#6: Hunting The Next iGaming Unicorn

As a kid, I dreamed of being the lead singer in a punk rock band or a striker for Real Madrid. I’d sit awake at night visualising the crowd singing along to my song or cheering my winner in the Champions League final.

As I’ve grown older, a different dream has kept me up at night. One that has grown stronger and stronger over the past few years, and I finally feel free to pursue it.

Now I’m an investor, I dream of building or investing in a unicorn.

So when my friend, a sports legend (not kidding, he is going to the Olympics this year!) Klen, wrote to me and asked the following question; I couldn’t help but get excited:

So here we go. I love this topic and hope you’ll find it interesting. I’ve been thinking about it constantly over the past few years, so I’m sharing my thoughts today.

If you have any topics you’d like to read my thoughts on, send me a message. Based on people's suggestions, I have added three essays to my list for this year.

What is a unicorn?

A unicorn is defined as a privately owned startup company valued at over US$1 billion and not listed on any stock market.

Familiar names like Stripe, Revolut, OpenAI, and Miro are examples of such unicorns.

Reflecting on why these companies achieved massive success, I've studied their growth trajectories and identified 12 key factors. These insights could also be pivotal for the iGaming sector:

• They recognised a significant market opportunity with unmet needs or disruption potential.

• They developed innovative products or services that addressed major issues or improved upon existing solutions.

• They created scalable business models that allowed for rapid growth without a corresponding spike in costs.

• Their leadership teams were not only talented but had proven industry track records.

• They secured substantial venture capital and investment to propel growth and expansion.

• Their user acquisition and retention strategies ensured continuous customer base growth.

• They built strong brand identities and reputations that fostered trust and resonated with their target audiences.

• They leveraged cutting-edge technology and data analytics to enhance operations and customer experiences and drive innovation.

• They planned strategically for international expansion to access new markets and further their growth.

• They maintained flexibility to pivot and adjust strategies as market conditions and opportunities evolved.

• They engaged in strategic partnerships and collaborations to boost capabilities, reach, and market influence.

• They executed effective marketing and sales strategies to enhance visibility, generate leads, and increase revenue.

• Bonus Tip (Personal Insight): Look for awesome founders—those you'd enjoy spending time with, whether sharing a meal or embarking on a mission together.

Route one of owning a unicorn: find one.

As an investor, I follow a daily checklist like the one above. I wish spotting a unicorn before anyone else was easier, but Yolo has most likely already found and invested in a few. They’re really good at it.

But I’m going to start by sharing my thoughts on how I’d find one. The first step is to determine who the target is. Which type of iGaming business is most likely to become a unicorn?

Operator?

Blackhat markets contain lots of unicorns already. However, they’re not playing the proper valuation game. Their business can die overnight. Founders can go to jail (read the news; it happens a lot). Their valuation probably around 1-1.5x of yearly GGR. It’s a pure cash-generation game.

Greyhat markets are tougher, but still very possible. Valuation is sometimes 3-4x yearly GGR. There are plenty of good examples. These markets are “very far away from regulated” markets. Brazil is no longer in this category and probably looks like a zebra.

Whitehat markets sometimes have businesses with insane valuations. I think this can start with 5x of yearly GGR and go up to 12-15x. Growing markets, booming economies, long-term someone’s vision and insane synergies with the existing businesses.

Affiliate business?

Oh, that's tough here. Consider revenue type—CPA or rev share—markets, business dynamics, technological background, operator diversification, and market diversification.

Some businesses I’ve seen were getting up to 10-15x EBITDA, and some—performance marketing affiliates—3x, which is good.

You can do the math on how much this kind of company should be making. And how many FTDs they should be generating. Insane.

B2B SaaS?

It's my favourite category here.

10x+ to EBITDA is easy if it's disruptive and targets complex issues. Revenue is tied to the operators' revenue. Potential buyers will purchase to stop competitors from using the product. They’ll also buy if it gives them an insane increase and synergy with what they already have as an operator.

Invest early, and be careful with projections. Stress the hell out of the founders.

Platform provider?

One of the hottest categories these days. A lot of great companies. But if you think of the valuation and how much they should be making to reach the unicorn. It is so less likely to happen any time soon. I have not seen any big recent acquisitions there. Please correct me if I am wrong.

Route two of owning a unicorn: Build one.

I’ll use one of my latest companies—Blask—as an example of my thinking while explaining how you can apply this to any of the companies you are building. As usual, I’ll apply the “build in public principle here” to share my perspective.

Identified a large market: OK, the market was obvious to me. I’ve worked in iGaming for more than 15 years now, so switching the industry and looking at something else makes no sense. I heard beef jerky is a good high-margin product, but the only thing I know about them—they are damn tasty—so they’re a no-go for me.

Developed a unique and innovative product or service: We’ve developed an AI-driven competitive intelligence product—something iGaming has never seen. Also, it is a bridge to one of the hottest technologies that lots of people are trying to figure out how to use but are scared of missing out on. The word AI is like a magnet at the moment.

Created a scalable business model: Blask is pay-as-you-go. More workseats? Pay more. More countries? More. More features? More! The product has to be worth paying for, of course.

Assembled a talented and experienced leadership team: My co-founder Max is one of the greatest technology minds, even beyond our industry. We’ve assembled a team of the world’s best product and tech experts and never invested in sales. Product always comes first.

Attracted substantial investment: I funded this since day 1. Jeffrey Haas helped me as an early investor, and now we have Yolo and Oakvale. I couldn’t dream of better partners.

Implemented effective strategies for acquiring and retaining users: I worked in B2C, so I know all the little tricks for acquiring and, most importantly, increasing the LTV of users. Push notifications, transactional emails, and promotions are coming. :) Acquisition-wise, brand marketing + content marketing is going to be our main funnel—the most cost-effective combo.

Established a strong brand identity and reputation: This is one of my key areas of expertise. Build a brand people want to trust, follow, and shout about. To the extent that they want to put it on the front of their shirt because it's so powerful. Is that possible with a competitive intelligence tool? We’ll find out :) 

Utilised cutting-edge technology and data analytics: AI, I don’t want to mention anything else here. This is something iGaming lacks these days. The data-driven approach in B2B is also something we are going to target heavily. Study user behaviour and understand where to put the max amount of effort. Using 3rd party tools to save time to market.

Planned for international expansion: Blask perfectly fits the international expansion framework of iGaming. Africa, Latam (both Portuguese speaking and Spanish). Tier-1. If you can’t cover that market, there’s no point in starting. I hate hearing when people saying “we target Brazil”. Come on, you are not unicorn-thinker here.

Remain adaptable and agile: Is the client asking for features? Stress it, but let's get this into our pipeline if it's good. This is a very client-driven industry.

Formed strategic partnerships and collaborations: Investors, data partners, and clients are your main brand ambassadors. Aim to build companies which clients are proud of sharing.

Implemented effective marketing and sales strategies: I’ve utilised my network for the early push, plus PR, and, of course, we’ll follow up with the usual affiliate and performance marketing techniques to catch them all.

Advertising: You’re reading it, mate :) 

My unicorn forecast

Let’s dig into where I think we’ll see the next big iGaming unicorns and what type of businesses they’ll be.

Highest chance of a unicorn? Operators.

The benchmark is this:

My unicorn picks in this category are: 

Kaizen Gaming (Betano), EstrellaBet, PrizePicks, Underdog Fantasy.

Kaizen Gaming is probably already a unicorn - but a startup? :)

Moderate to high chance of a unicorn? B2B SaaS or B2B platform provider/game provider.

If you go through my list of key points, “why,” you will clearly see that disruption in iGaming may lie in the B2B segment.

We keep talking about innovation and are very far from being innovative as an industry, but I think the next big unicorn is somewhere here. A combination of AI and something outdated, where you have scaling potential attached to the operators’ revenue—you have a winner.

Some benchmarks include:

One of the iGaming’s greatest tech companies. Nothing but respect to what they’ve built and achieved.

Remember these guys? One of my all-time favourite companies.

My favourite picks here are Huddle, Blask (obv!), and Spribe (these guys created Aviator).

Least chance of a unicorn? An affiliate.

Remember Gambling. com? Great company; I love these guys. But I don't think the industry's state of the industry would’ve allowed that. The valuation, the available opportunities, and the markets are just too tough to beat.

Still, very far from being a unicorn.

And then there’s Catena Media.

No comments here with Catena. Once beloved company now clearly needs help. So much respect, but something needs to change.

I’m showing these two as a benchmark of a valuation.

My unicorn pick is casino. org, guys. I heard many cool things about you, and I would love to meet you in person. :) DM me if you are reading this. You are probably the next possible affiliate unicorn. I can’t say it’s a startup, though. Let it age.

Closing thoughts

From the very early days of our lives, we do dumb shit like touching fire, eating dirt, and keep failing until we become who we are right now. No success comes without proper failure. Or 10s of failures. Don't be afraid to take risks, experiment, and make great shit.

Keep building, keep trying. Make mistakes, and keep dreaming. Dream big or go home.

I think this industry is ripe for some big ol’ unicorns. But the best way to do so is to try to innovate genuinely. Yes, it is riskier, but the rewards will be bigger for those who do.

PS: I love receiving your feedback. Something was broken, and I think I lost a few of your emails. Those who reached out over LinkedIn told about it, and now I think it's fixed. Please tell me what you think about the new essay, and let’s discuss it!