Karma Gaming, the Halifax startup that is developing video games for regulated lotteries, has landed just under $500,000 in additional seed financing from a group of Atlantic Canadian angels, complemented by a $250,000 loan from the Atlantic Canada Opportunities Agency.
CEO Paul LeBlanc said the company has been in discussions with the angels for several months and has just closed the round. He added that the company is now looking for $3 million to $5 million in venture capital financing, which it will likely have to raise outside of the region.
Karma has devised a solution for a problem that afflicts regulated lottery companies around the world: their clientele is aging, and young people are not interested in buying weekly lottery tickets. So the company is developing video games that will include a modest cash prize. In September, Karma signed an agreement with Brisbane, Australia-based lottery operator Jumbo, under which the Halifax company will launch an interactive game that users could play to pick lottery numbers.
“The Australian deal is moving ahead and we’re shooting for a March 2013 launch,” said LeBlanc in an interview.
Karma was launched last year with $500,000 in funding -- half through an equity investment from Groupon CTO and Dalhousie University alumnus Paul Gauthier, and half via a loan from ACOA. The current round came about as several businessmen – who coincidentally are mostly involved in real estate – stepped up with investment. The 10-person group (two of whom wish to remain anonymous) includes:
- Donald E. Clow, President and Chief Executive Officer of Crombie REIT of Halifax;
- Victor Goldberg, Halifax-based Partner at law firm Cox & Palmer;
- Gordon Lang and Jim Spatz of Southwest Properties of Halifax;
- Charlie Oliver and Ed Nash of Martek, a St. John’s property company;
- Scott McCrea, CEO of Armour Group of Halifax;
- And Robert Richardson, Executive Vice President and Chief Financial Officer of Killam Properties of Halifax.
LeBlanc said Karma is moving forward and now has six products, which it is beta-testing with three lottery companies in Canada, two in the U.S. and one in Europe.
Jay Aird, the Karma CTO, has led a project to spin out a subsidiary company dystillr, an analytics tool for monitoring every casual gaming site in the world. Less than a month old, the company already has several clients, including the global investment bank Morgan Stanley, which recently issued a huge report on the industry based on dystillr’s analytics.
