Venture Firms Hit The Jackpot With Betfair
Ten years ago Index Ventures took a chance on an online betting service called Flutter that merged two years later with a rival called Betfair. That gamble has paid off handsomely for the European venture firm, as Betfair Group Ltd. went public Friday in a high-flying IPO.
Neil Rimer, co-founder of Index Ventures, said Betfair will be one of the firm’s best investments in terms of return multiple. Betfair’s shares traded up 19 percent from its initial public offering price, closing Friday at GBP15.50 on the London Stock Exchange. The firm sold 493,000 shares in the offering for GBP6.4 million, and still owns 2.3 million shares worth GBP35.7 million at the current price.
Betfair’s major shareholders also include SoftBank Corp. and European venture firm Balderton Capital, which sold part of its stake to Softbank for about $554 million in 2006.
Betfair pioneered online person-to-person sports betting by developing the Betting Exchange, a market place that allows consumers to bet at odds sought by themselves or offered by other customers and thereby eliminating the need for a traditional bookmaker. It now has about 3 million registered users betting on sports events and playing online poker and other games.
