DraftKings has raised an additional $41 million in a Series C round of funding from The Raine Group that includes Redpoint Ventures, Atlas Venture, and GGV Capital.
This latest round of funding is in addition to the Series B round where DraftKings raised $24 million from the same group last year.
The company plans to use the additional funds for product development and improvement of its mobile products for fantasy sports. In addition, DraftKings expects to increase the amount of game winning pay out this year to $200 million.
Along with the news of additional funding, the company also announced that they will acquire another daily fantasy site, StarStreet. This is another daily fantasy site that DraftKings has acquired since they took over DraftStreet last month.
Commentary:
In the competing daily fantasy market, it appears that DraftKings is loading to take on market leader FanDuel. The $200 million announced in payout by DraftKings is larger than the $135 million in payout announced by FanDuel last year.
There is no question that the daily fantasy market is growing however, it is in an interesting stage of growth. There have been some important entries from established brands such as Fantasy Score by USA Today and Fan Nation by Sports Illustrated. The smaller start-up daily fantasy game providers will be facing an increasingly competitive landscape as all these companies look to win over the most important commodity: the daily fantasy user.
I labeled them the daily fantasy user on purpose to differentiation it from the mainstream fantasy sports users that are playing fantasy sports. It is the hope of the daily fantasy game providers to attract the millions of players that are playing the traditional season league games. However, at the moment the daily fantasy game providers are competing for the early adopters in the market. I expect more of the smaller start-ups to consolidate and I expect the big game providers such as Yahoo! and ESPN to continue to monitor the disruptive market of daily fantasy closely.
It is also interesting to note that DraftKings has elected to take on more funding rather than to let their own profits run the business. In that aspect, they are not as mature as FanDuel, that projects that it will turn a $40 million in revenue this year. However, FanDuel has not disclosed what their cost to run the business is outside of declaring the amount they pay out in winnings.
