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Cipher Sports raises $5m Serie A funding for US expansion

Louisiana in a hurry to legalise sports betting

Cipher Sports Technology, an Australian sports wagering technology startup, has raised a total of US$5 million in a Series A round. The betting operator is competing in the B2B and B2C space and is currently focusing on predictive analytic betting products as well as machine learning and sports media. Cipher Sports is gearing up to expand internationally and will invest its newly acquired funds to spread its business to the US market. 

Cipher Sports Technology Group was first launched in 2021. It caught the attention of a number of investors shortly after it was nominated for the Sports Affiliate of the Year Award at the SBC Summit North America conference. Before this time, the company had already attempted to secure itself in several states with no success. However, due to these false starts, the firm made a name for itself in those locations. Cipher plans to expand its business across the country for the next 12–18 months. 

According to Cipher’s press release, the leading investment group for the company is an Australian private investment group based in Melbourne called Cygnet Capital. The company chose the group as its primary partner for the $5 million Series A following an extensive due diligence process. Cipher also earned the support of several “high net worth” individuals but neglected to mention most financial information, like revenues and post-money values.

Cygnet Capital co-founder Johnathan Rosham commended Cipher’s ambitions to expand internationally. He also expressed his desire to see the sports betting start-up achieve their goals despite the volatile and challenging investment environment present globally.

Rosham also remarked on the company’s current position, declaring it a great place to secure a spot in the prime market that recently started accepting online sports wagering. According to him, Cipher could use its expertise in the brand-and-technology-first approach to seize a niche in the North American market. He added that in the next few years, the company could multiply its revenue to tens of millions.

Cipher handles sports betting sites like dimers.com. The site showcases proprietary technology which, according to the company, helps people involved in betting predict the possible outcome of games. Besides that, the company makes money via website advertisements and referrals to betting sites like DraftKings, PointsBet, and BetMGM. 

In addition to their multiple income streams, Cipher earns revenue via its B2B channel by selling products and services in place of media companies and sportsbooks. Cipher closed a deal with a US publisher called Advance Local in May. As a result of the agreement, their content, videos, and other tools were made a part of websites like PennLive.com, GulfLive.com, and LehighValleyLive.com, all of which are owned by Advance.

According to Cipher’s chief executive, Adam Fiske, the company has created a “really strong brand and a great database of sports bettors”. Fiske also said that the recent funding would speed up Cipher’s growth so it could start competing with the current market leaders.

Cipher joined the sports betting industry fairly recently due to the merger between iRival Media and Hypometer Technologies. iRival was majorly a content and marketing company, while Hypometer, founded in 2015, oversaw data and analytics. Nick Skade and Fiske founded Cipher in 2019. Slade currently holds the post of Chief Content Officer, while the co-founders of Hypometer, Darryl Woodford and Katie Prowd, are the Chief Operating Officer and Chief Technology Officer of the company.

Cipher was initially established in Australia and had a notable position in the National Rugby League (NRL) and the Australian Football League (AFL). Despite that, Fiske claimed that the US market holds more promise for growth for the company. According to him, the United States has a lot to offer because around 90% of the company’s business is focused on the country.

Australia legalized betting as far back as 2001; however, the US made it legal in 2018. Due to the difference in dates – not to mention the respective populations – the US has significantly more growth potential for Cipher than Australia. Several states in the country have legalized sports betting, with the likes of Maryland, Kansas, and Ohio in the process of wrapping up their market rules.

While talking to Forbes, Cipher co-founder Fiske admitted that the company, along with other startups, previously had issues with raising capital, mainly as a result of the hesitation of investors, venture capital firms, and others. They were eagerly waiting for the economic showdown that could affect online sports betting, online gambling, and the like, but were sure Cipher would not need more funds soon.
 
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