DraftKings announces new round; sources say DraftKings raised $100M, and FanDuel is raising too as companies await merger approval
Dan Primack / Axios :
Context & Ripple Effects
DraftKings and FanDuel have been in limbo since their November 2016 merger agreement, which put Jason Robins at the helm of the combined company with Nigel Eccles as chairman — but the deal still awaits approval months on. This round is what keeps the two operating independently through that wait.
The signal in this report is that neither side is freezing spend: DraftKings has banked $100M and sources say FanDuel is out raising too, meaning both investor bases are funding a prolonged two-company state rather than conserving cash for a fast close.
First-order effects
- DraftKings now holds $100M of fresh capital to fund marketing and operations as a standalone company for as long as merger approval takes, removing pressure to cut burn before the close.
- FanDuel launching its own raise means its existing investors are being asked to back the company through the same approval limbo, keeping it competitive rather than letting it atrophy into the acquirer's waiting room.
Second-order effects
- Raising while a merger pends prices the deal as uncertain: FanDuel's subsequent $30M-$40M convertible note from existing investors shows the follow-on was structured defensively, with terms that hedge on whether the combined company ever exists.
- Advertisers, leagues, and players get two funded competitors instead of one consolidating player for the duration of the review, sustaining customer-acquisition costs and prize-pool competition across daily fantasy.
Third-order effects
- If approval timelines stretch long enough, 'bridge' fundraising becomes a standard feature of regulated-market M&A: target and acquirer both raise independently, and shareholders absorb extra dilution as the cost of regulatory patience.
- A drawn-out process tests whether the merger's governance plan — Robins as CEO, Eccles as chairman — can survive months of separately capitalized, separately managed companies, since each new round entrenches distinct investor interests on both sides.
The trend: Pending tech mergers increasingly run on parallel bridge financings, with both parties raising independently until regulators force the question.