DraftKings has received $50 million in investments that weren’t announced publicly, Legal Sports Report learned after the daily fantasy sports site’s $300 million round of funding earlier this week.
The mystery $50 million
In announcing its latest investment round, DraftKings CEO Jason Robins told the New York Times that it had raised a total of $426 million across all funding rounds.
What was strange about that? According to Legal Sports Report’s investment tracker and Crunchbase, there was a discrepancy of about $50 million between the amount reported by the NYT and the publicly known figure.
A DraftKings spokesperson confirmed that the $50 million came from a round of funding that was not announced publicly.
So where did it come from?
A source in the financial industry told Legal Sports he believes the funding came from DraftKings employees — not the site’s founders — placing shares with investors that buy pre-IPO shares. This is a fairly common way to get employees liquidity in today’s market when a private company delays going public.
A story at Boston Business Journal from earlier this month is one of the only references around to that $50mm+:
That would also be a quadruple valuation increase over the Series C1 round of $51 million that DraftKings raised six months earlier in December 2014, according to PitchBook.
Wellington Management Company LLP was listed as a previous investor during the $300mm round. A story earlier this year mentioned Wellington as an investor for an “undisclosed amount.” DST Global, also listed as a previous investor, is not believed to be involved any of the previous public rounds of funding.
There are obviously other possible scenarios, but these appear to be the most likely explanations.
In the end, it means that DraftKings has raised more than $60 million more than FanDuel has — at least in rounds of funding we know about.
Photo by Véronique Debord-Lazaro used under license CC BY-SA 2.0.