Betegy will ramp up US push

Betegy will ramp up US push

Summary:

Betegy, which provides data visualisations, automated on-air and retail graphics, and casino marketing assets to operators, has raised an undisclosed amount in a funding round led by JKR Investment Group. The round was also attended by Yolo Investments founder and GP Tim Heath. Alex Kornilov is the CEO of sports betting platform Sportsbet.io and founded Betegy.

Betegy, which provides casino marketing assets to operators, intends to use the funds to continue its scaling in the US. A previous funding round led by JKR Investment Group was announced in 2020.

To learn more about the agreement and how Betegy intends to further modify its products for the US market and the startup funding industry as a whole, iGB spoke with both the founder and CEO of Betegy, Alex Kornilov, and the founder and general partner of Yolo Investments, Tim Heath.

What inspired you to invest in the business, and what do you think Betegy brings to the market that wasn’t on offer before?

Betegy’s innovation is to automate the previously time-Consuming process of turning reams of data into world-class content. We know that the product works because it has been integrated into the Sportsbet.io brand, but we also saw potential synergies across several Yolo Investments portfolio companies.

A great betting or gaming product needs to be a one-of-a-kind experience. Customers are expecting to be engaged beyond the core product. That is a really powerful proposition, and Betegy is empowering operators to do that.

What kind of expansion opportunities will this latest round of funding allow Betegy to pursue?

The goals for the round were clearly defined during the summer of 2021. We saw a huge opportunity when we decided to go for the next round of investment, because our growth in the US was pretty significant. The previous round with JKR helped us understand how the American market would react to Betegy’s products.

We had a deal signed with the World Series of Poker when we launched our broadcast product, which was an immediate success.

To assess the amount we raised, it took us three months to shop around to see how the company should be positioned, the potential revenue and the products needed.

Tim has been with us since the beginning, because he was already a client through his SportsBet.io brand. We didn’t need to go through a stage of product validation because he’s used the product before, his team knows my company, and he decided to invest after a few rounds of discussions.

We had to change from being a European business to being a US company. Making sure we did that right and how we could prepare for future funding rounds was the biggest challenge behind the round. It was a key operational challenge to prepare to bring in US investors in the future. It took us the longest, not the negotiations.

On both sides of the Atlantic, Betegy has worked with a number of media giants. Alex, how are you going to leverage these relationships with your sports betting partners? Do you think there is enough scope for convergence?

It is interesting because we have many dimensions to converge. Sports betting and media are available in Europe and the US. The bridge we are building is four-way.

Four or five years ago, we started talking to big media companies about how to bring betting to their content offering, and in a way that is exciting and modern, and not just a promotional element.

It took four to five years for us to realise the opportunity to implement the strategy among the media companies.

Considering the macroeconomic factors at play, how difficult was it to raise capital?

Raising capital is a combination of many different forces. On the other side, you have macroeconomic factors, such as market conditions, and investor appetite falling and rising.

We noted that the markets were in a downturn when we started those discussions with the board. The company must grow, even if it is getting harder to do so, and so it started with a bit of tension in the board room.

As we discussed the micro economic factors, such as our growth, our clients, our burn rate, and how efficient we are on the production side, we realized we are able to deliver much better results than other companies from the investment.

There was an opportunity for venture capitalists, who are going to be more risk averse, because the unprofitable businesses are burning cash, whereas we are coming from a lean perspective.

The macro economic conditions play to our strengths and make it easier to talk to investors. I know that we are growing above the market rate, so I don’t have to lower my valuations. Thanks to the years of work and the structure of our operations, my operations are solid and our strategy looks solid, so we really turn the downside into an upside.

Tim, how have these market conditions changed the way you look at investment opportunities? What you look for in a business may have changed because of that

I will always support people and teams building products that solve real-world problems, both financially and strategically.

The principles are the same even though the details change. The question we are asking ourselves more and more these days is, what value can we add if we invest?

Yolo Investments now holds equity in more than 80 companies. Our edge is in being able to find synergies that can help a great idea or a strong team become a game-changing product.

Is an innovative product no longer enough? Do you think the capabilities of the founding team, their track records, and the existing backers are important factors?

The people are the most important part of a company’s value. You build intellectual property and assets that you can assign a value to, but you can’t stress how important the people are.

There are different types of colleagues that I have, some that have been here from the start, and they form the core of the business, but the people who join now are still important, as we are in our growth phase. We want to find the right people, and we don’t want toxic people, so we have a cultural interview.

My colleagues are not only model professionals, but they are humble, hard working and driven not only by financial benefits of working for Betegy, but also by the fact that investors invest in them. You can get your clients, but you need the people to get there.

It has never been enough to have an innovative product. It is cheap to have ideas without execution. The founding team and their track records aren’t the only things that go beyond that for us at Yolo Investment. We feel that the company can really add value by making sense within our broader network. We wouldn’t want to be passive investors. We want to find opportunities where our expertise can take an investment to the next level, because we have assembled a team with unparalleled expertise across several fields.

Looking specifically at the US opportunity, how important will unique and engaging content be to the sportsbook community going forward? Is this in short supply right now?

There are things you can track and use to build your funnel on one side, and your brand building and awareness tools on the other side, if you look at the bigger picture.

Spending on branding is usually the easiest way to make a statement. You turn on the tap, get the result, turn it off. After that initial burst of growth, you will have to justify that spend more and combine those two marketing tactics together.

Who will win or lose is something that will define them. They will prevail because someone who does performance marketing, crunching the numbers, assesses all metrics, and does it better, supported by branding spend, will prevail. That will not happen in a couple of years.

Performance marketing doesn’t have to see a lot of results at the beginning, but it does ramp up over time. It will allow you to allocate less money to branding and more money to capturing the players. Being a provider that helps people grind, build things long-term, enable personalisation and automate the production of creative is something that we are really looking forward to.

More and more clients are looking to make their banners more efficient to maximize spend. What we see going on in the market is backed up by what we can do to facilitate that.

Where do you think there is room for growth in the US?

The most exciting thing for me right now is the convergence of broadcasters, sports media and sports betting. The audience is more prepared for this than in Europe.

The US is better prepared to combine betting and sports into a single experience than any other country. This comes from the deep roots of fantasy sports in the US, so they know their teams, know the statistics, and have done it since before sports betting was legal. Content, betting, live sports, and new platforms are all exciting to me.

What investment opportunities do you see in the US market, and do you think the supply side is going to be the most attractive for investors going forward?

It is easy to forget that it is still very early days for the market, as the growth in the US has been so impressive. It is likely that the way several states have regulated online gaming has helped a few large-scale incumbents dominate on the operator side.

There are some interesting opportunities for investors because the barriers to entry are lower for suppliers. Several Yolo Investments companies are already thriving there, and we will always be open to hearing from others who think they can bring something new to the table.

Do you believe the supply side is going to be the most attractive target for investors going forward?

It is easy to forget that it is still very early days for the market, as the growth in the US has been so impressive. It is likely that the way several states have regulated online gaming has helped a few large-scale incumbents dominate on the operator side. There are some interesting opportunities for investors because the barriers to entry are lower for suppliers. Several Yolo Investments companies are already thriving there, and we will always be open to hearing from others who think they can bring something new to the table.