Champions Round raises $7M for free-to-play fantasy sports games

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Fantasy sports game startup Champions Round has raised $7 million in funding to create skill-based games for Gen Z sports fans.

Point72 Ventures and Goodwater Capital led the round, with additional investments from Pipeline Capital, Quest Venture Partners, Mana Ventures, Band of Angels and Gaingels.

Founded by veterans of the video game industry, Los Angeles-based Champions Round is a sports media and consumer technology business focused on redefining the relationship between live sports and Gen Z. The company’s average player base is 22, versus around 38 for all sports betting.

“We see an opportunity to become the home of the next generation,” said Champions Round CEO Carter Russ, in an interview with GamesBeat.

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Champions Round offers a variety of skill-based games which can be played alongside users’ favorite content creators.

“We want to bring communities together through sports,” said Russ. “Fantasy sports historically demand lengthy commitments, seldom reward their players, and can be very tricky and cumbersome to play. Despite all of this, nothing keeps us closer quite like our fantasy sports leagues.”

A new submarket with Gen Z

In North America, there are 70 million people playing fantasy sports with companies such as DraftKings, FanDuel and smaller platforms such as Underground.

While sports fans love placing bets on events like the Super Bowl, Gen Z players are often too young to place bets in online games. And some view sports betting as intimidating.

“We’re focused on the 60 million or so Americans who haven’t been able to place their first sports bet yet,” Payne said. “It’s about creating that fandom with us first. We are creating games where the player psychology is not about money, but about playing the game in a social way.”

Russ said this leads to significantly greater retention of players and more viral growth.

“In the legacy games, your motivation is to win as much money as possible,” Russ said. “We were able to catapult ourselves to No. 6 on the app store with virtually no spend.”

Bringing fans back daily

Champions Round is going after diverse audiences for fantasy sports.

Traditionally, fantasy league members gather just before the start of a sport’s annual season to draft a team they’ll manage until the end of the year. Instead of a season-long commitment, Champions Round hosts a suite of fantasy sports game modes that resolve in micro-moments, be it play-by-play, daily, weekly, monthly, or quarterly.

Russ said they’re simple to organize, require minimal management, and handsomely reward players with memorabilia, cash prizes, in-game rank, collectibles, and much more.

“With a rock-solid game loop, we’ve developed short-form games that beacon for friends to play with
one another over and over again,” said Russ.

Champions Round’s short-form games tap into a paradigm shift for younger fans who prefer serialized highlights to long-form sports viewing. Fueled by the new funding, Champions Round aims to infuse its viral game modes with a heap of personalization, progression, and metagame achievements to further enrich its ecosystem.

Origins

Carter Russ and Chase Payne (right) are the founders of Champions Round.

Russ said he was captivated while playing the massively multiplayer online game Final Fantasy XI, and he cofounded a guild for enthusiasts. That taught him about the value of online communities. And that’s something that he brought to the idea of fantasy sports.

“It meant a lot to me, and it was something that I put a lot of time and effort into,” he said. “What we recognized was there really wasn’t an equivalent for sports gaming.”

Many of the fantasy sports games have focused on single-player experiences, he said.

With Champions Round, players aren’t betting for real money in the game itself. So it’s not classified as gambling, though there are some cash prices with a focus on skill-based gaming, where you can legally win prizes in 41 states. But about 80% of the games are free.

“Champions Round was built on the idea of creating games for every single week, every single month. We have very regular seasons, post seasons, offseason play for something that used to really be an annualized experience,” Russ said. “Once a year, people would come together and do a fantasy football draft. And this product was supposed to keep people playing from the beginning of the NFL season to the end. What we recognized was it was really only engaging for those that were trending towards first place. And it made no sense that you can only play with friends once a year.”

So the company created games that can be played in simplified forms all the time. The focus is on social play for free. You can choose to buy in for a certain amount of money and play for cash, but it’s not required.

And the games so far are a big hit with Gen Z players. As a free-to-play game, the title draws younger players to the platform. Those players are more accustomed to organizing communities online and devoting smaller chunks of time to sports viewing.

It’s not real-money gambling, nor is it focused on traditional games. It’s more like daily fantasy sports, but targeted at younger players.

“We’re taking video game mechanics and applying it to this sports gaming space,” Payne said. “We’re really focused on spectator sports you’re watching on TV.”

Diverse audiences

Champions Round does free-to-play fantasy sports.

“The audience is not predominantly white men,” Russ said. “There are a lot of women watching, and it’s not all hardcore sports fans. Sports culture has become more diverse.”

The company’s audience is mostly in the U.S., but there are thousands that play internationally.

“We see that as a big opportunity,” Russ said. “We have a lot of players on Champions Round claiming that they’re playing fantasy sports for the first time.”

Russ cofounded the company with Chase Payne, who previously worked at Zynga and Electronic Arts.

To date, the founders have raised $10 million. They started the company in May 2018, though they really started gearing up for a real business in the summer of 2019. They now have 35 full-time and part-time people, mostly working remotely.

“Most of the people we’ve never met in person,” Russ said. “Our team is very diverse, reflecting what sports viewership is like today.”

“We strongly believe modern sports fans no longer care about calendar years and seasonality,” said
Payne, chief marketing officer. “They expect sports entertainment to be on-demand and streamed. We are excited to use this round of financing to continue reshaping this new relationship between fans and athletes.”

Joining the board of directors is Coddy Johnson, former chief operating officer of Activision Blizzard
and current operating partner at Goodwater Capital.

“During my career, I’ve seen the video game industry truly evolve from largely solo player experiences into rich, globalized social products,” said Johnson, in a statement. “Yet, during the same period, fantasy sports have done the opposite; the individualized play has been the predominant mode of usage. Champions Round’s reimagination of fantasy sports, its vision for what social play means today, is something I knew we had to be a part of.”

“We believe Gen Z is driving a rapid transformation in sports consumption,” said Ishan Sinha of Point72 Ventures, in a statement. “Always connected and looking to build community online, we see Fantasy Sports fans looking for more engagement, more touchpoints, and more ways to compete socially. We believe Champions Round’s products are addressing a gap between once-a-season legacy fantasy sports
and high-stakes betting by offering games that bring fans closer together, more often. We’re excited
to support the team on their journey.”

Champions Round will use the money to grow its content business and stable of sports and lifestyle content creators. The company is developing shared world experiences for its fans to connect with them within the Champions Round app, a concept it calls “creator rooms.”

“Gen Z doesn’t watch sports the way I did when I was growing up,” Russ said. “In the hours before a game, I would stare at he wall. Gen Z is different. They consume clips on social media, they follow athletes, they follow influencers and content creators.”

Russ added, “We’ve already shown the investors that we’ve been able to do a crossover. People who follow creators come and play with them on our app. The next step is we want to show how this ‘creative room’ idea is to be sort of like a game master. Someone like a fantasy football analyst who’s already playing games with his fans should be able to then create a room on Champions Round and play games there.”

Those creators and influencers can monetize their creator rooms in the same way that they can on something like a YouTube channel.

“We will use these funds for developing and deploying this new feature,” Russ said. “We’re going to be using it to work with all these creators that we already have good relationships with. We will just continue to hone down on our target demographic, which is already focused on consuming sports with the creators that they love.”

Russ also said the company has made its branding gender-neutral and inclusive.

“I really like that Champions Round is using sports as a vehicle to create the same MMO experiences we’ve come to expect from big multiplayer video games,” said Mike Vorhaus, founder of Vorhaus Advisors. “In an industry too focused on solo cash players, with difficult unit economics, Champions Round is fixing a broken business model while appealing to the next generation of gamers.”

User acquisition via social

There is no shortage of competitors, both big and small.

With Champions Round, it’s easy for fans to create their own contests and invite their friends to the app, Russ said. That’s important because it’s more fun to play with people that you care about. As a result, those players tended to stay longer. The average cost for acquiring a new customer is under $1, Russ said, whereas the daily fantasy sports companies often spend $800 to acquire a new player.

“We’ve grown as a sleeper app,” Russ said. “And we have activity happening year round.”

And there are rewards for every action you perform, much like in a video game.

“No sport should have an offseason,” Russ said. “If I want to be entertained in a conversation about football, basketball, or whatever, it’s really the responsibility of platforms like ourselves to meet the customer where they are. We want to recover the calendar for the whole year.”

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