Preparing his company for a Noridic OMX NASDAQ IPO, Spiffx Founder Lennart Gillberg explains to SBC why he is bringing the innovative new betting exchange to the market and his company’s goals for 2015.
SBC: Can you outline your corporate journey from creating an alternative betting exchange to listing on the Nasdaq Nordic OMX?
Lennart : We started four years ago by having an arbitrage robot trading on Betfair. We realised then that there must be a demand in the sportsbetting industry for a secure hedging functionality on the market. We looked at the financial market and took technologies and functionalities used there and applied them to the sports betting market.
We developed our platform and did a test during Euro 2012, with only pre-match play, and got excellent results. We continued to develop and in Q2 2013 we were approved by the Malta Gaming Authority for an exchange licence.
Before the 2014 World Cup we were ready to launch the platform with all functions both pre-play and live. This meant that during the World Cup we had an opportunity to test and adjust everything that was needed. It turned out to be a very successful test run as we got more clients than expected.
Since then we have been running live and pre-play with Premier League, Champions League, and the Euro 2016 qualifiers and have managed to increase our client base five times during that time. Now we are facing new challenges in order to reach our goals of being the alternative exchange and are looking forward to that.
SBC: You have a unique product for the sports betting market, why did you choose the route of a Nasdaq OMX IPO, to grow your company and its operations?
Lennart :We find IPO the route the best for everyone involved in order to finance the company. We get both enough financing to take us into black figures, and we also believe that we can deliver great shareholder value if we meet our P&L and publicity. Also we gain credibility towards our audience.
SBC: As a business leader how will the OMX IPO effect your operations and how is your team preparing to meet new demands set by market led investors?
Lennart : We have on purpose set a fairly low share price (pre-valuation) in our IPO to make it happen smoothly. That means that we are expecting an increase in the share price constantly until we are cash flow positive. We are looking at the IPO as a pure financing activity with a great potential leverage for our investors.
SBC: The sports betting industry has seen mixed results with its company IPOs, what have you learnt from this context with regards to your business and its potential obstacles?
Lennart :We know that there have been some difficulties with some company’s IPOs, however we look upon ourselves as the next generation of exchanges, an alternative exchange, something new in the industry. There is also a need and demand for our service both from the professionals and semi-professionals, since the enhanced competition means keeping the margins will be more and more difficult in the future.
We are not a ‘me-too’ service in the sport betting world; we are a new creature on the market. We can compare ourselves to the option markets in the financial sector, and that has been developed successfully over the years.
Lennart :There are a lot of investors that have successfully invested in gaming companies such as Betfair, Unibet, Betsson etc. While Spiffx is not competing with the sportsbooks, they are our potential tier one clients, partners. We believe that the investors are looking for new opportunities in the gaming sector.
We also believe that the investors are familiar with financial options, therefore they should understand and believe in Spiffx’s alternative exchange. Investors are also looking at new technologies and automated solutions and that is what Spiffx is providing.
We are providing hedging instrument to the sports betting industry to help them to secure their margins as well as providing a market place for traders speculating on odds movements. We are also going to deliver new consumer products to the sportsbooks with better margins and less risk then their existing products.
SBC: Following your IPO, what are your short and long term business objectives, and how will you aim to achieve them?
Lennart : Short term we will be more active increasing our client base. We do not need large client bases like a sportsbook, however we need enough active clients in order to provide liquidity. We did our Beta launch during the World Cup last year, since then we have increased our client base five times.
In detail we will continue to develop our service and technology, after the summer we will add more events such as the other European leagues. Long-term the target is to establish Spiffx as the alternative market place and fulfil our financial objectives with black figures during 2017.
Lennart Gillberg – Spiffx – Founder & CEO