The co-founder of one of Scotland’s ‘unicorn’ companies – FanDuel – has raised the largest startup seed funding round ever in the UK for his new venture into the sports betting world.

Nigel Eccles, who was behind the rise of the fantasy sports site before leaving the company in 2017, has co-founded a new sports betting site called BetDEX, based on blockchain technology, an apparent ‘world first’ for the industry.

Set for launch in the first half of 2022, combines the decentralised ledger technology with sports betting, with the aim of ‘transforming the consumer sports betting experience’.  

It was announced today that the $21 million investment round is led by San Francisco-based crypto investment  firm Paradigm and Bahamas-based cryptocurrency exchange FTX, which was recently valued at $25 billion after its own Series B-1 round was disclosed in October.  

Multicoin Capital, Hack VC, Lightspeed Venture Partners, Sino Global Capital, Solana Ventures, and Everblue Management also participated in the round.

Former FanDuel CEO Eccles becomes BetDEX’s non-executive Chair, Varun Sudhakar is appointed CEO, and Stuart Tonner takes up the CTO role. BetDEX plans to scale the business from a base in Scotland and is now hiring for a range of positions.  

Eccles said: “Blockchain technology is set to revolutionise sports betting and we want to be at the forefront of that. It’s exciting to be founding the business with Varun and Stuart, and to be building it in Scotland. We are energized to have the backing and wealth of expertise that comes with having Paradigm and FTX as cornerstone investors.”  

Varun Sudhakar, Co-Founder and CEO of BetDEX, said: “The sports betting industry charges high prices for poor products and limits trades by its most successful users. BetDEX is diametrically opposed to this approach, we will successfully compete against incumbents with a markedly superior product and low fees, which is now possible with the advent of the blockchain technology. Winners will always be welcome on our protocol.” 

Eccles co-founded FanDuel in 2009, with the company going on to become Scotland’s first $1 billion dollar-valued startup before being acquired by Flutter in 2018.  FanDuel is now estimated to be worth around $30 billion.  Varun Sudhakar, who began his career in investment banking in Silicon Valley, worked alongside Eccles in senior strategy and corporate development roles at FanDuel between 2015 and 2018, before going on to senior executive positions at other venture-backed startups in New York. Stuart Tonner was the first engineer hired by FanDuel, spending over eight years with the company, building the core FanDuel platform and scaling it to tens of millions of users. 

In 2020, the global sports betting market was valued at USD $203 billion and is forecast to grow to USD $350 billion by 2024. Despite the immense size, popularity and potential of the sports betting market, it has been characterized by incumbents charging high fees and delivering minimal product innovation.

BetDEX aims to take the opposite approach, with a protocol built on public blockchain Solana, and will offer consumers extremely fast and low-cost trades, while eliminating counterparty risk. Sportsbooks or bookmakers in the UK typically take a 7-10% margin, whereas BetDEX will be less than 1%.

The protocol will be fully decentralized and open-sourced, allowing third parties to build their own applications and innovate on top of the platform. BetDEX plans to accept wagers in USDT, SOL and SAMO at launch. The company said it will encourage the development of products on its platform “in line with regulations, and in an intelligent and thoughtful way”.

Sam Bankman-Fried, CEO and founder of FTX, said: “We are thrilled to be backing a team with deep industry expertise to transform the sports betting experience. It is mind-boggling that more sports wagering does not occur on exchanges – we firmly believe in giving consumers the ability and control to set their own price and are excited to partner with BetDEX to bring this vision to fruition.” 

Arjun Balaji, investment partner at Paradigm, said: “It feels obvious crypto will transform online sports betting.  DeFi has shown how financial markets can be automated and distributed to the benefit of consumers.  Crypto can do the same for all other kinds of financial activities, including betting.  The BetDEX team has the right combination of industry experience and technical skill to create something that shows the way forward for everyone working in the space.”