Team SBC catches up with Anton Kaszubowski, Founder of Greenlaw Limited – an advisory and investment vertical for igaming start-ups.
Anton is an experienced igaming executive and investor in new ventures, gambling and media sectors, he has played a significant role in the financing, growth and eventual sale of several businesses in the interactive gaming and media sectors as either a founder, operating executive director or a non executive director. Anton Founded igaming operators Netplay TV and BetonBet.
SBC discusses early stage financing for new ventures coming into igaming and how new ventures should aim to make themselves attractive to potential investors.
SBC: Anton, a pleasure to meet you. We have seen some early acquisition and investment by the igaming operators into technology development. What do you read into these actions?
Anton: I would say that this trend is part of normal competitive dynamics amongst the established operators. Each is trying to gain a strategic competitive advantage by acquiring product, technology and/or talent. We historically experienced a phase of consolidation of the industry with many of the major companies acquiring to fill out their product portfolio or consolidating to deliver scale. However, the larger companies become, the more management teams become focused on operations and administration in order to ensure process and efficiency as a way of delivering growth. Hence, they are not always good at supporting true innovation so often they will use M&A as a tool for refreshing and guiding their strategic development by integrating new more disruptive technologies, products, methods and skill sets.
SBC: iGaming is now a saturated market in which to operate, and this may be unappealing to investors. What should new ventures focus on in order to be thought of as unique and an appealing investment?
Anton: Investors are not necessarily looking for uniqueness, although it is undeniably an important factor. Having a truly unique proposition certainly increases the chances of success and funding, but I don’t think it is vital for a gaming start up. Since the vast majority of start ups fail, investors are looking for some fundamental telltale factors that will increase their confidence in the likelihood of success. In my opinion the most important of these telltale factors will always be a strong management team with relevant experience, and preferably a track record of success.
Furthermore, due to lower probability of success for a start up, investors will always also look for highly scalable opportunities in large and growing markets that could potentially generate a very large return. It is obviously better to take a risk on a large return than a smaller one. Since gaming is not short of highly scalable opportunities, such as mobile and social gaming, and as regulation and economic and technological development opens up growth in new markets around the globe I think that investors will always be attracted to start ups that can position themselves in that nexus.
SBC: Where in igaming’s value chain, do you feel a start-up can have the most effect? What discipline or mechanic do you feel should look to be enhanced by new ventures?
Anton:I don’t think there is a rule. It depends on the quality of the company, management and innovation involved. There is no reason why it shouldn’t be on the product side, as we have seen with the rise of social casino, or on the services side with innovations in payments that could be introduced by the development and growth of Bitcoin. There are also game changers ahead in terms of technology platforms that enhance user experience. I am a big believer that Virtual reality will have a major impact on the sector. There is room for innovation in all areas and in my experience the gaming sector has never been short of entrepreneurs and innovators to continue that trend.
SBC: Examining investment in igaming start-ups, are investors (whether they be private or institutional) put off by investing in ventures where the markets have very convoluted regulatory procedures that may not be completely defined?
Anton: Absolutely! Regulatory clarity is a must for institutional investors. Some private investors may be a little more flexible, but they will looking for supernormal returns and high cash flows in the case of business models reliant on some level of regulatory arbitrage. From an investor’s perspective, it is extremely difficult to exit a business whose business model possesses significant regulatory risk. Moreover, the valuation of such businesses will always be relatively low as they will be based on the net present value of short term cash flows.
SBC: You are now in the financing side of igaming, when potentially investing in companies what do you look for in terms of management and competencies within the new venture?
Anton: The key things I look for in a management team are the same as most investors. These are clarity of vision, the ability to clearly articulate the value proposition of the venture, self awareness, realistic expectations in terms of both opportunities and challenges, proven execution experience demonstrated by a track record of success especially in terms of managing a business from start up to maturity. Chemistry and your sense of your ability to work with an entrepreneur or a management team is also key from a practical standpoint. Ideally, I like to be in a position where as an investor I am adding value beyond the monetary investment. That way I can negotiate and justify a better equity position. However, I also prefer to learn along the way from the talented people I am lucky enough to work with. It does not always work out like that but it is what I aim for in all my investments.
SBC: How do you feel the igaming market will change in the coming months, and where do you envision we will see the next set of igaming start-ups?
Anton: I feel virtual reality will have a big impact. There is such a large array of uses for virtual reality and therefore ways to commercialize the technology. I have no doubt that the gambling industry will be one of the first to find viable commercial applications, which we will begin to see maybe as early as later this year.
Anton Kaszubowski – Founder – Greenlaw Limited