Waterhouse VC: a year in Review

Company valuations increased across the board in 2023. However, they varied significantly by geography and sector. Investors have become more selective as interest rates increase globally. They prefer to invest in businesses that are profitable.

Two factors contributed to +39.5% in 2023:

• Project Tennis is a tennis-focused professional betting syndicate, founded by Tom Dry. The first discussion was in December 2022, and the investment took place on July 1, 2023.
• Saintly is a B2B crypto betting operator. Position terminated on August 20, 2023.

Beat the House

The performance of Tom Dry’s syndicate is excellent going forward into 2024. By January 2025, the fund will have earned back its investment in Tom Dry’s syndicate. It will only be 18 months since the initial investment. The fund’s focus is on professional betting in general. Currently, we are exploring various professional betting options.

We are also looking into professional horseracing betting. Totes offer rebates that make horse racing a very interesting sport. The large syndicates that provide liquidity benefit from the generous rebates offered in tote/pari-mutuel betting. They have a distinct advantage over other players, which can vary depending on the size of the pool.

In order to qualify for rebates, syndicates need to wager substantial amounts. According to Sports Trading Network, US Totes usually only offer rebates for those wagering over $5m per annum.

The rebates received by the bigger syndicates have already put the smaller syndicates behind them. This rebate advantage led to substantial profits and large payouts for racing focused syndicates.

Waterhouse VC would have a great portfolio holding if it could bet on races and get rebates.

Saintly- A seven month journey

Saintly contributed the most to the performance of the fund in 2023. In February 2023, we negotiated a purchase option for 20% of Saintly due to its technological platform. This platform positioned Saintly well to capitalize on the growing opportunity of crypto betting, which was first discussed by us in May 2022.

Sportsbet.io, Stake.com and other online crypto operators that have similar user interfaces to those of fiat-based operators such as FanDuel or DraftKings already record extraordinary profits.

Waterhouse VC signed an option agreement with Saintly in February 2023. The deal was terminated in August 2023 at a valuation of 23 times that option value.

India & Brazil: Emerging Market Opportunities

In 2024, we expect that emerging markets like Brazil and India to be the key growth areas for operators as well as B2B suppliers.

India’s online betting industry is growing by over 20% annually (Sportskeeda). The rapid growth of the Indian economy, which has seen GDP per capita double since 2009 and an estimated 370,000,000 bettors, is fueling this industry.

The total wagering on cricket is $150bn. 85% of Indians bet on the sport (GiiResearch). In most cases, the legality of gambling in India is still unclear.

Brazil has recently launched online betting following the approval of President Lula da Silva. The new industry is expected to launch soon, as 134 operators have already signed the pre-market ordinance.

2024: Looking forward to

Professional betting, emerging markets like Brazil and India, and B2B providers that offer a unique or critical service to gaming operators and bettors are all areas we’re excited about.

Waterhouse VC identified several attractive companies within the industry that are currently valued at only 1x their revenue plus roughly the net cash they have on their balance sheet. Wholesale investors have access to larger deals that are still being valued at low levels.