FanDuel, one of the two major players in the budding daily fantasy sports industry, has raised $275 million in new venture funding. The new round values the company “well north” of $1 billion, according to a source.
The round was led by KKR and included new investors Google Capital and Time Warner Investments with Turner Sports. Existing investors Shamrock Capital, NBC Sports Ventures, Comcast Ventures, Bullpen Capital, Pentech Ventures and Piton Capital were also involved.
FanDuel, which still isn’t profitable, has now raised $363 million since 2009. The company has a fast-growing revenue stream, though, and made nearly twice as much as rival DraftKings in 2014. It brought in more than $57 million last year by taking a small percentage of entrance fees that people submit to compete in daily fantasy sports contests. It’s just spending much more — primarily on advertising — than it’s bringing in.
And even now the bulk of FanDuel’s money has been earmarked for marketing; bringing on new users is the company’s top priority with the new funding, according to CEO Nigel Eccles.
FanDuel and rival DraftKings are in a heated race to scoop up fantasy sports enthusiasts for their respective sites, and even Yahoo is now jumping into the fray with its own fantasy sports service. FanDuel and DraftKings are spending hundreds of thousands — if not millions — of dollars to partner with sports leagues and teams in an effort to build out their brands. Those deal are pricey, but what’s more expensive are the in-stadium advertising and media deals that come along with those partnerships.
DraftKings, for example, has committed hundreds of millions of dollars in ad spend to be the exclusive daily fantasy partner for all ESPN properties beginning in 2016, a deal that will block FanDuel away from advertising to ESPN’s audience, but at a hefty cost.
FanDuel will also use the money to build out new products and grow its workforce. It recently hired nearly all of Zynga’s defunct sports gaming division, and plans to add another 40-50 employees by the end of the year. FanDuel also recently hired away Yahoo’s senior director of fantasy sports Cliff Ma.
The money comes at a prime time for FanDuel. The NFL season — which is the company’s busiest quarter — is just a few months away. (It has partnerships with 16 different NFL teams.) Perhaps even more important is that with the addition of Yahoo’s daily fantasy offering, FanDuel will now have to fend off more than just DraftKings for user acquisition.
The money should make for some very intriguing competition.
This article originally appeared on Recode.net.