In most industries, venture capital is a familiar creature: pools of capital chasing exceptional returns by backing young, high-growth companies. In iGaming, however, venture investing comes with a distinctive twist. Alongside traditional venture firms – such as those specialising in gaming, technology or digital platforms – large operators have for some time operated their own in-house investment arms. These corporate venture units sit at the intersection of finance and strategy, tasked not only with generating returns but also with identifying the technologies and business models that may define the sector’s future.
The logic is straightforward: gaming is a fast-evolving ecosystem, shaped by regulatory change, technological change and shifting consumer preferences. Operators relying solely on internal innovation risk falling behind. Venture arms offer a way to externalise research and development – placing multiple bets on startups that might solve pressing operational challenges or unlock new revenue streams. Yet the model is far from uniform. As investors and industry observers reveal, these venture arms differ widely in structure, intent and outcome.
In-house venture arms have been around since the mid-2010s innovation boom in gaming. Back in this heyday, these business units were seeking to trial, and potentially invest in, novel technologies of the period, which included virtual reality, augmented reality and smart home innovations. This was done in the hope that iGaming would evolve to adopt some of these products. However, when this didn’t happen, and innovation was largely centred around traditional verticals like live casino and sports betting, the approach changed and the search for genuine industry innovation and efficient technologies took over.
Today operator VC funds are looking more seriously at verticals growing in popularity like prediction games and prize draws, as well as promising tools to improve efficiency like artificial intelligence.
How to spot the opportunity
At first glance, corporate venture arms resemble traditional venture capital funds: they deploy capital into startups in exchange for equity. But their underlying motivations often diverge. For some, financial returns are paramount; for others, strategic value takes precedence.
Tom Waterhouse, chief investment officer at Sydney-based investment firm Waterhouse VC, is clear about his priorities. “We invest for returns first,” he says, emphasising a disciplined, thesis-driven approach. His firm focuses on B2B wagering suppliers that address tangible operator pain points, leveraging deep domain expertise to identify opportunities. “We are not investing purely as an innovation scout or a future M&A pipeline,” he adds, although he acknowledges that “strong strategic relevance and optionality can naturally come from backing the right businesses early”.
By contrast, corporate venture arms embedded within operators tend to lean more heavily toward strategic objectives. Maxime Sbeghen, head of investments at FDJ United Ventures – the corporate venture capital arm of the European operator – describes the unit as “a strategic lever for the group”.
FDJ United Ventures seeking AI, fintech and adjacent verticals
With €110 million under management, the fund invests in early-stage startups across gaming, AI, fintech and adjacent verticals, with the explicit aim of supporting the parent company’s transformation. “Beyond investment, our priority is to actively monitor emerging tech trends and identify leading-edge technology players early,” he explains.
This points to a mix of approaches across the industry. As Jesse Learmonth, founder of BettingStartups – a platform that supports and connects early-stage iGaming startups – explains, the role and function of corporate venture arms varies by operator. “Flutter’s Alpha Hub could be perceived as an innovation scout for its group of brands, while DRIVE by DraftKings is more akin to a traditional venture capital firm that deploys direct capital.
“Innovation is at the core of both approaches, but the way in which it nurtures that innovation is wildly different.” To sum up: innovation may be a shared goal, but the mechanisms for achieving it differ significantly across the board.
iGaming VC: A pipeline to acquisition?
One persistent assumption about corporate venture arms is that they serve as feeders for mergers and acquisitions. Invest early and acquire later once a startup proves its worth. In practice, the picture is more nuanced.
Sbeghen is explicit that M&A is not the primary objective. “Our fund is not designed for M&A. We invest as minority shareholders, focusing on partnership and long-term value creation.” That said, acquisitions do occur opportunistically. He cites the example of L’Addition, a retail technology startup that was eventually integrated into FDJ’s payments and services business.
Learmonth highlights the inherent tension from a startup perspective. Accepting operator investment can unlock distribution and commercial opportunities, increasing the likelihood of eventual acquisition. But it may also deter other operators from engaging with the business. “Having an operator on the cap table might discourage other operators from entering into a commercial relationship,” he notes, framing the decision as one of the primary trade-offs.
In reality, only a minority of portfolio companies are likely to be fully acquired. Corporate venture arms typically maintain diversified portfolios, and most investments are structured as minority stakes. Acquisition tends to depend on a combination of factors: demonstrated business value, cultural fit and the extent to which the startup becomes integral to the operator’s core activities.
A choice between early bets or proven models
Another defining feature of operator-led venture activity is the stage at which capital is deployed. Here, approaches vary significantly. FDJ United Ventures focuses primarily on the earliest phases, investing from pre-seed to Series A, the stage where there is usually a working product. This allows the group to “capture key innovations very early and build lasting relationships with startups”, according to Sbeghen. Early-stage investing also facilitates experimentation, enabling business units to explore use cases before competitors.
Data from BettingStartups suggests that this focus on early-stage deals is common. In the first quarter of 2026, the firm tracked 13 deals, nine of which were pre-seed or seed stage. “Current activity is skewing to the very early stage,” Learmonth says, although he acknowledges the risks: uncertain commercialisation paths and the potential for long integration timelines.
Waterhouse VC on the other hand, adopts a more cautious stance, preferring companies that have already demonstrated traction. “We prefer revenue-generating businesses with live operator contracts rather than very early concepts,” Waterhouse explains. This approach reduces execution risk and makes it easier to assess strategic value. At this stage, he argues, investors can better evaluate whether a product solves a genuine operator need and whether it has the potential to scale globally.
These strategies show a choice between risk and certainty. “Strong strategic relevance and optionality can naturally come from backing the right businesses early,” Waterhouse adds. But they come with higher failure rates. Later-stage investments are easier to assess but give less influence and cost more.
Amounts invested vary dramatically
Venture investing in iGaming does not follow a single approach. This is especially clear when one looks at the amounts invested: capital varies dramatically depending on how developed a startup is, how strongly the investor believes in it and how useful it is to the investor’s core business. At FDJ United Ventures, typical investments range from €300,000 to €3 million, with the fund usually participating as a minority investor alongside larger venture firms. “The level of commitment depends both on the company’s stage and its strategic relevance to the group,” Sbeghen notes.
Across the broader market, the range is far wider. Learmonth points to BettingStartups data showing deals as small as $500,000 and as large as $75 million in a single quarter. “A wide range, to be sure,” he remarks, attributing the variation to factors such as total market size, business model and current market trends. Technologies like artificial intelligence and prediction markets are currently attracting disproportionate investment.
“There is no one-size-fits-all cheque size,” Waterhouse says. Instead, capital allocation is shaped by belief in the opportunity and how well it fits the strategy. Where opportunities resonate strongly with investors, further investment often follows once the business has been validated.
Measuring success beyond returns
Given the high failure rates associated with startups, defining success in a corporate venture portfolio is no simple task. Financial returns remain important, but they are rarely the sole metric.
For Waterhouse, success hinges on backing companies that achieve durable positions within the industry. “We are looking to back businesses with genuine product advantage, strong distribution, sticky customer relationships and real staying power in the value chain,” he explains. Suppliers that become “genuinely important to operators” tend to deliver both financial and strategic value over time.
At FDJ United Ventures, the emphasis is more explicitly strategic. “Success is primarily strategic,” says Sbeghen, pointing to tangible collaborations as the key metric. Examples include partnerships with startups developing AI-driven betting features and digital lottery solutions. These collaborations allow the operator to enhance its offerings while validating the startup’s technology.
Learmonth frames success in broader ecosystem terms. Corporate venture arms, he argues, create value when they “create the conditions for innovation to flourish” within their organisations. This involves not just investing capital but fostering a culture that embraces external ideas and integrates them effectively.
Independence or integration?
Perhaps the most delicate balancing act for corporate venture arms lies in managing the relationship between startups and the parent organisation. Too much control can stifle innovation, while too little can limit strategic value.
“Founders need room to run,” Waterhouse insists. His firm focuses on providing support –introductions, strategy, capital – without interfering in day-to-day operations. “In most cases, companies perform best when they keep their independence and move quickly. Where we can add real value is by opening doors commercially, helping management think through growth and using our network to accelerate progress.”
Sbeghen describes how FDJ United Ventures maintains minority stakes and ensures startups retain autonomy, while facilitating access to the group’s resources and expertise. The creation of an operating partner role helps manage interactions and resolve potential friction points, he says. Board representation provides oversight without imposing undue control.
Learmonth captures the essence of the challenge: “It’s a tricky tightrope to walk.” Startups should be given autonomy, he says, but within clearly defined boundaries, with alignment across the organisation on expectations. The goal, he suggests, is to build relationships without slowing progress.
An evolving corporate iGaming VC model
The balance between financial and strategic goals will continue to shape venture investing. For operators, these units offer a way to shape the industry’s future rather than merely react to it. For startups, they present both opportunities and constraints. Innovation in iGaming increasingly happens outside established operators, and venture arms are the bridges to reach it. As the sector evolves further, so will its approach to venture investing.
Original article: https://igamingbusiness.com/tech-innovation/how-have-corporate-vc-funds-in-igaming-evolved/
