We’re excited to announce our investment in GeoComply, the leading provider of fraud prevention and cybersecurity solutions that detect location fraud and help verify a user’s true digital identity. GeoComply offers reliable, accurate, and precise location-based detection technology and today is the trusted leader in the online gaming/sports betting industry. Never a team to rest on its laurels, the company has rapidly expanded its offering to media/entertainment, fintech, and financial services customers, among others.
Based in Vancouver, British Columbia, GeoComply marks our third growth equity investment in a Canadian software company (following Cority and Galvanize) as we continue to find exceptional companies among our neighbors to the north (read: we love Canada).
We also have a long history of supporting female-led, market-leading organizations like GeoComply, having backed more than 50 female founders to date. Additionally, our partnership reflects Norwest’s continued focus on investing behind businesses that help companies ensure mission-critical compliance with regulations to manage risk and avoid costly penalties. As a team, we have backed over 10 “compliance DNA” software/data businesses, which are companies that have been built around (or have elements of) enabling compliant practices and/or mitigating risk for customers.
GeoComply offers reliable, accurate, and precise location-based detection technology and today is the trusted leader in the online gaming/sports betting industry.
After tracking GeoComply for over two years, we connected with founders Anna Sainsbury (CEO) and David Briggs (Director) and quickly found common ground. GeoComply fit squarely in the aperture of the types of investments we pursue—the company was founder-led, profitable plus exceptionally capital efficient, and growing rapidly. The team certainly did not need additional primary capital to sustain operations but was looking to bring on like-minded partners during the next phase of growth—one we anticipate will be similar to the last.
Persistence and Capitalizing on Opportunity at the Right Time
Anna and David founded GeoComply in 2011, growing conservatively and profitably in the early years while building customer-driven, market-leading solutions for the online gaming/sports betting industry. GeoComply was the first to identify a lack of reliable location-based geofencing solutions and started first by serving the New Jersey market. In 2013, New Jersey was the first U.S. state to legalize online gaming, and state regulators needed a location-based solution to quickly and precisely locate users for legal and regulatory compliance purposes.
In May of 2018, after years of GeoComply preparation, lobbying and education of regulators, PASPA (Professional and Amateur Sports Protection Act of 1992) was overturned, which afforded individual states the ability to determine the legality of sports betting. The PASPA ruling not only sparked the enormous growth of the sports betting industry by opening the pathway to legal online gaming in more states, but it also made a solution like GeoComply critical to the success of the industry.
Given the complexity of state-by-state location compliance requirements and stringent tax policies, GeoComply is instrumental in helping states, operators, and regulators:
- ensure bets come only from legal states and locations
- prevent slippage of tax revenues
- detect bettors who try to spoof their locations by using a VPN or other techniques
Today, about half of the states have legalized online sports betting, sparking a modern day gold rush. The growth of the industry has attracted players from large casino operators to numerous new startups, Caesars to Fanatics. Against a rapidly evolving backdrop, GeoComply has remained steady and constant—profitable, growing, and operating reliably behind the scenes.
GeoComply is instrumental in helping states, operators, and regulators ensure bets come only from legal states and locations, prevent slippage of tax revenues, and detect bettors who try to spoof their locations by using a VPN or other techniques.
Why We Are Bullish on GeoComply
Sticking to the “gold rush” theme, our thesis behind partnering with GeoComply is much like selling pickaxes to miners. It’s in use daily, consistently works, and enables customers to operate successfully. While there is fierce competition amongst operators in the gaming market to capture market share, GeoComply is able to “play Switzerland,” offering valuable services to all operators and regulators.
Even as operators pull back marketing spend and growth initiatives in order to focus more on profitability, GeoComply stands to benefit from the continued move of sports betting and gaming to legitimate, legal, and online methods. From 2018 to 2021, bets placed on sports in the U.S. grew more than 20-fold, increasing from about $300 million to over $7 billion a month.
Today, GeoComply serves several gaming industry leaders (DraftKings, BetMGM, FanDuel), leading media and entertainment companies (Amazon Prime and BBC), and companies in the financial services and crypto spaces. The company now processes over a billion transactions a month and is active on over 400 million devices.
GeoComply has also expanded its product set to offer KYC and AML verification, chargeback management, and marketing analytics to become a one-stop shop for compliance, fraud, data analytics, and digital identity.
From 2018 to 2021, bets placed on sports in the U.S. grew more than 20-fold, increasing from about $300 million to over $7 billion a month.
Doing Well by Doing Good
An equally important mission for GeoComply is its focus on giving back to impactful causes. The company had nearly 200 employees based in Ukraine when Russia invaded in February of 2022. The team worked tirelessly to support and relocate those employees, even urging the Canadian government to expedite visas to help those affected by the crisis.
Along with the work in Ukraine, GeoComply is committed to ensuring and advocating for responsible gaming practices. They partner with organizations like the National Council for Problem Gambling and the Responsible Gaming Council. Besides causes directly related to core operations and gaming, the GeoComply team also is passionate about supporting the Child Rescue Coalition, <Code> Like a Girl, and many other causes.
A Partnership You Can Both Bet and Bank On
We’re excited to be joined in this round by Arctos Sports Partners, a private equity firm dedicated to the professional sports industry and sports franchise owners. Arctos will bring invaluable expertise and key relationships with teams and leagues to support GeoComply’s product and vertical expansion.
We look forward to working with them, along with existing investors Blackstone and Atairos, and are thrilled to partner with the GeoComply team in the next chapter of its growth and evolution. We truly believe this will be a partnership you can both bet and bank on!
