SAINTLY (Option Deal - EXITED)
Saintly owns a cutting-edge crypto wagering technology platform. The company is run by an elite team with a wealth of experience in developing top-tier wagering technology. We were particularly excited by Saintly’s B2B opportunity to white-label its platform.
Market Context
The global online gambling market is forecasted to grow to over US$370 billion by 2030. At the time Saintly approached Waterhouse VC, the crypto gambling segment of the market was in the early stages of a booming growth period.
Since then, cryptocurrency has continued to mature as an asset class, driven by the launch of Bitcoin and Ethereum ETFs and growing mainstream adoption. In wagering, cryptocurrency payments reduce expenses tied to conventional methods, which means that crypto-operators can increase technology investments, offer larger bonuses, better promotions and superior odds. They also appeal to a younger, more tech-savvy audience.
Stake.com alone hit $2.6 billion in gross gaming revenue in 2023, up from $1.8 billion in 2021. Shuffle.com is another crypto-operator experiencing rapid growth.
Shuffle.com is a crypto-operator experiencing rapid growth. Source: @noahdummett
Due Diligence Process
Waterhouse VC’s in-house technology team, with extensive experience in building tech platforms for high-growth wagering companies, conducted due diligence on the Saintly platform.
This involved direct engagement with Saintly's developers, allowing for an in-depth analysis of the platform's code, architecture, and scalability.
The key insight from this process was our determination that the value of Saintly's code significantly exceeded its replacement cost with Australian developers. This comprehensive technical evaluation formed the foundation of our conviction in Saintly's potential.
Investment Timeline
After a due diligence period, Waterhouse VC signed a 3-year option to buy 20% of Saintly. Shortly after, the business raised significant funding. Within six months of signing the option, the whole company and our option were purchased by a strategic buyer.
Waterhouse VC signed a 3-year option to buy 20% of Saintly. Our internal estimate of the cost to rebuild Saintly’s existing technology was significantly higher than the valuation ascribed to the company.
Saintly raised US$2,000,000 for the launch of its own B2C brand. As Waterhouse VC primarily focuses on B2B rather than B2C, we decided to exit our option in Saintly.
Waterhouse VC’s option was sold in August 2023 for 2,180% above our option conversion price, delivering a 23x return for our investors.
Successful Venture
Our investment in Saintly was primarily driven by its superior technology and under-appreciated value as a strategic asset.
The platform's ability to be white-labeled not only opened up multiple revenue streams but also provided strategic optionality, effectively underwriting our investment by ensuring the technology retained value regardless of B2C success.