In this Sept. 9, 2018 photo, customers watch sports on a giant screen at the sports book of the … [+]
Cipher Sports Technology Group, an Australian sports betting company, has raised $5 million in a Series A round.
The company plans on using the proceeds to expand in the United States, a market where it already has a presence and where it sees potential outsized growth as more people become comfortable betting online. Cipher also does business in Australia and plans on expanding to other countries in the next 12 to 18 months.
Cygnet Capital, an investment group based in Melbourne, Australia, led the round. A group of high net-worth individuals participated, as well. Cipher would not disclose its post-money valuation, revenues or other financial information about the company.
Cipher owns and operates consumer-facing websites such as dimers.com in the United States featuring the company’s proprietary technology that helps bettors predict outcomes in games. The company makes money through advertising on the websites, and referrals to online sports books such as BetMGM, DraftKings and PointsBet.
Cipher also generates revenue in the business-to-business channel, including selling products and services to sports books and media companies. For instance, in May, Cipher closed a deal with Advance Local, a U.S. publishing company, where Cipher’s content and tools are shown on the PennLive.com, LehighValleyLive.com and GulfLive.com websites that Advance owns.
Cipher is operating in a crowded field that includes major brands such as the Action Network, which the Better Collective acquired last year for $240 million, and Covers Media Group, which Tribune Media bought in 2015.
“We’ve been able to build a really strong brand and a great database of sports bettors,” said Adam Fiske, Cipher’s chief executive. “But now that we’ve got the funding and the capital, we really can accelerate the growth of that quickly and start to compete with the current market leaders like Action Network and Covers….Our goal is to build Dimers into one of the U.S.’s most recognizable media and content brands.”
Cipher was formed last November through the merger of iRival Media and Hypometer Technologies, both Australian sports betting companies. Hypometer focused on data and analytics, while iRival specialized in content and marketing. The two had previously worked together on projects.
Nick Slade, who had co-founded Cipher in 2019 with Fiske, is Cipher’s chief content officer. Meanwhile, Hypometer co-founders Katie Prowd and Darryl Woodford are Cipher’s chief operating officer and chief technology officer, respectively. Hypometer was founded in 2015.
“Coming together has been quite an easy process,” Fiske said. “We’ve got a team of like-minded people with all different skill sets. It just made more sense for us to attack the (U.S.) market together rather than potentially being competitors.”
Although Cipher has strong roots in Australia and a presence there with a website that features the Australian Football League and the National Rugby League, Fiske said that, “90% of our business focus is on the U.S. because the size and opportunity is so large.”
Fiske added that online sports betting has been legal in Australia since 2001, so the potential for growth is not as large as in the U.S., which legalized online betting in 2018. As of now, online sports betting is legal in 20 states and Washington, D.C. and pending in Kansas, Maryland and Ohio, according to the Action Network. The population of Australia is also about 26.1 million compared with 332.4 million in the U.S.
Cipher currently has 20 full-time employees, 15 in Australia and five based in its U.S. office in Manhattan’s Flatiron District. It plans on hiring an additional 10 employees in the next few months, five apiece in Australia and the U.S.
Fiske acknowledged that startups such as Cipher have had more difficulty raising capital in recent months as venture capital firms and other investors envision economic conditions worsening in the coming months. However, he does not see Cipher having to raise any more money anytime soon.
“Definitely the sentiment in the market has changed,” Fiske said. “You can see that. But we’re very confident with what we’ve been developing and so are our investors and shareholders. We’re pretty bullish on the market overall, and we think it’s going to bounce back pretty strong. It’s still very early days in legal online sports betting in the U.S., so we’re pretty excited about what the future holds for not just us but the industry as a whole.”