Spark Capital leads Underdog’s Series C round with a $70 million investment

Agastya Jain
Apr 12
6 min read

By: Agastya Jain, Aria Najmabadi, Ben Curtis, and Jack Kennedy

4/12/2025

Deal Overview:

Investor: Spark Capital

Target Company: Underdog

Sector: Media & Entertainment

Subsector: Digital Gaming

Investment Structure: Series C

Investment Size: $70 million (round is expected to close at ~$100 million)

Target Valuation: $1.225 billion

Announcement Date: March 26, 2025

Firm Overview:

Underdog (Target): Founded in 2020, Underdog is a rapidly growing sports betting and daily fantasy sports platform that has quickly established itself as a disruptive force in the competitive gaming industry. The company has gained significant traction by offering innovative fantasy sports contests and recently expanded into sports betting markets in select U.S. states.

What distinguishes Underdog is its technology-first approach and user-friendly interface that appeals to both casual fans and serious bettors. Unlike traditional sportsbooks that simply adapted to digital platforms, Underdog was built from the ground up as a mobile-native experience, enabling the company to create more engaging and interactive betting products. The company's recent Series C funding round in March 2025 pushed its valuation to over $1.2 billion, cementing its status as a unicorn in the sports betting space.

Spark Capital (Investor): Founded in 2005, Spark Capital is a leading venture capital firm known for its early investments in transformative consumer, enterprise, and frontier technology companies. With over $6 billion in assets under management across early and growth stage funds, Spark has backed numerous billion-dollar companies, including Twitter, Slack, Coinbase, Discord, and Oculus.

What sets Spark Capital apart is its founder-centric investment philosophy and willingness to back bold, category-defining ideas before they become obvious opportunities. Unlike more conservative firms, Spark has demonstrated remarkable foresight in identifying emerging platforms and technologies that fundamentally reshape industries. Spark's investment approach combines deep consumer insights with patient capital, allowing them to support founders through multiple growth stages. The firm has particularly excelled at identifying network-effect businesses and platforms that create new markets or dramatically transform existing ones, making them a natural fit for a company like Underdog to redefine the sports betting landscape.

Sector & Deal-Relevant Trends:

Sports Betting Growth Surges on Regulatory Momentum and Fan Engagement Tailwinds: The U.S. sports betting market is experiencing explosive growth as expanding state-level legalization and technological innovation unlock significant monetization opportunities. As of early 2025, 34 states plus Washington, D.C. have legalized online sports betting, with 4 more having approved legislation pending implementation. This rapid legislative adoption—fueled by favorable tax structures and bipartisan support—has created a fragmented, but lucrative, patchwork of opportunities for operators and investors.

Online sports betting revenue in the U.S. is projected to grow from $6.5B in 2022 to over $20B by 2027 (CAGR: 26.1%), with firms like DraftKings and FanDuel spearheading the market. DraftKings, for example, grew revenue from $323M to $3.7B in just four years, underscoring investor appetite and business model scalability. In-play (live) betting—already dominant in Europe—continues to gain traction in the U.S., requiring advanced data infrastructure and content delivery capabilities to service real-time wagers. Media and betting are becoming increasingly intertwined, as evidenced by the NBA’s and NFL’s strategic partnerships with Sportradar and Genius Sports to deliver in-app betting experiences. Even ESPN now integrates betting language—such as spreads and moneylines—directly into push notifications, reflecting the normalization of wagering data in mainstream sports media.

Strategic Partnerships and Market Consolidation Reshape U.S. Sports Betting Landscape: The U.S. sports betting industry is undergoing significant transformation, marked by strategic partnerships and consolidation efforts aimed at enhancing market share and operational efficiency. A notable example is the collaboration between Penn Entertainment and ESPN. In August 2023, Penn Entertainment entered a 10-year, $1.5 billion licensing agreement with ESPN to rebrand its existing sportsbook operations as ESPN Bet. This move leverages ESPN's extensive brand recognition and media reach to create a competitive sportsbook platform. The rebranding encompasses a mobile app, website, and select retail locations across the 16 states where Penn is licensed.

Concurrently, Fanatics Betting and Gaming has expanded its footprint through strategic acquisitions. In April 2024, Fanatics completed the acquisition of PointsBet's U.S. businesses for $225M, granting access to PointsBet's sports wagering, iGaming operations, and proprietary technology platform. This acquisition positions Fanatics to extend its sportsbook offerings to a substantial portion of the U.S. online sports betting market.

These developments illustrate a broader trend of strategic alliances and consolidation within the U.S. sports betting sector, as companies seek to leverage brand strength, technological capabilities, and market access to navigate the competitive and rapidly evolving landscape.

Cross-Sector Convergence Reshaping Deal Dynamics: The convergence of sports betting, data analytics, and media content is creating a new deal landscape defined by strategic partnerships and vertical integration. Investors are increasingly targeting sports-adjacent businesses like analytics providers, digital sportsbooks, and fan engagement tech platforms. This has led to rising valuations and a wave of M&A and joint ventures, as financial sponsors look to consolidate value across the fan experience lifecycle. As institutional capital pours in and regulatory frameworks mature, the sports betting sector is becoming a critical piece of the broader sports and entertainment investment ecosystem.

Projections, Opportunities, and Risks:

Underdog’s Distinctive Model Enhances Its Appeal in a Rapidly Expanding Sports Betting Market: Underdog has carved out a unique position at the intersection of fantasy sports and regulated sports betting. By first gaining traction through fantasy contests, the company has been able to build brand recognition and acquire users efficiently, all while gradually introducing its sportsbook product as regulations evolve across different states. This dual-pronged approach has allowed Underdog to scale more quickly than competitors that focus solely on one vertical, and its diversified revenue streams offer investors a sense of stability and upside.

Unlike many competitors that rely on outsourced platforms, Underdog has developed its technology in-house, with a clear focus on the U.S. market. This has enabled the company to create a more intuitive and accessible product experience—especially appealing to users who are new to sports betting. As a result, Underdog has amassed a base of over 4 million users and claims to be the fastest-growing sports gaming company in the U.S.

While this domestic-first strategy may limit its total addressable market in the short term, Underdog’s traction in the U.S., coupled with fresh investor capital, presents an opportunity to expand internationally. The platform already offers betting props tied to global sporting events, laying the groundwork for potential international growth. Still, the challenges of this sector remain real—even major incumbents like ESPN Bet have struggled to gain meaningful traction. For Underdog and its investors, the long-term bet is that its proprietary technology and U.S.-centric product design will enable it to overcome fragmentation and capture meaningful share in an increasingly competitive and dynamic market.

Strong Investor Backing and Rapid Valuation Growth Signal Continued Upside for Underdog: Underdog’s founder and CEO, Jeremy Levine, is a seasoned entrepreneur in the sports betting space, having previously sold companies to DraftKings and Flutter Entertainment (FanDuel’s parent company). This time, however, Levine has declared he has “no intention of finishing third again”—a bold statement that has energized investors eager to back a proven, ambitious operator. Since its founding in 2020, Underdog has raised over $140 million from a standout roster of investors, including BlackRock, Harris Blitzer Sports & Entertainment, SV Angel, Mark Cuban, and Kevin Durant—many of whom bring deep experience in gaming, tech, and sports media.

Underdog’s valuation has more than tripled since its 2022 Series B round, offering early investors strong returns and reinforcing its momentum. Spark Capital, citing confidence in Underdog’s model and leadership, led the most significant venture investment ever made by a Silicon Valley firm in a betting platform. Despite this early success, the company still sees meaningful growth ahead. Underdog currently ranks as the 4th most downloaded sports gaming app in the U.S. and continues to expand into adjacent verticals.

Beyond betting and fantasy sports, Underdog is investing heavily in original content and sports media. Its daily sports show, *Gil’s Arena*, is already the 5th most-watched daily sports program in the country, illustrating the company’s growing influence in the broader sports entertainment ecosystem. With its unicorn valuation achieved in under five years and a strong innovation pipeline, Underdog remains well-positioned to deliver continued returns for its investors.

“This investment fits Spark’s philosophy of backing products we love from creators we admire,” “Underdog has proven they can win where it matters most: product. They’ve also shown they can attract top talent from gaming, tech, and sports. Their unwavering focus on product and customer experience is why they've emerged as the most innovative player in sports gaming. We see massive opportunity ahead and are thrilled to be on the journey with them to make sports more fun."

- Will Reed, General Partner, Spark Capital

“Spark’s investment is a real accelerator. We’re going to continue to invest in people and product – and as fast as we can. There is so much more to build, and we’re going to keep building.”

- Jermey Levine, CEO and Founder, Underdog

The bottom line...

Spark Capital’s $70 million investment in Underdog marks a major endorsement of the company’s rapid ascent in the U.S. digital sports betting and fantasy market. With a $1.225 billion valuation just five years post-launch, Underdog has emerged as a tech-forward disruptor blending fantasy gaming, sports betting, and original content into a unified platform. Backed by strong investor demand and a product built specifically for the U.S. market, Underdog is well-positioned for further domestic expansion and potential international growth. Spark’s involvement underscores confidence in Underdog’s leadership, proprietary tech, and ability to lead in an increasingly convergent media and betting landscape.