcast Ventures and NBC Sports Ventures. Google Capital, Time Warner Investments, Turner Sports and several individual NFL and NBA team owners also invested. Shamrock Holdings, founded as the investment arm for the family of the late Roy Disney, also participated. This round was predictably described by FanDuel as oversubscribed. The huge batch of new money arrives as daily fantasy continues to explode in popularity and FanDuel remains locked in a spirited battle for market share and prominence with DraftKings. FanDuel is projecting to more than triple its revenue this year to nearly $200M. FanDuel CEO & co-Founder Nigel Eccles said, “Having partners like KKR, Google Capital and Time Warner/Turner Sports invest in FanDuel underscores the way this company is transforming sports entertainment. This roster of investors, with expertise across finance, technology, advertising and sports entertainment, is committed to the growth and success of FanDuel as a gamechanger for the sports industry.” The latest round also is less than a year following a $70M Series D round. FanDuel has now raised $363M in total from investors. The exact valuation the round places on FanDuel was not disclosed. B the company said that it did easily reach 10 figures (Eric Fisher, Staff Writer).
FUNDING CAME TOGETHER QUICKLY: Eccles said that FanDuel "still drew plenty of interest from potential backers" despite raising $70M last year. In N.Y., Michael de la Merced notes the investment round "came together quickly" after KKR "expressed interest in leading." KKR Principal Ted Oberwager said, "We think it's one of the most valuable kinds of media today. Fantasy sports offers some of the highest levels of engagement that we've seen." Yahoo last week announced plans to enter the daily fantasy business, and Eccles said that he had "anticipated the entry of both Yahoo and ESPN into the industry and wondered what had taken the traditional media companies so long." However, he claimed that the "business of running the leagues -- built on sophisticated trading systems -- was more difficult than many realized and that having a six-year head start offered his company some advantages" (N.Y. TIMES, 7/14). RE/CODE's Kurt Wagner noted FanDuel "still isn't profitable," but it has a "fast-growing revenue stream ... and made nearly twice as much as rival DraftKings" in '14. FanDuel brought in more than $57M last year "by taking a small percentage of entrance fees that people submit to compete," but the company is "spending much more -- primarily on advertising -- than it's bringing in" (RECODE.net, 7/13).
ONE DOOR CLOSES, ANOTHER OPENS: In N.Y., Richard Sandomir reports DraftKings as early as today "expects to add Fox Sports and other investors to its portfolio, largely replacing" the money ESPN had been expected to invest in the company before pulling out a couple weeks ago. Fox Sports would "be another elite sports investor," as MLB also has a stake in DraftKings and the NBA and NBC Sports own part of FanDuel. A source said that the Disney before backing out its deal "asked law firms to examine whether it should invest in DraftKings," and the company came out of those talks with concerns that it "might taint its well-crafted family image by owning a chunk of a company in a business that feels a little too close to gambling." DraftKings co-Founder & CEO Jason Robins said, "The way they put it to me is that this is an adult product that doesn't necessarily fit with their brand." Sandomir notes DraftKings will still "pay ESPN plenty of money to seed the media giant with its daily games covering various sports." Robins: "In the end, it was better just to deal with ESPN" (N.Y. TIMES, 7/14).
