Sports betting startup Novig has raised $6.4 million in seed funding, with the aim of bringing exchange-style wagering to everyday fans.
Lux Capital led the round, which included participation from Joe Montana and Y Combinator, among others. The New York-based company plans to launch its app in Colorado this October.
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Most bets originate with lines set by “the house,” a sportsbook that takes action on both sides of a given wager and makes money from the “vig,” or additional take it adds to the odds it offers, often ranging from 5% to 15%. Unsurprisingly given its name, Novig plans to distinguish itself by offering bets without a vig.
Instead, the company’s platform is built on an exchange model, like stock markets, where bets on one side are matched with equal and opposite speculation on the opposite side. It plans to make money by charging institutional traders, serving as a market maker, and otherwise monetizing the data it gathers on bets it takes.
While still a student at Harvard, CEO Jacob Fortinsky started the business in 2021 with co-founder and CTO Kelechi Ukah. Novig now has 12 full-time employees. Fortinsky said the concept emerged after joining groups of so-called sharp bettors looking to wager against each using chat tools like Discord or Signal after being limited by sportsbook apps.
“This group is massively marginalized in the broader sports betting world,” Fortinsky said, estimating that 15% of bettors are price sensitive or intent on maximizing their expected winnings.
Fortinsky expects the app’s first users to come from that population of sports bettors who view the offering as a financial one rather than a pure entertainment product. But the team is focused on honing its pitch and language to entice casual bettors, too.
“What we found is that lots of people are attracted to what we’re building not because it’s more profitable but because they’re already familiar with trading meme stocks or Tesla options or ethereum,” he said. “They’re looking for more of a trader-type experience.”
Two other startups—Prophet and Sporttrade—recently launched exchange-based sports betting platforms in New Jersey. Betting exchanges like Betfair have succeeded overseas but the offering’s inherent complexity, regulatory hurdles, and lack of marketing firepower to date have limited U.S. growth.
Ultimately, Novig’s goals are to compete with the biggest sportsbooks, regardless of the type of bets they offer.
“For every single type of bettor, we think we can offer a better platform,” Fortinsky said. “I want someone to use our platform… because it’s the most fun, it’s the best user experience possible, it’s the stickiest app, it’s what their friends are using. They don’t even know what an exchange is, and they’re still using our platform—that is our North Star.”
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