INSUBCONTINENT EXCLUSIVE:
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Today the big news
that falls into our orbit is about DraftKings, a sports betting service focused on fantasy sports that will go public via a reverse merger
Not too long ago DraftKings and its erstwhile rival FanDuel were ubiquitous on television; now the two are fractions of what they once
were.
Let chat about what went wrong and what next.
The ascent
Both DraftKings and FanDuel raised modest sums until the latter half of
2014.
FanDuel Series A was worth just $1.2 million back in 2009
Its $4 million Series B in 2011 almost sounds like a joke
An ensuing 2013 Series C just tipped the scales at just $11 million
Things picked up in Q3 2014.
DraftKing story is similar, if slightly more aggressive
A $9.8 million Series A in 2013 was followed by a $24 million Series B that same year
Then in Q3 2014 things started to go faster.
In the third quarter of 2014, FanDuel raised a $70 million Series D
In the same three-month period, DraftKings raised $41 million
The next year, FanDuel raised a $275 million round in July
That same month DraftKings raised $300 million
All of a sudden the companies were unicorns, worth a combined $2.2 billion, post-money.
FanDuel funding history (according to Crunchbase
data) then slowed, while DraftKings raised another $150 million in 2016 and $118.7 million in 2017
But the great capital arms race had reached its zenith and fallen for the two companies.
The punishing fight across hundreds of millions of
dollars in TV ads for market share between the two led to a merger proposal in 2016
That was called off in 2017
From rising titans blanketing your screens with ads to a failed combination, what went wrong?
The descent
What happened is actually very
understandable in light of WeWork failure to go public earlier this year: The companies were torching capital in the name of growth.
