St.Louis Park-based DraftStreet.com (Left Tackle, LLC) recently raised a $1.6m series A equity round from undisclosed investors — primarily in New York.
In essence, the site is a hyperactive marketplace for NBA, NHL, NFL and MLB fans and teams to compete in short term (daily and weekly) fantasy sports leagues.
We since caught up with Co-founder and COO Michael Kibort to learn more about the startup and his adventures in growth.
What is the genesis of DraftStreet.com?
First of all, the four founders are all fantasy sports nuts! We wanted to turn this passion and energy into something more and saw a lot of room for improvement within a fast growing industry. We officially formed in 2010 and from there, figured ‘let’s make something that people like us would enjoy’. It all began with a soft launch MLB over the summer and I don’t really know that there was originally a goal to do X or be Y, since our collective passion for a better product was the motivation. We’ve since learned that this can be a profitable enterprise and see a big upside in where we’re headed.
What is the business about and how is it different than the rest?
A traditional fantasy league starts at the beginning of a season with the draft and lasts months to the official season end. This appeals to beginners and passive players, but what about the addicts? I would say we’re on the forefront of the fantasy sports industry — in that we feed instant gratification by enabling a marketplace for daily and weekly fantasy leagues. The value-added is that we offer top quality game formats and functionality as well as live-scoring. Also, we handle all the buy-ins, payouts, matchmaking, integrated player news, stats and analysis. When this adds up, we’re constantly iterating and ever expanding based on user feedback and demand. Overall, there are many different features that we offer which differentiate us from other online sites — and a laundry list of development left to go. It’s a hub of activity that’s been growing 50% a month since inception.
How do you create awareness and acquire customers?
Part of our team’s strength is our background in online direct marketing. We have ads placed in a number of different networks of websites and are able to optimize performance extremely well. We have also formed strategic partnerships with some websites that carry our target demographic. We offer users of these sites “Freerolls,” or no entry fee contests for cash prizes to expose them to DraftStreet.com and all it has to offer. We are also beginning to work some celebrities in the sports and pop culture world to create awareness and bring familiarity to the brand. Finally, we have created an industry leading “Recruiting Program” where users can earn money by getting their friends to play on DraftStreet.
How do you make money and what’s the scope of the industry?
There is a small fee on top of each buy-in for every cash league. Our fee structure is among the most competitive in the industry. 30 Million Americans currently participate in fantasy sports leagues; That number doubled from 15 million in 2005 (FSTA.org). Over $2 Billion is spent annually on fantasy sports not including money wagered on actual leagues themselves (FSTA.org).
At what point did you realize that DraftStreet.com was going to require outside investors?
We knew early on that we would require outside investors, but wanted to get as much as possible done with our own capital so that we would not have to give up too much of the company. We started by contacting friends and family and expanded as fast as possible on as little as possible — initially raising a $325k seed stage round to prove the concept. One rule for entrepreneurs is to get as much done with your own money as possible. Not only will this allow you to create a higher valuation, but the fact that you have invested your own time and money will be very attractive to potential investors. It changed the nature of how we operate for the better, and set us up for the greater challenge (and completely new experience to us) of raising what we considered our series A.
What has been the biggest lesson learned with your venture?
For me, the single most important lesson is that nothing is ever as easy as it seems. A great idea means nothing without the ability to execute.
What advice would you have for others about turning passion into reality?
The first piece of advice would be to stay organized as there are many moving parts within a start-up business that require your attention…it is critical to always know where you stand on paper with every aspect of the company. Secondly, it is extremely important to not only know your strengths, but also your limitations; this will allow you to surround yourself with the right people to accomplish your ultimate goals.
What lies ahead for the startup?
The first year has been equal parts fun, challenge and super experimental. People think entrepreneurship is glamorous, but we work harder for ourselves than we ever did for anyone else. The beauty of our model is in a turnkey system and as we refine the model, it’s all about the marketing. NHL Hockey is launching this week; eventually Nascar and PGA will open the service up to new demographic markets.