Underdog Fantasy has officially reached unicorn status, announcing a $70 million Series C funding round on Wednesday that values the sports gaming operator at $1.23 billion — more than doubling its previous valuation from 2022.
Spark Capital, a venture capital firm known for early investments in consumer tech standouts like Twitter, Slack, and Discord, led the round with what Underdog calls "the largest investment from a top-tier Silicon Valley venture capital firm" in the sports gaming industry.
"This investment fits Spark's philosophy of backing products we love from creators we admire," said Will Reed, general partner at Spark Capital. "Underdog has proven they can win where it matters most: product. They've also shown they can attract top talent from gaming, tech, and sports."
The company indicated that the funding round could potentially exceed $100 million when fully closed, pushing the total capital raised by Underdog to over $140 million since its founding in 2020.
Underdog, which began as a daily fantasy sports alternative to DraftKings and FanDuel, has expanded to offer various fantasy products in 41 states plus Washington, D.C. and Canada. The company launched its first sportsbook in North Carolina last year and plans to enter Missouri when that state launches sports betting this fall.
CEO Jeremy Levine emphasized that the new capital will primarily go toward product development and talent acquisition.
"Spark's investment is a real accelerator," said Levine. "We're going to continue to invest in people and product — and as fast as we can. There is so much more to build, and we're going to keep building."
According to company statements, Underdog is now the fourth-most downloaded sports gaming app in the U.S. and claims over 5 million users.
The funding announcement comes just days after Underdog reached a $17.5 million settlement with the New York State Gaming Commission, which resulted in the company temporarily withdrawing its fantasy "draft" and "pick'em" products from the Empire State.
Under the settlement terms, Underdog agreed to the fine but did not admit any wrongdoing. The commission acknowledged that Underdog operated under the assumption that it was acting in good faith.
Despite this setback, the company has expanded its popular pick'em product to New Jersey and Delaware under a peer-to-peer model, a strategic shift from its original player-versus-house approach that more closely resembled traditional sports betting.
With this latest round, Underdog has assembled an impressive list of backers, including:
Spark Capital (current round lead)
BlackRock (funds and accounts managed by)
SV Angel
Mark Cuban (Dallas Mavericks owner)
Kevin Durant (NBA star)
Breon Corcoran (former Paddy Power Betfair CEO)
Previous funding included a $35 million Series B round in 2022 that valued the company at $485 million, meaning the current valuation represents nearly a 154% increase in just two years.
Underdog has gained popularity through distinctive offerings like its Best Ball Mania tournament, which recently awarded a $3 million prize to its winner. The company's "Pick'em" format, allowing users to build parlays based on player props across various sports, has helped differentiate it from competitors.
According to Axios, CEO Levine recently told employees he's tired of finishing behind DraftKings and FanDuel, suggesting he's not looking to sell the company as he did with previous ventures. Levine previously sold fantasy sports startup StarStreet's user database to DraftKings and later sold DFS company DRAFT to Paddy Power Betfair (now part of Flutter Entertainment) for $48 million.
Reed of Spark Capital praised Underdog's approach: "Their unwavering focus on product and customer experience is why they've emerged as the most innovative player in sports gaming. We see massive opportunity ahead and are thrilled to be on the journey with them to make sports more fun."