Did you know that Minnesota is home to over a dozen tech companies playing in the wide world of sports?
Underwritten by TST Media, the ‘Game On’ series explores this local cluster of technology, ranging from startups to the public market.
LeagueSafe is an on-line escrow service that secures and manages fantasy leagues’ finances. In a nutshell, it’s PayPal for fantasy leagues.
When was the company founded and what phase is it in?
Paul Charchian started developing LeagueSafe in 2007 after departing his first company, Fanball. A year later, LeagueSafe was live, as a small semi-public beta in 2008. We went fully live in 2009. We underwent a massive site overhaul in 2011, which addressed everything we learned since launch.
How many employees do you have? Have you previously raised outside investor capital?
Unlike Fanball, which offered a full suite of fantasy sports products, LeagueSafe is very streamlined. Our product is comparatively simple, the electronification of fantasy league finances. As such, our personnel needs are pretty modest. We have five employees along with seasonal hires during our busy seasons.
Fanball raised angel funds several times, both while as a tiny startup in the early ‘90s, and later as a much larger dot com. LeagueSafe has also raised angel investment.
How do you make money?
Much like an escrow service, we hold fantasy league entry fees throughout the sports season. So, obviously, we make money on the float over a five month baseball season or a six month basketball season. But, with interest rates at all-time lows, we’ve gotten creative about finding other revenue, including revenue from withdrawals and late fees.
What are your core technology products/services?
LeagueSafe is very similar to PayPal, but refactored to meet the specific needs of fantasy sports players. LeagueSafe offers the convenience and safety of electronified payments of fantasy league entry fees, which has traditionally been a chore that falls on the shoulders of commissioners.
LeagueSafe locks down the funds throughout the season, so fantasy players can rest assured that their entry fees aren’t being spent.
Unlike most traditional fantasy leagues with no online payment mechanism, within hours of the end of the season, LeagueSafe is ready to pay league winners. And LeagueSafe offers many convenient payment options, taking the burden off the shoulders of commissioners.
What sports/markets/audiences do you serve?
Fantasy sports players and office pools (such as weekly pick ‘em pools, “knockout leagues,” and March Madness).
How does your company and technology enhance or advance the sport(s)?
Fantasy sports are supposed to be fun! The last hassle left in fantasy sports surrounds the traditional handling of finances. Before LeagueSafe, commissioners were stuck handling cash, checks, PayPal, and IOUs for league fees. This is especially true as leagues are increasingly composed of players from across the country.
And, of course, every league has deadbeats, forcing the commissioner to spend time they don’t have nagging and attempting to collect from slow-paying owners. No commissioner wants to be the bad guy. LeagueSafe will do it for them.
Under the traditional payment methods, many leagues run into trouble because the commissioner intermingles league funds with his/her personal finances. Over the course of the season, the funds might be spent on shoes, a vacation, or the cable bill. At the end of the year many commissioners simply don’t have the money any longer. LeagueSafe stores league funds safely, and returns 100% of the league’s entry fees.
Lastly, LeagueSafe handles all the winners’ payments.
How do you see technology changing the game 5 – 10 years out?
Fantasy sports is a stable, maturing marketplace, with over 33M players in the US, and hundreds of companies catering to their needs. Big portals such as Fox, ESPN, Yahoo, and CBS tailor their sports offerings specifically to fantasy players.
Looking forward, the fantasy sports industry’s growth is in second screens. Most fantasy players consume televised sports with two, three, or four screens: laptops, tablets, and phones. Increasingly, fantasy companies are building products to cater to these platforms.
Also, increasingly, people are finding new leagues and other fantasy players on the internet. Pre-internet, almost all fantasy leagues were comprised of known people: friends, coworkers, etc… Today, people are creating leagues with strangers, sharing conversations in forums, and building new friendships over fantasy sports.
Because people are playing with strangers, there’s an added value to a third party service to secure league fees.