[ad_1] Kansas City Chiefs quarterback Patrick Mahomes (15) drops back to pass during the first half of an … [+] NFL football game against the Detroit Lions Thursday, Sept. 7, 2023, in Kansas City, Mo. (AP Photo/Ed Zurga) Copyright 2023 The Associated Press. All rights reserved. Deven Hurt and Brad Chabra grew up on Bay Shore, Long Island as best friends, attending elementary, middle and high school together. After graduating from Harvard and American University, respectively, they began working in 2018 in cybersecurity and finance, but they soon discussed starting their own company. That led to the launch in 2019 of PredictionStrike, an online marketplace where sports fans can buy virtual shares of professional athletes. They founded the startup as sports betting and fantasy sports were booming and modeled it after a stock market. Recently, PredictionStrike raised $10 million in a Series A funding round led by Bullpen Capital, a venture capital firm that has invested in more than 100 companies since its founding in 2010, including an early-stage investment in FanDuel in 2012. MaC Venture Capital, Correlation Ventures, Elevate Capital, Gaingels, HighSage Ventures and Sixty8 Capital also participated. PredictionStrike had a post-money valuation of $32 million after the latest round, according to Hurt, up from $18 million following the company’s $3 million seed round that closed last year. Hurt claims PredictionStrike has processed $60 million in transactions and has more than 175,000 users, an increase from $15 million and 100,000 users a year ago. Unlike on the NYSE or Nasdaq, where people buy equity stakes in actual companies, the share prices on PredictionStrike are based on an algorithm the company has created that incorporates how players perform in games as well as user demand in terms of how often the players’ shares are being traded. PredictionStrike offers virtual share prices for players in the NFL, NBA and Major League Baseball as well as fighters in the UFC. “Probably the biggest thing for us is just making sure that the market feels like it makes sense and users feel like it works for them,” Hurt said. Hurt, who was a bioengineering major in college, created the initial marketplace for PredictionStrike, but others have since helped him improve the product as the company raised money to invest in outside hires. Hurt, the company’s chief executive, has also been running the company the past three years while attending Harvard Law School full-time. He graduated from Harvard Law in May. “It was difficult and time-consuming,” Hurt said of juggling law school and being a CEO. “Pretty much, I only had time to do school and run the company. But the nice thing about Harvard Law School, especially the second two years, is you really can decide where you want to put your time. People, of course, get involved in campus groups and things like that. Where I wanted to put my time was the company, and so the school had a lot of flexibility to allow that to happen.” Marlon Nichols, co-founder and managing general partner at MaC Venture Capital, said he was impressed that Hurt could be a law student and startup founder at the same time. MaC co-led PredictionStrike’s $1.7 million pre-seed round two years ago and led the seed round. “You would have never guessed that (Hurt) was doing that (going to law school),” Nichols said. “He was continuing to perform. He’s been dedicated to this thing from the beginning, and he continues to be. I think the law degree helps, especially as you look at potential legislation in the space and things like that. It’s a plus.” PredictionStrike is not the first marketplace looking to combine people’s passions for sports, betting, fantasy and the stock market, but most have failed due to a lack of interest in the product, bad business models or questions about how the values of players’ virtual shares are determined. Mojo is the highest-profile recent entrant into the space. The company last year closed a $75 million Series A round from notable investors such as Thrive Capital, Tiger Global, former MLB star Alex Rodriguez and Marc Lore, a successful entrepreneur who along with Rodriguez have agreed to purchase the majority stake in the Minnesota Timberwolves and Minnesota Lynx. Mojo has a fantasy game that is available in 19 states and Washington, D.C. as well as a mobile sportsbook in New Jersey. The Mojo app offers dozens of opportunities for people to get involved and places values on props such as whether a football player will score the first touchdown or a baseball pitcher will strike out more than seven batters. PredictionStrike, meanwhile, has one value per player based on their performance and demand among users. For instance, New England Patriots receiver Kendrick Bourne’s virtual share price increased by 55.40% after he caught two touchdown passes in Sunday’s opening season loss to the Philadelphia Eagles. Hurt noted that PredictionStrike is referred to as a “fantasy derivative platform” and a “game of skill,” meaning it does not have the same regulatory requirements as sportsbooks, which have to apply for licenses in each state. He said it’s similar to the status that FanDuel and DraftKings had as daily fantasy operators before they got into sports betting. PredictionStrike is available in about 40 states, but Hurt said some states have cracked down on companies known as having games of skill and make them apply for licenses. In May, for instance, Legal Sports Report reported the Ohio Casino Control Commission was investigating PredictionStrike and four other websites of potential illegal activity and that the State of New Jersey sent PredictionStrike a cease and desist letter for offering unlicensed sports wagers. When asked to comment about those investigations, Hurt said that “PredictionStrike has operated and will continue to operate as a game of skill as opposed to sports betting. Furthermore, PredictionStrike will continue applying for game of skill/fantasy sports operator licenses in states where required.” PredictionStrike generates most of its revenue by charging a 2.5% fee for each transaction. It also has a subscription offering where users can pay to have lower transaction fees and gain access to other perks. The company hopes to some day sell the data that it collects on trends in athletes’ popularity and trading patterns, too. “This fits between what we know as fantasy, what we know as fandom, and at the same time you’re able to make money on this by holding shares and trading them as the right time,” said Nichols, who is one of PredictionStrike’s board members. “PredictionStrike has basically figured out a way to monetize the fantasy market, which is massive. If we don’t see results similar to FanDuel, DraftKings and those folks, something’s gone wrong. It definitely has that potential.” [ad_2] Source link Post navigation Investing in Space: Industry enters new era Want $300 in Super Safe Annual Dividend Income? Invest $3,075 Into the Following 3 Ultra-High-Yield Energy Stocks