What We Can Learn From Underdog's $1.3B Exit
What every founder, investor, and sports executive can learn from one of the fastest-growing companies in sports.
One of the biggest sports business stories of the year happened last week.
UK-based IG Group announced it will acquire Underdog in a deal worth up to $1.3 billion (with incentives that could reach $2B+).
Who said sports tech companies can’t get big? Who said sports tech companies take too long to reach an exit?
The Underdog acquisition perfectly fits the thesis I always talk about of “sports as a wedge”, or “using sports as a platform to scale”.
Post-acquisition, IG Group announced plans to scale Underdog’s platform beyond sports into financial markets, culture, and politics.
Whether you’re building a startup, investing in sports, or simply trying to understand where the industry is headed, I think there are a lot of lessons worth studying.
Let’s Dive In 👇
History of Underdog
Started by 2x-exited betting founder Jeremy Levine and his co-founders in 2020, it only took 6 years from founding to exit.
How?
It was a series of strategic decisions (and timely pivots) that compounded over time.
A potential sign that the founders were looking for an exit…
In March 2026, Underdog laid off about 20% of its 500 employees after shifting to prediction markets (a move usually done to increase EBITDA).
Before getting into some key lessons, let’s take a quick look at the deal.
Underdog Deal Terms
Underdog has nearly 1 million monthly active users, and more than 60% are under 30.
Underdog generated approximately:
$466 million in trailing-12-month net revenue
Up from roughly $380 million the year before (~21% growth)
IG Group agreed to acquire Underdog in a deal worth up to $1.3 billion, consisting of approximately $1.1 billion upfront plus a $200 million earnout tied to Underdog’s 2026 performance.
For illustration purposes, an investment at the seed round likely turned into:
$250k → worth roughly $5M
$500k → worth roughly $10M
$1M → worth roughly $20M
co-founders → likely $100M+ each
Kind of surprisingly, you don’t see any so-called “Sports VCs” on the cap table (definitely a miss by those who passed on them in 2020).
To keep the team motivated…IG Group is also offering eligible Underdog employees the ability to earn up to an additional $850 million through a management incentive plan if the business significantly outperforms financial targets in 2028 and 2029 (this is separate from the $1.3B paid to shareholders).
IG is excited about this deal, as they expect Underdog to:
More than double its U.S. revenue
Increase its U.S. active customer base by more than 10x after the acquisition.
Ok, this is all great…but what lessons can we learn from Underdog?
Let’s get into them ⤵