As noted yesterday, there’s been a recent uptick in Minnesota tech fundraisings lately, with over $7.5m (possibly more) behind five different startups already this year.
Initially launched in 2008, LeagueSafe is PayPal for fantasy leagues. It’s a free finance tool for fantasy sports league owners and commissioners to manage funds through a secure online payment system in conjunction with an FDIC-insured financial institution. “Think of LeagueSafe as a type of escrow service, which means nobody can get at the money until the end of the season when your league is ready to pay its winners,” says the website. The service ensures that nothing funny happens with the money and earnings are distributed quickly and efficiently.
LeagueSafe founder and president Paul Charchian is a well-known figure in the sports media business. As early as 1993, together with Rob Phythian, he began publishing a weekly fantasy sports magazine, and hosted a radio show that reached 120 markets. This success led to the birth of fantasy sports website Fanball.com in 1998, a tumultuous venture that raised $10m, actually filed Chapter 11 in 2001, but eventually managed to sell for $12m in 2005 to London’s Fun Technologies, which was quickly purchased by Liberty Media. Charchian and Phythian left in 2007 and Liberty Media recently elected to “shut down” Fanball. Charchian is also president of the Fantasy Sports Trade Association (FSTA).
The exact amount of money tied up in fantasy leagues is largely unknown, but the FSTA says that 27 million Americans currently participate in fantasy sports leagues, marking a 50% increase from 2005. Over $800m is spent annually on fantasy sports, not including leagues entry fees — an amount which LeagueSafe claimed was $4.5b in 2008. It’s not clear from the website how exactly LeagueSafe generates revenue, but my blind guess would be interest on the float.
As an aside, LeagueSafe is the second homegrown fantasy-sports related startup appearing on our radar in the past few months.