Fantasy games firm may raise more capital
Eccles says FanDuel ‘looking at IPO next year’
Chief executive Nigel Eccles said the company is likely to do one more big fund-raising before it goes to the market in an initial public offering (IPO).
FanDuel and DraftKings dominate the sector in the US and both are looking at their capital needs from next year.
They are already worth $1 billion each, earning them the status of “unicorns”, and Mr Eccles said in an interview in the US that in January – the end of the National Football League – the company will review its financial performance and decide if it wants to raise another private funding round or hire banks for an IPO.
“We would in January go to the bankers and say ‘this is how football has gone, this is what we think 2016 looks like, when does it make sense (to go public)?” he said.
His counterpart at DraftKings, Jason Robins, said in a separate interview that his company is having “very active conversations with banks” to figure out its options.
“I ask everyone I meet with, should we go public? Should we raise another private round? Should we buckle down and focus on profitability?” Robins said. DraftKings is set to grow its NFL customer base by ten times from its level last year.
Fantasy sports has grown rapidly in recent years and now thousands take part. Members pay fees to enter competitions that last only a few hours but offer big money prizes. Some players have won prizes that dwarf even some of America’s highest-paid sports stars.
DraftKings and FanDuel are involved in their own big money rivalry. In July alone, DraftKings raised $300 million while investors put up $275m for FanDuel in a round involving KKR, Google Capital, Time Warner and Comcast.
Neither of the companies is yet profitable and both are focused on spending money to attract more customers and grow revenue. Eccles, who co-founded the company in Edinburgh in 2007, said it could become profitable “tomorrow” if it decided to cut its advertising budget, which is its biggest expense.
Investors and bankers are said to have approached both companies about a merger, although Eccles is not thought to be interested.
>> See also: Interview with Lesley Eccles
Photo: Nigel Eccles pictured at the recent Turing Festival in Edinburgh (by Terry Murden)