Jesper Søgaard: "We had a long-term focus and weren’t chasing all short-term opportunities"

Earlier this year, on 21 January, Better Collective threw a mid-afternoon housewarming party to celebrate the affiliate giant’s recent relocation to its grandiose HQ on Sankt Annæ Plads in Copenhagen overlooking the Danish capital’s harbour and opera house.

After speeches delivered by CEO and co-founder Jesper Søgaard and Lars Sandahl Sørensen, CEO of the Confederation of Danish Industry, the guests, which included staff and key stakeholders, toasted the move over drinks and tucked into canapés prepared by the firm’s in-house chef. And, in a nod to Better Collective’s faith in esports, Counter-Strike: Global Offensive (CS:GO) player Markus Kjærbye was on hand to demonstrate his skills and challenge guests at the first-person shooter.

Side note: Søgaard managed to defeat the 25-year-old pro Kjærbye. Well, in a way. “He was kind enough to let me eliminate him in one game, but it ended 10 to one,” Søgaard reveals to EGR. 

Later, as the winter sun subsided to create a bit of hygge inside – which loosely translates from Danish as cosiness and comfortable conviviality – outdoor lighting was used to turn the entire white façade of the building green, the primary colour of the Better Collective brand.

“It was a great day for the company, and it was great to see company stakeholders stopping by to see the new office,” the CEO reflects. Situated 150 metres from what had been the firm’s HQ since 2009, the more than 100-year-old, five-floor building being the new nerve centre since the move in August 2023 is perhaps befitting as Better Collective turns 20 years old on 19 March.

“We needed more space and to upgrade the entire level of facilities for our colleagues […] it’s a place where I can see the next 14 years of Better Collective because there’s room for growth here.” Old habits die hard, though, as Søgaard admits he has twice cycled to the old place by mistake. 

Casino spieler 

The expansive HQ is a stark contrast to the pokey German hostel where, in 2002 – around 18 months before Better Collective was incorporated in 2004 – Søgaard and high school pal Christian Kirk Rasmussen dipped their toes into the nascent world of igaming affiliation. While on a sabbatical in Berlin to improve their German, the pair, both 19 at the time, were also exploiting generous online casino bonuses and playing the optimal blackjack strategy to eke out a profit at the virtual tables.

Online gambling was taking off around this time, so they spotted an opportunity to launch a German-language igaming education and content portal. After poring over a German dictionary to come up with the name for the site, they eventually settled on CasinoVerdiener, or CasinoEarner in English. Søgaard says: “We planted a seed and had no idea what it could turn into. It was a hobby project and two guys having a bit of fun playing around with [HTML website builder] Microsoft FrontPage, but it grew by word of mouth and saw more and more visitors.” 

Søgaard and Rasmussen later returned home to Denmark to attend university in Copenhagen where they beavered away on the site while studying political science and commerce, respectively. The earnings from CasinoVerdiener had started to roll in, so they took the plunge and established Better Collective.

Looking back at the affiliate world in the early 2000s, Søgaard says: “There was an element of it being the Wild West in those early days with so much happening and constant change. All the big affiliates were targeting the US market, and that stopped a few years later [with the passing of the Unlawful Internet Gambling Enforcement Act]. Then, there was a focus on the European market, with that shift being in our favour as that’s where we were operating. So, we got some tailwinds there […] and, early on, we made the shift to sports betting content and affiliation.”

This pivot was as Better Collective made its first acquisition in the shape of Bettingexpert, the site becoming the fledgling company’s flagship product. Almost two decades on from the transaction, Bettingexpert remains a core asset and one of the largest social networks for sports betting tipsters. “We learned about affiliation in online casino but where we applied it to the greatest level of success was in the sports betting media landscape,” Søgaard says.

Once they graduated from university, the duo was able to focus much more attention on their startup. One benefit of that focus was improved organic search visibility. “We started to see success with rankings on Google. You know, if you are number one in Google rankings you will see valuable audiences come to you, but if you are 11th, you’re not seeing anything. It’s very binary.”

The profits from ranking highly for key search terms, and then ushering traffic to betting sites, were reinvested into the business, such as launching Bettingexpert in several languages. Better Collective was soon experiencing a flywheel effect, the CEO says. Revenue hit €800,000 for full-year 2008, while EBITDA wasn’t far off, coming in at €700,000.

Over the next few years, the business continued to deliver organic and profitable growth as Better Collective climbed the ranks of the online gambling affiliate space. This ascent didn’t go unnoticed. Several operators and larger affiliate groups each expressed an interest in acquiring the company. So, did the founders contemplate cashing in their chips? “Nobody put a price on our business that was sufficiently high and would match what we believed the business was worth, with the potential we were realistically able to achieve,” Søgaard responds.

“To be honest, we never really considered any of those offers and I would be surprised if there will be offers in the future that would lead us to change that way of thinking. But obviously, you never know what will happen in the future.”

While Søgaard and Rasmussen rebuffed bids from suitors, Better Collective itself morphed into an acquisition machine, gobbling up businesses left, right and centre amid an M&A wave that swept through the gambling affiliate sector, starting from the middle of the previous decade. The firm’s 2018 IPO generated much-needed capital to turbocharge the M&A drive. “The IPO was about us raising more firepower. We raised €65m and quite quickly after the IPO the €65m was put to work,” the 41-year-old CEO says.

Listing on the Nasdaq Stockholm came just weeks after PASPA was struck down in the US, creating the industry’s largest greenfield opportunity to date and the chance for Better Collective to diversify its revenue (85% of revenue was derived from Europe in 2018). M&A would prove to be vital to accelerate scale and market share across the pond. In 2019, Better Collective acquired a 60% stake (later increased to 100%) in leading fantasy sports resource RotoGrinders. The ink on the deal was barely dry when VegasInsider and Scores and Odds were snapped up for $20m in an all-cash transaction.

Then, in 2021, Better Collective shelled out $240m to purchase US betting media business Action Network, which remains the company’s largest buy to date. Søgaard explains: “We wouldn’t have had the position in North America we have today if we hadn’t made acquisitions. No doubt, they have been absolutely key in positioning Better Collective so well in the North American market.”

He adds: “We were very realistic that we, as Europeans, could not launch a new product or brand in the US and believe we would be better at doing so than Americans.” But Better Collective didn’t stop there in the region, of course.

Last year, Toronto-based Playmaker Capital was acquired for €176m, the second-largest purchase to date for Better Collective. The deal, which completed in February and was hailed as “transformational”, includes a bulging portfolio of sports media brands across the Americas, including the regulating market of Brazil where Better Collective opened two offices, in Rio de Janeiro and São Paulo, in 2023 and established a regional team.

The swoop for Playmaker Capital doubled Better Collective’s reach to almost 400 million monthly visits. “We are very excited about Latin America,” Søgaard states. “With this acquisition we gain ground in that region and have bought some of the leading brands in the different markets. Though I say Latin America, the way we are going to approach it is country by country because you need to tailor it to the local audience.”

Yet, whether it’s bolt-on deals involving local sports brands or branching out into adjacent verticals, like esports and the 2020 acquisition of prominent esports platform HLTV, the Dane insists M&A has been “extremely value-creating” for Better Collective. “It has brought us a lot of powerful brands and that, in my mind, is the best foundation for us to execute on the strategy we have and utilise our expertise.”

But does the consolidation frenzy across the affiliate landscape in recent years mean there’s a danger you run out of credible acquisition targets? “No, not at all. There are still so many markets where we are not present and there is a lot of global digital sports media [businesses] that are of interest, so there is still a lot to do, and I honestly don’t think we are going to run out of targets in the foreseeable future.”

When kicking the tyres on targets Better Collective could potentially buy, Søgaard clarifies that the hope is to find “long-term, sustainable businesses”. He elaborates: “We want to make sure that it isn’t just performing well now but will perform well in five years’ time. A strong indicator of that is the power of the brand. We look for strong brands to add to our portfolio, but it could also be a niche brand in a local market.”

Søgaard references the 2018 acquisition of sports media site Betarades in Greece to underline his point: “The Greek market isn’t the biggest out there, but we have ownership of a very strong brand with a big, loyal audience. That gives you a tailwind to ride growth for many years to come.”   

That figures  

Besides acquiring seven businesses in 2023 for a total consideration of up to €298m, Better Collective’s key financials all headed in the right direction. Revenue beat previous expectations, climbing 21% year on year (YoY) to €327m, while recurring revenue (mainly revenue share income) jumped 47% YoY to €189m and EBITDA (before special items) increased 31% to €111m.

Furthermore, new depositing customers (NDCs) rose 14% in 2023. In the US, where the company achieved its strongest monthly revenue – €37m in January 2023, fuelled by Ohio’s sports betting launch – there has been a steady transition from cost per acquisition (CPA) deals to revenue share contracts. Of the 115,000 North America NDCs sent in Q4 2023, more than half (55%) were revenue share deals. This shift will continue in 2024, creating tough Q1 comparisons, yet bosses say recurring revenue is crucial for long-term sustainability.

Søgaard, who says the revenue share model is in the firm’s “DNA” and that the US has historically been the exception with CPA deals, adds: “We are not just getting the one-off payment, we are getting a share of the net revenue generated from players month after month. Despite making that transition, which will have a short-term negative effect, we still managed to grow North America last year.”

As for 2024, the group-wide focus is on integrating the businesses acquired last year, so expect the pace of deals to slow, although almost DKK1.1bn was raised at the end of February to fund future M&A opportunties. Better Collective, which listed on the Nasdaq Copenhagen last November, can look forward to a packed sporting calendar with Euro 2024 this summer in Germany and the Copa America taking place in June.

Plus, the Africa Cup of Nations was staged at the start of the year. Still in charge of the business alongside COO Rasmussen, the CEO is also focused on the long-term aim: “Today, we aspire to become the leading digital sports media group. We believe the toolbox we have in terms of audience growth and monetisation is best in class.”

It’s already been quite the journey for a company that started out as a hobby and now has a market cap of SEK17.2bn (£1.3bn) after a 340% rise in the share price since the float in 2018, a portfolio of dozens of sports media brands and approximately 1,800 employees around the world. So, it’s easy to see why Better Collective has been crowned EGR affiliate of the year for the past six years.

But does Søgaard think there was a big slice of luck in terms of when Better Collective started out in affiliation and that it would be far harder to replicate its success if starting out today instead of 2004? “I definitely think there was an element of luck; very few businesses will be able to be successful without any luck,” the CEO acknowledges.

“Where we stood out is we had a long-term focus and weren’t chasing all short-term opportunities. I feel that served us well as the business has developed. But I do think it would be much harder to do [today] what we did back then. Having said that, I’m sure you can always find your own niche where you can start and gain momentum and build. It’s harder today but not impossible,” he adds.