Electrify Invests in Veritasium YouTube Channel, Fanatics Pays $150M for PointsBet US
RockWater Roundup
RockWater analysis to make you a better investor and operator. Today we discuss Electrify Video’s investment in YouTube channel Veritasium, and Fanatics’ acquisition of the PointsBet US business for $150 million.
Tubefilter, 5.8.23
by Chris Erwin
There’s another datapoint in digital IP investing.
Last week Electrify Video Partners made an investment in YouTube channel hub Veritasium.
The capital infusion will allow 2 key strategies…
📽 Founder Derek and his creative team will focus on higher quantity and quality of content creation.
💸 More commercial opportunities like expanding the Snatoms STEM kit.
More and better content = more audience = more $$ opportunities.
This builds on an increasing # of digital IP M&A. Like Lunar X / Theorist Media, Doing Things / Overheard, Electric Monster / React Media, more.
What I like about this deal…
🍝 The creative teams, including producers, are staying on the team. They’re part of the secret sauce!
📈 Derek still maintains equity upside since only a minority stake deal. I wonder if his creative partners / rest of team also have an equity stake?
⚛ Electrify Video Partners is focusing its digital IP on STEM and kids content. A HUGE market — we’ve done hundreds of hrs of research here! This deal builds on Electrify’s recent Astrum (astronomy hub), Spitbrix (LEGO creator), and Fizzy (kid-friendly destination) deals.
From all this, here’s a key final question I’m thinking about…are majority or minority deals better, and which model will deliver highest ROI?
Other investors like Candle Media want majority stakes to control exploitation and maintain upside, and move quickly. Their minority Westbrook deal was a one-off and won’t be repeated.
Is that a better model vs a portfolio of minority stakes, where there’s influence but no direct control? Latter feels more like a VC model vs roll-up model.
Which model do you think will win out?
And what what recent digital IP deals am I missing?
Fanatics Buying PointsBet US Sports Betting Business For $150 Million
LSR, 5.14.23
by Michael Booth
Fanatics, Inc. has a killer growth playbook. Build a competitive moat via physical e-comm, then expand across core fan vertical: Fanatics spent over a decade slowly entrenching themselves as the go-to merchandiser for the “Sports Fan Economy”. Now, it’s leveraging its league partnerships and first-party fan data to expand to trading cards, NFT’s, and betting — fundraising against a new mission of evolving into a “Global Digital Sports Platform”.
US sports betting is the wild west with a countless number of competitors driving, high UA costs, and low customer loyalty. Over $2B was spent in UA last year alone. But eventually the market will become winner-take-all, and Fanatics is a great financing vehicle for PointsBet to weather the storm.
Fanatics was most recently valued at $30B, so this is a pretty small acquisition and offers a lot to their strategic positioning — adding twelve new states to their sportsbook.
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If these insights are relevant to projects you’re working on, ping us here. We love talking all things media x commerce!
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