This article was first published on Hyperlush.
College Dropouts Fund their Startup Draftpot on Reddit and Make $15,000 in Their First Week
Two college dropouts had no idea how to make a profitable business. But a post on Reddit changed the course of their lives forever. In this story you’ll learn how Joey Levy and his co-founder raised money on Reddit, made $15k in their first week, and went on to raise $2 million. This is the story of Draftpot.
There’s a LOT of money to be made in fantasy sports betting.
Just watch any football game these days and you’ll find yourself being bombarded by commercials from DraftKings and FanDuel, the two industry leaders in daily fantasy sports, where users build a fantasy team and score points on how well those players execute in the real game. Top scorers take home the money.
How much is being spent on sports betting globally? Estimates range from $400 BILLION to a TRILLION DOLLARS. Most of it from illegal transactions. (We’ll interview the bookies next!)
Per ESPN, $95 billion is wagered legally and illegally on college and pro football games alone. Eilers Research estimates that Daily Fantasy Sports (DFS) will generate $1.5 to $2.5 billion in entry fees by 2020.
And you can now add Joey Levy, CEO of Draftpot and his two co-founders to that list. All three recently took a leave of absence from college to join the gold rush.
Passion From The Start
Hailing from Plantation, Florida, Joey was always into sports, lifting weights and playing high school football. Until he tore his labrum and rotator cuff which put an end to his athletic career.
He focused on his academics and started a “pseudo” tutoring company in high school which made him “50k-100k” a year. Ultimately, he didn’t think it was as scalable as the tech industry and moved on to college.
Entrepreneurs usually get into an industry they are passionate about. For Joey, it was a birthright.
“My dad had been playing fantasy baseball by hand since the late 80’s early 90’s. When my mom was giving birth to me, he was on the phone doing his fantasy baseball auction.”
Obviously, his dad’s affinity for the game was passed down to his son.
“Fantasy sports is in my blood,” says Joey. “I’ve been playing high stakes fantasy baseball since I was 10 years old.”
After attending two years at Columbia University, Joey realized that there was no fantasy sports product catered to the casual, everyday fan who has a chance to win.
And why hadn’t there been?
Because only a small minority of professional fantasy draft users actually make money in the daily tournaments. And they’re the ones wagering up to six figures a week chasing after the massive pots.
With no skills to develop a site himself, Joey teamed up with two developers, his friend Josh Hughes and Jessica Vandebon (both engineers and Columbia students) to build a “beautiful and robust site.”
“We firmly believe fantasy sports fundamentally enhances the way people consume sports. It simply makes it more enjoyable to watch.”
This quote couldn’t be any truer. If you’ve ever placed money on sports, you’d know that a bet makes you care way more about a play, a player or team than you really should.
Even when friends and associates were skeptical about their ability to compete in the landscape, they forged ahead and put together a staff of nine, three in business development, two additional developers (students at Columbia) and a data scientist.
Timing and Luck
Every entrepreneur will tell you that timing and luck play a major factor in one’s life and business. For Joey and his team, it was a post on Reddit just a few months ago that was fortuitous.
Below is what he posted on the /r/entrepreneur subreddit that led him to his first investor and a moderate user base.
An unnamed Redditer liked the beta site so much, he invested the initial five-figures to get Draftpot going.
“We were lucky on Reddit. If that particular user wasn’t on that day, then Draftpot wouldn’t be what it is right now.”
That money allowed the company to grab API calls (real time statistics) for a few months, while also giving them the credibility to go after more investors.
Money Leads to More Money
Joey reached out to his family and friends, which quickly snowballed into a frenzy, with work colleagues wanting a piece of the action.
The team was invited to pitch to an institutional investor, Dorm Room Fund, who quickly jumped on board. Joey explains their significance:
“It wasn’t about their capital contribution but more about getting an institutional investor on your cap table because getting their stamp of approval contributes to the due diligence process.”
Including DRF and another VC firm, Draftpot raised over $2 million dollars and had 32 investors at their cap table in less than a year. He and his co-founders had no choice but to quit school.
“It would have been pretty irresponsible to do anything else other than Draftpot.”
Photo by Jasper Lo
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Originally published at hyperlush.com on October 14, 2015.