HUDDLE: MATT DAVEY
A year of caution Matt Davey, Tekkorp Capital and Tekkorp Digital CEO, speaks to Gaming America about what US investors are looking for in digital firms, as well as the benefits of merging into a SPAC. Could you talk through your current ventures at Tekkorp Digital and Tekkorp Capital? I had the luck and pleasure of building a business called NYX Gaming Group over a 15-year period, which culminated in a sale to Scientific Games back in January 2018. Fast forward to January 2019 and I fully integrated the company within Scientific Games, then set up my own investment vehicle, the view being how do we deploy capital into this expanding sports betting and online gaming market, with a particular focus on the dynamics of what’s been happening here in the US. That’s been a fascinating experience. Along the way, we also saw the big arbitrage between the private-based investment type opportunities versus public investment opportunities. To help capture that and bridge the gap, we launched a special purpose acquisition company (SPAC) called Tekkorp Digital Acquisition Corp, and we raised $250m in trusts. We’re actively in the market now talking to private companies about going public. Our focus there is on the $1-2bn price valuation range; we’ve been actively investing, also through Tekkorp Capital, which is my private vehicle. We’ve made a number of investments there, more on the growth equity side of things. It’s just been incredible to look at how many entrepreneurs are coming into the market with great ideas, looking to solve problems we have here in the US. When we spoke for the CEO Special of Gambling Insider, you told us any firms you’re looking to invest in must have a nexus with the US market. Can you expand on the type of profile of company you’re looking at? 22 GAMINGAMERICA
The nexus to the US is particularly relevant to our public vehicle, the SPAC. The thinking there is there are a large number of fast-growing and highly innovative gaming operators and suppliers in the global market. Not all of those would make sense in terms of going public in the US. What the US market is looking for is you might have great economics and a great business, great team, but why is it relevant to me? Why should I, as a US investor, think about investing in your business? So we are looking specifically for companies that meet those growth metrics: great management, great technology and great intellectual property. But they must also have a really clear reason as to why they would need to be public on a US exchange. And typically that relates to actually running operations here in the US. The good news is the US market is probably the most attractive emerging market in the world for sports betting and online gaming operators. So we don’t have much of a challenge in finding that nexus but it’s important to ask that it logically makes sense; we’re listed on NASDAQ, so our investors will be looking for what the US story is. Would you say that is a profile all US investors look for? And how different is the profile of a firm US investors are looking at compared to the rest of the world? Looking at just the companies themselves, we’re seeing two different types of businesses really here in the US. We’re seeing home-grown opportunities, where entrepreneurial businesses or great technology companies that have been around the space are really looking to tap into the online sports betting market. Either through the supply of data, analytics or core software, perhaps even the operations side. But we’re also seeing a lot of the more mature European operators
