A helping hand: A network for industry start-ups

Venturing out into the world of business ownership is a terrifying jump, not least in the ever-demanding technology space and, in particular, the overly saturated online gambling sector. But nonetheless the hunger for innovation in a considerably aged (by technology standards) industry like gaming is vast and it is due to the penetration of fresh-faced tech start-ups, often with no history in the sector, that we remain thriving.

But for these entities seeking an entry into the industry, the process of establishing themselves can be a hugely complex one, not least in the face of overly complex regulations and sourcing funding from venture capital firms that are wary of the stigma attached to the online gambling industry.

In the wider world of technology, accelerators like Silicon Valley initiative Startup Grind have sought to educate, inspire and connect entrepreneurs around the world to assist them in building their business and to partner with like-minded business owners and investors. The founder also developed software to enable businesses to scale while having remote workers contributing from around the world.

Chapter director for Startup Grind’s Gibraltar faction, Denise Matthews, insists the global network offers a huge amount to early-stage tech companies. One such example is the opportunity for founders to pitch their product/service ideas at a global event.

An experienced panel of professionals help to prepare the start-ups for the presentation which has a selection of investors involved. “It’s [also] the ability they have as a large scale network,” Matthews says. “The success has really been to do with how starting a business is very much about building a community around it.”

But up until now no such opportunity existed for gambling firms despite operators clearly calling for these start-ups to come forward and inject new novel product ideas into their largely old-fashioned approaches.

Outside experience

One of many examples is Paddy Power Betfair’s (PPB) Romania-based tech hub, which recently partnered with two firms on developing safer gambling tools via an external competition that attracted over 200 start-ups from 54 countries.

On the initiative, which ran from November to December of last year, programme lead at PPB Rob Smith said: “The first edition of Alpha Hub has demonstrated the potential of Paddy Power Betfair’s collaboration with start-ups that can complement our own products, technologies, and innovation eff orts. We are very interested in expanding this process in the future.”

Sky Betting & Gaming launched the first bid for outside innovation with its CoLabs programme last year, and Kindred’s investment arm Kindred Futures has been actively seeking partners to work with for some years. The appetite for collaboration is certainly there among the bigger firms, but accessing them has proven difficult.

The founders of self-described ‘WhatsApp of betting’ app Bet Blocks, Jonny Robb and Nilesh Mistry, made headlines last year with the announcement of their product and since then have found themselves the point of contact for gambling industry knowledge for eager developers of similar products trying to break onto the scene. The two quickly established there was no such Startup Grind-style initiative for gambling and set about establishing an online network for like-minded entrepreneurs.

“We had the idea of creating the start-up network with the objective of informally connecting the start-ups to allow us to help one another and exchange ideas,” Robb explains to EGR Technology from the comfort of the pair’s co-working space in Shoreditch, a hotbed for budding developers.

“The second aspect was to try and collectively raise our profiles within the industry. I think what we’ve discovered is there are a lot of interesting start-ups out there doing a lot of interesting things. “We met up with a few of them at ICE and starting up the site has helped us learn quite a bit from them from a technology and business side.

“They’ve been asking us for our help with the betting side of things like relationships and affiliates, which we have really good knowledge of.” Nine companies make up the network since it was first established in February.

Robb and Mistry contacted 10 companies initially and received extremely positive responses from eight. From there another has joined on recommendations from others in the network. “At the moment we are the middle men that have initial meetings with companies to find out what challenges they’re facing and from that organically comes a need we can meet by connecting them to others.”

The next phase of growing the network is to host a networking event to bring together members of Gambling Startup Ventures with relevant industry counterparts to discuss common challenges in egaming, not least regulation in the UK, and according to Robb and Nilesh, the most difficult facet of entrepreneurship in this sector, raising capital and timing.

Start-up struggles

For the Bet Blocks founders the blow of starting a new tech venture was softened by the backing of William Hill, as both entrepreneurs worked as UX specialists with Grand Parade before venturing out on their own.

“Because of the unique nature of betting, a lot of people who might ordinarily support a start-up might not within the betting industry,” says Robb. “A lot of venture capitals won’t invest in products associated with gambling, they have to be comfortable with that. As a result a start-up in the space is an outsider and the reigns of support might not be as available to you as a start-up outside of gambling. So whose responsibility is it to then help those start-ups?”

Elsewhere, Robb highlights the difficulty behind and frequency of establishing a relationship with an operator, only to find that six months to a year in the start-up’s life the point of contact has moved on to another role in another company and they are back to square one.

Unsurprisingly, the process of making commercial decisions can be slow among the major operators. A key setback in the launch of Bet Blocks, which has been pending its official inauguration for some months now, was approval from Apple to feature its product in its iOS App Store.

Like many others in the industry, and not just those starting out, Apple rejected Bet Blocks on very vague grounds. “Apple advertises that it approves 95% of apps within three days and it took them three months just to get around to looking at our app, then they reviewed it for 10 minutes and declined it.

“They gave us a very vague clause within their guidelines. The clause included everything from imitating another brand to attacking the App Store. We couldn’t understand and asked for clarification. After three weeks of no clarification, they just approved it. We advise start-ups within the network to start that process early if they can,” say the Bet Blocks duo.

UK licensing was another area that has caused alarm among the network’s members. One company, dubbed Prophet, is a US start-up moving its operations to London in an effort to penetrate the mature UK betting industry first.

Prophet offers a secondary marketplace for cashout on bets, and alleges it takes a much lower commission than operators. Prophet is the brainchild of two former university friends based in New York, both with a background in financial trading.

“The complexity of betting is way more advanced in the UK [than the US] but we’re comfortable with it. We haven’t been granted a UK licence yet but we are in the process of receiving it. From there it’s about having a successful launch in the UK, then we’re looking to hire a London-based CMO and we’ve been interviewing some great candidates thanks to the network,” Prophet founders Jake Benzaquen and Dean Sisun comment.

Introducing Fireswan

Also, among the companies in Robb and Mistry’s Gambling Startup Ventures network is an app that automates users’ betting strategies and back-tests them against sports data to establish winning formulas for seasoned bettors.

The iOS and Android Fireswan app is available currently in beta and has a keen following on Reddit, where the developers openly discuss updates and issues with their community of almost 500 beta testers. “The feedback initially was quite positive and the community suggested to us a lot of new features. People started to ask about being part of the closed beta very early on and that’s why we decided to make it public,” says founder Max Shyrokiy, who also claims it has produced 15,000 picks with a 5% ROI for punters.

At present the available data dates back to the beginning of the football season but the firm plans to increase its offering and continue to add new features to boost the players’ ROI, which at the moment is averaging 5%. In the pipeline are plans for a social messaging feature and data for more sports markets.

The goal, Shyrokiy says, is to make the product attractive to amateur bettors with no knowledge of the process. “We met [Jonny] and he’s been sharing our product. [The network] is useful because we’re trying to bring together technologists to help deal with and manage a lot of the information and data in betting. We’re positioning our product as a sports analytics tool. We’re not making any real money but it’s a tool for bettors that we wanted to offer,” Shyrokiy explains.

“We are not considering having betting companies involved at this stage,” he says, as he wants to separate the product from the bookies and monetise it by offering premium content to paying users.

Despite its nascence, there is a clear demand for the network and Robb and Mistry have far too much on their hands to give it the attention it deserves. However, the ultimate aim of the network, Robb and Mistry explain, is to facilitate mentorship programmes between betting start-ups and well-established industry veterans.

As Robb rightfully points out, the industry is awash with experienced folk full of extremely relevant advice. “Their wisdom would be greatly appreciated by the start-ups and they could be monumentally useful to them. There are also opportunities for non-exec directorships and investments. We need to think about how to attract that kind of person,” Robb and Mistry conclude.