Tuesday, January 17, 2006
Betting on a growing industry
ROSE SIMONE, RECORD STAFF
Tech Capital Partners is betting on the success of a local start-up company that will sell a new type of software to the online gaming industry.
LiveHive Systems produces software that allows real-time online wagering. Its founders are (from left) Jean Paul Dupuis, Jean-Pierre Bhavnani, Dave Bullock and Rob Riopelle. The Waterloo company says it could have as many as 30 employees within a year.
The venture capital firm announced yesterday it will invest up to $1.8 million in LiveHive Systems Inc., a Waterloo company that has developed software to help online sportsbooks companies offer real-time wagering on any aspect of a sporting or popular culture entertainment event.
"What interested us was the market. It is a huge market," said Tech Capital Partners associate Jacqui Murphy.
Worldwide online gambling produced profits of $12 billion last year, said Robert Riopelle, LiveHive's vice-president of business development.
The company is ready to deploy the new software and is moving into offices on Lodge Street in Waterloo next month, he said.
The company was launched by four friends who have engineering backgrounds and who previously worked for other technology companies.
Besides Riopelle, the other members of the executive team are Dave Bullock, vice-president of operations; Jean-Paul Dupuis, vice-president of technology; and Jean-Pierre Bhavnani, vice-president of product development.
They are now hiring a president and five other people, and could have as many as 30 employees within a year, Riopelle said. "This is the high-tech capital of Ontario, so it made sense for us to situate ourselves here."
The investment from Tech Capital Partners "gives us the capital to grow quickly in what is an aggressive and fast-moving market."
It is still illegal to privately offer online betting throughout much of North America. It can only be offered from certain jurisdictions or in games run by government lottery corporations.
But in places such as the United Kingdom or Costa Rica, the old business of book-making is a hot and legal industry that has migrated to the online environment.
It is to these industries -- such as William Hill PLC. in the United Kingdom or Pinnacle Sportsbook in the Netherlands Antilles -- that LiveHive hopes to market its software to, Riopelle said.
"We have contacts in the industry," he added.
LiveHive's technology will feed opportunities to bet on "events within events," Riopelle said. The software is unique and that's why the company wants to deploy it quickly, before others get into the act.
Rather than just betting on the outcome of a football or baseball game, the LiveHive NanoGaming software will allow people to bet in real time on micro-events -- such as whether, during a football game, the next play will be a pass or run.
It will also allow wagering on other events -- for example, whether a player on a reality television show like Survivor or The Bachelor will stay or be tossed out.
"It allows for more opportunities and more involvement in the games," Riopelle said.
The company servers in Waterloo will run the "situational data" that provide the various gaming options. The options are set up by operators watching events from a broadcast control centre and fed to the online sportsbooks businesses that take bets from people watching the events live or on television or the internet.
"A bunch of us were sitting around in a bar and we saw there were things we would like to bet on but there wasn't the technology," Riopelle said.
"From there, we did some research and found there was a need that could be backed up by market demand."
The team got help from Watstart, an online business community initiative spearheaded by Tech Capital Partners and entrepreneur Gary Will to help new technology businesses get off the ground.
This is the first time Tech Capital Partners has invested in a company that came through Watstart, Murphy said.
She said Tech Capital Partners can see the growth potential.
"The market is growing exponentially despite the fact that there are regulatory issues in some countries," Murphy said.