Deven Hurt and Brad Chabra grew up in Bay Shore, Long Island, as best friends, attending elementary, middle, and high school together. After graduating from Harvard and American University respectively, they began working in cybersecurity and finance in 2018, but soon discussed the possibility of starting their own company.

This led to the 2019 launch of PredictionStrike, an online marketplace where sports fans can buy virtual stocks of professional athletes. They founded the startup while sports betting and fantasy sports were booming and modeled it after a stock market.

Recently, PredictionStrike raised $10 million in a Series A funding round led by Bullpen Capital, a venture capital firm that has invested in more than 100 companies since its founding in 2010, including an early-stage investment in FanDuel in 2012.

MaC Venture Capital, Correlation Ventures, Elevate Capital, Gaingels, HighSage Ventures and Sixty8 Capital also participated.

According to Hurt, PredictionStrike had a post-money valuation of $32 million after the latest round, compared to $18 million following the company’s $3 million seed round. Closed last year.

Hurt says PredictionStrike has processed $60 million in transactions and has more than 175,000 users, up from $15 million and 100,000 users a year ago.

Unlike the NYSE or Nasdaq, where people buy stock shares in real companies, stock prices on PredictionStrike are based on an algorithm created by the company that incorporates how players perform in games and user demand in terms of frequency with which players shares are traded. PredictionStrike offers virtual stock prices for NFL, NBA and Major League Baseball players, as well as UFC fighters.

“Probably the most important thing for us is just making sure that the market makes sense and that users feel like it works for them,” Hurt said.

Hurt, who studied bioengineering in college, created the initial market for PredictionStrike, but others have since helped him improve the product as the company raised money to invest in external hires. Hurt, the company’s CEO, also ran the company for the past three years while attending Harvard Law School full time. He graduated from Harvard Law in May.

“It was difficult and time consuming,” Hurt said of juggling law school with being a CEO. “Basically, I just had time to go to school and run the business. But the great thing about Harvard Law School, especially in the second two years, is that you can really decide where to spend your time. People, obviously, get involved in college groups and things like that. Where I wanted to spend my time was in business, so the school had a lot of flexibility to allow that to happen.”

Marlon Nichols, co-founder and general partner of MaC Venture Capital, said he was struck by the fact that Hurt could be a law student and startup founder at the same time. MaC co-led PredictionStrike’s $1.7 million pre-seed round two years ago and led the seed round.

“You would never have guessed (Hurt) was doing this (going to law school),” Nichols said. “She was continuing to perform. He’s been dedicated to this thing since the beginning, and he continues to be. I think the law degree helps, especially when looking at potential legislation in space and things like that. It’s an advantage.”

PredictionStrike is not the first marketplace to try to unite people’s passions for sports, betting, fantasy and the stock market, but most have failed due to lack of interest in the product, bad business models or of questions about how the values ​​of players’ virtual actions are determined.

Mojo is the highest profile recent entrant in the space. The company last year Closed a $75 million Series A round from major investors such as Thrive Capital, Tiger Global, former MLB star Alex Rodriguez and Marc Lore, a successful entrepreneur who together with Rodriguez agreed to purchase the majority stake of the Minnesota Timberwolves and Minnesota Lynx.

Mojo has fantasy gaming available in 19 states and Washington, D.C., as well as a mobile sports betting site in New Jersey. The Mojo app offers dozens of opportunities for people to get involved and places value on props, such as whether a football player will score the first touchdown or a baseball pitcher will strike out more than seven batters.

PredictionStrike, meanwhile, has a per-player value based on performance and demand among users. For example, the virtual stock price of New England Patriots receiver Kendrick Bourne increased 55.40% after he caught two touchdown passes in Sunday’s season-opening loss to the Philadelphia Eagles.

Hurt noted that PredictionStrike is billed as a “fantasy derivative platform” and a “game of skill,” meaning it doesn’t have the same regulatory requirements as sports betting, which must apply for licenses in every state. She said it’s similar to the status FanDuel and DraftKings had as daily fantasy operators before they got into sports betting.

PredictionStrike is available in about 40 states, but Hurt said some states have cracked down on companies known to have games of skill and forced them to apply for licenses. In May, for example, Legal Sports Report reported the Ohio Casino Control Commission was investigating PredictionStrike and four other websites for potential illegal activity and that the State of New Jersey envoy PredictionShock a cease and desist letter for offer unlicensed sports betting.

When asked to comment on those investigations, Hurt stated that “PredictionStrike has operated and will continue to operate as a game of skill as opposed to sports betting. Additionally, PredictionStrike will continue to apply for skill game/fantasy sports operator licenses in states where this is required.”

PredictionStrike generates the majority of its revenue by charging a 2.5% fee for each transaction. It also has a membership offer where users can pay to have lower transaction fees and get access to other benefits. The company hopes to one day also sell the data it collects on athlete popularity trends and trading patterns.

“This fits between what we know as fantasy, what we know as fandom, and at the same time you can make money on this by holding stocks and trading them at the right time,” said Nichols, who is one of PredictionStrike’s members. members of the board. “PredictionStrike has essentially found a way to monetize the fantasy market, which is huge. If we don’t see similar results to FanDuel, DraftKings and others, something has gone wrong. It definitely has that potential.”

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