US sports betting exchange start-up Novig has concluded a seed funding round, raising a total of $6.4m from a consortium of high-profile tech investors.
This milestone comes just before Novig’s anticipated launch in Colorado in October.
The funding initiative was spearheaded by Lux Capital, a New York-based venture capital firm.
Notably, the funding pool attracted participation from around 30 investors, including computer scientist Paul Graham, investor and Hall of Fame NFL quarterback Joe Montana, and Dropbox co-founder Arash Ferdowsi.
The list also includes prominent VC fund Y Combinator, Soma Capital, Innospark Ventures, Rebel Fund, Bayhouse Capital, Archon Capital, Palm Drive Capital, TRAC, True Culture Fund, CapitalX, and numerous others.
Novig is a peer-to-peer exchange that offers users the ability to place bets directly against their friends or the market, distinguishing itself from traditional set-ups where bets are placed against the house.
Rather than charging retail users, Novig generates revenue from three main sources: institutional traders, data monetisation and internal market making.
Novig CEO Jacob Fortinsky (pictured left) and CTO Kelechi Ukah, are recent Harvard graduates with previous experience at Jane Street and Bank of America, as well as in machine learning and politics.
“We’re honoured to have the support of so many of the world’s leading tech investors, who believe in our mission to democratise sports betting for good,” Fortinsky stated.
“Our vision is clear: to reshape the sports betting landscape that has long favoured exploitation over innovation, and to usher in an era of integrity, transparency and empowerment.
“Together, we’re rewriting the rules and putting the power back in the hands of bettors,” he added.
He added that each year $300bn is wagered on sports in the US. “All of which is bet against retail sportsbooks, which have egregious 7-10% margins, discriminatory and inefficient practices, and a stale betting experience. No matter how good of a sports bettor you are, the house always wins,” he said.
In preparation of its launch, Novig conducted a beta test involving 200 users who engaged in a two-week pre-launch trading tournament.
This effort resulted in 15,500 orders across 1,290 markets.
Novig’s platform offers instantaneous confirmation of live bets, and the firm claims that its matching engine is 100 times faster than those employed by industry frontrunners.
“We’ve been overwhelmed by the positive reception of our product from Novig’s first users and are excited to bring our product to regulated markets beginning this fall in Colorado,” said Fortinsky.
Last year, Novig secured a spot in the accelerator portfolio of Silicon Valley’s Y Combinator.
The accelerator invests $500,000 per company biannually in multiple start-ups.
The start-ups then relocate to Silicon Valley for a three-month period, during which mentors collaborate closely with each enterprise to refine their processes and enhance their investor pitches.
Following the announcement that blockchain-based betting exchange BetDEX received a remote gambling licence in Ireland, iGaming NEXT editor Conor Mulheir caught up with the operator’s CEO and co-founder Varun Sudhakar.
The pair discussed the process of securing BetDEX’s Irish licence, the reasons behind pursuing a presence in that market, and the brand’s plans for the future.
iGN: You recently acquired your remote gambling licence in Ireland. Why did you choose to enter that market?
VS: Ireland is just one of many different jurisdictions that we eventually hope to operate in, so we’re looking at a number of other licences as well, which we’re planning to pursue over the next few months and years.
Ireland is a relatively small country in terms of population, but it’s home to one of the oldest betting markets globally, and the population there has been betting for a long time.
That means they run into a lot of the same issues which our platform tries to solve, so there’s less of an education process required for us to launch in a country like Ireland, compared to other countries where gambling doesn’t necessarily have as much of a history as it does over there.
iGN: Ireland is currently in the process of introducing a new regulatory regime for its gambling sector. How did that affect the licensing process?
VS: At present, licence applications are made with the Revenue Department of Ireland, so you have to fill out certain applications and then they carry out a background check on the directors and owners of the company, dig into the product that you’re offering and evaluate your business model. After you pass the due diligence phase, the licence is granted and there are fees to be paid.
The process took us around three to four months, from start to finish. And if/when the new gambling bill is signed into law, we would plan to apply for a license under that regime as well.
iGN: What unique challenges do you face when applying for licences for a blockchain-based betting exchange?
VS: A lot of the regulators that we speak to hear the word ‘blockchain’ and immediately react from a position of thinking “are these guys doing something shady?” Or, “is this illicit activity?”
So, there needs to be a process of educating the regulator and showing them how the blockchain is, I would argue, much safer and more transparent than traditional fiat rails.
It’s also important to show them the benefits that the blockchain can provide from a regulatory perspective in terms of AML and KYC. That is a challenge that needs to be overcome, but once you do overcome it, a lightbulb goes off in their head.
iGN: What are some of the regulatory benefits of operating on the blockchain?
VS: The transparency and traceability of the blockchain is really powerful and a strong tool for regulators. But it’s not necessarily one that they immediately think of when they hear the word “blockchain”.
Recently I have seen, especially internationally, regulators starting to become more comfortable with this, starting to really understand the technology and the benefits that it can offer them. But it is an education process, especially when we’re probably the first exchange to go about doing this. It does take time to walk people through that.
iGN: What are the benefits to customers of using blockchain?
VS: We chose to build on blockchain rails because of the benefits it can give to users, as it allows us to operate a product where we don’t have to limit winners, and we can offer a noncustodial platform with low fees.
We’ve done a lot of research and we’ve been working in the industry for a while, and we always thought that would be a major selling point, but the proof is really in the pudding when a product goes live.
When people come and start wagering, you see whether they actually do resonate with those USPs or not. For me, almost to a tee, every single one of the customers that I’ve done interviews with, has fallen within that bucket.
iGN: What is the profile of your typical customer?
VS: I would say every customer that I’ve spoken to is a sports bettor first – they usually have some exposure to crypto, but aren’t necessarily ‘crypto enthusiasts’.
Almost all of them tell me that they found out about our platform because they’ve either been stake limited on other platforms, or been hit with too many premium charges because they’re ROI positive players, or in other cases they’ve ended up placing wagers on platforms where the platform has actually taken or lost their money – or it’s just disappeared.
So typically, our customer base is folks who I’d say are sports bettors first, and may have some exposure to crypto, but really find value in the differentiating factors that our product offers.
iGN: Where are your customers typically from?
VS: When we originally launched on our Isle of Man licence, from a jurisdictional perspective that allowed us to access about 40% of the world – largely jurisdictions in Asia and South America, plus parts of Europe and Africa.
So geographically, our customers are largely from international markets. Some of our biggest countries by volume are jurisdictions in Asia or South America. Our customers are really global, to be honest with you.
iGN: How has the product developed since launch?
VS: From a product perspective, we’ve been expanding quite a bit since we launched. When we initially launched in November, we only offered football markets on the World Cup, and we only had pre-match, match winner markets, so the only thing that you could bet on was for Team A or Team B to win, or for the match to end in a draw. Since then, we’ve expanded both the product inventory and the sports inventory.
On the sports side, we’ve added NBA, cricket, tennis, baseball, plus a few esports and MMA markets. And then from the product perspective, we’ve expanded in terms of the types of markets we offer – we’ve expanded into side markets for certain sports, so for example, on football, you can now bet on things like ‘both teams to score’ markets.
In addition, we’re continuing to expand those side markets for other sports, and we just recently launched in-play betting for cricket and tennis. We want to bring that to other sports over the remainder of the year as well.
iGN: How much further do you intend to develop the product, and will that require additional funding?
VS: If you ask me, we’re far from having a “complete” product, but I would say we’ve definitely made a lot of progress since the beginning of the year. I still think there’s a lot more that we can do, and I’d say we’re maybe 30-40% of the way to where I want to be in terms of product coverage. But, we started from a place which was maybe 5% of what I wanted when we launched, so we’ve made significant progress but still have a long way to go.
In terms of our funding, we raised $21m in a seed round in November 2021, and we still have a few years of runway left, so we’re not planning on raising any more capital in the short term. We want to be the world’s largest web3 sports betting exchange with high customer satisfaction, so right now the focus really is just on continuing to grow, developing the product and continuing to expand.
The product was built on open-source technology called The Monaco Protocol, so we only need a small team of around four engineers working on the tech. I do anticipate that we’ll probably raise additional capital in a few years’ time, but nothing in the short term.
New Jersey-based Prophet Exchange has secured a new funding worth over $10m to support the development of its platform ahead of future state launches.
What is Prophet Exchange?
Prophet Exchange, founded by Dean Sisun and Jake Benzaquen in 2018, launched in New Jersey in August 2022, becoming the first regulated peer-to-peer (P2P) betting exchange available in the US in the process.
The firm, with a product built on its own proprietary technology, “is uniquely situated to capitalise on the rapidly changing and expanding sports betting market,” it said.
Prophet Exchange currently offers P2P betting on moneyline, spread and total markets for NFL, NBA, NHL, MLB and NCAA football and basketball games.
The firm plans to introduce further betting markets on soccer, tennis, golf, UFC and other tier-two sports “in the immediate future,” it added.
While betting exchanges have long been popular in Europe and the UK, they remain a lesser known product in US betting states.
Challenges include a lack of cross-state liquidity sharing and limited understanding among US bettors about the differences between traditional sportsbooks and betting exchanges. Stateside competitors include Sporttrade, Mojo and Novig, which is still in beta testing.
New funding round
The latest funding round has seen the business secure upwards of $10m from a trio of new investors.
They are MIXI Inc, a Japanese company with subsidiaries in the sports, lifestyle, digital entertainment and investment sectors, Ninjabet.com, a US-based matched betting community, and derivatives trading firm Chicago Trading Company.
Prophet Exchange said the investment represents validation for its P2P exchange betting model, despite challenging conditions across financial markets in 2023.
The funding will be used to continue the development of Prophet’s platform, allowing the business to continue working towards achieving profitability.
Increased liquidity, an improved roster of betting markets, better payments technology and a move into in-play betting are also in the firm’s immediate pipeline, it said.
From there, the business will be prepared to roll out its technology into new markets as the costs of licensing fees and market access agreements continue to come down, it added.
“As excited as we are to enter the emerging market of sports betting, we are a tech company at heart,” said Prophet Exchange co-founder and CEO Dean Sisun.
“We are a scrappy, lean and agile firm in a sea of behemoths, which allows us to respond to changes and capitalise on opportunities at a moment’s notice.
“This round of funding will let us continue as disruptors in the betting space and push our fast-moving product forward in this blossoming market,” he concluded.
Co-founder and COO Benzaquen added: “To be frank, something has always bothered us about ‘the house always wins.’
“At Prophet, we win only when the user wins. As the first pro-consumer betting exchange in the country, we believe it’s time for the house to lose a few hands.”
New Jersey-based peer-to-peer sports betting operator Prophet Exchange has strengthened its product and content teams with three new hires ahead of its launch later this year.
The operator aims to become the first US sports betting operator to enable peer-to-peer betting, with its New Jersey launch planned for this summer via a market access agreement with Caesars Entertainment.
Today (31 May), the firm announced it has hired former Caesars senior software engineer Matt Stolarz as director of technical product, software engineer Zhifeng Shi as director of software engineering, and former Action Network social media exec Casey Halpern as director of social media and content.
Prophet Exchange director of technical product, Matt Stolarz: “You couldn’t dream up a better product or a better team to come into.”
Prophet’s new director of technical product Matt Stolarz has worked as a senior software engineer at both Caesars Entertainment and William Hill, where he and his team were responsible for launching the William Hill sportsbook in New Jersey and expanding it across the US.
“I am beyond excited to join Prophet Exchange to help guide and build the first and best sports betting exchange product in the United States,” Stolarz said.
“I am also looking forward to working alongside a brilliant and talented team of fellow sports betting industry experts. You couldn’t dream up a better product or a better team to come into.”
Newly appointed director of software engineering Zhifeng Shi previously built large scale data ingestion pipelines to provide business insights into near real-time data for companies.
Prophet Exchange director of software engineering, Zhifeng Shi: “I am very excited to have the opportunity to join Prophet to work with the product and engineering teams and to build the most reliable and trustable platforms to power the next revolution in US sports betting.”
Most recently, Shi was a software engineer at real estate broker Compass, which he joined in its early stages to build an end-to-end transaction management platform. The platform now powers more than 6% of annual US real estate transactions since its initial release under a year ago.
“I am very excited to have the opportunity to join Prophet to work with the product and engineering teams and to build the most reliable and trustable platforms to power the next revolution in US sports betting,” Shi said.
“I am looking forward to being a part of Prophet’s challenging and exciting journeys ahead.”
Prophet’s new director of social media and content, Casey Halpern, joins from his most recent role managing and overseeing social media channels at Better Collective-owned Action Network.
Prophet Exchange director of social media and content, Casey Halpern: “I firmly believe that Prophet Exchange will solve a plethora of problems that everyday sports bettors currently face.”
Prior to that, Halpern worked as a producer and researcher for NBC’s Football Night in America for the past five NFL seasons, in addition to a long history working with athletes and media personalities on producing social media content and building their profiles.
“I am thrilled to join Prophet Exchange,” Halpern said. “This is an incredible opportunity to help scale an important and innovative product that will be the first of its kind in the US.
“I firmly believe that Prophet Exchange will solve a plethora of problems that everyday sports bettors currently face. I am looking forward to the exciting, yet challenging times ahead as we build a best-in-class sports betting exchange.”