This past weekend I had the opportunity to host my first Ohours session (http://ohours.org/). In my Ohours profile, I mention that I'm willing to talk about a range of topics, which include: startups, finance, private equity, venture capital, investing, tech trends, non-profits and healthcare. Anyone can log onto the site and sign up to meet and chat about any topic, which provides a great way to meet new people who share the same interests.
This week I had the founder of an online fantasy sports league website sign up to go through his business plan as he is getting ready to pitch to angel investors. I was impressed with his story and how he got started and came up with the idea for his startup. As a corporate lawyer, he had followed and read about the new online gambling regulations that started to come out in 2006 and he noticed that one of the loop-holes in the law was related to Fantasy Sports leagues online. He waited a few years to see if the government would come in and add any new regulations after a few of the initial sites started to pop up. Today there are about a dozen websites that let you bet on fantast sports, but he has come out with a platform to extend fantasy sports leagues online to just about every type of sport including tennis and golf as well as college sports. The most interesting part of the platform will be its ability to extend betting between people outside of sports to reality television as well. This way people can also start to bet on events such as who will make it to the next round of American Idol or Dancing with the Stars and they will also be able to capture a target audience outside of just the adult male population. The one thing to look out for will be the potential for the government to see how profitable these companies will become and then they may start to tax the revenue these companies are making, since right now there is really nothing in place for this industry. The other potential concern I would have as an investor would be the acquisition cost for each customer. Since there are several competitor sites, these companies may have to spend more and more on advertising online in order to capture additional active members. It's also still unclear how long active members remain members of these sites since the oldest site is still only two years old. Overall, it still seems to be a pretty convincing business model with a very scalable platform and low operating costs, so hopefully his idea will get some traction with the Chicago angel investors in the coming weeks.