I recently had the privilege of representing Comcast Ventures on a panel hosted by Michael Frank of Net Service Ventures at the Twitter headquarters in San Francisco, titled “Innovations in Fantasy Sports and Sports Betting”. I was joined by Guy Lake, Product Lead at Yahoo Fantasy Sports; Gill Alexander, Host on Pregame.com; and Brandon Ramsey, Co-Founder and CEO of Fanhood Sports.

The sports gaming space is heating up, reflected in recent deal activity and the 400+ attendees in the crowd, including many folks in town for GiGse, the Global iGaming Summit and Expo. In the last year, landmark legislation has been passed in Nevada, New Jersey and Pennsylvania to allow real-money online gaming, including in some cases sports betting, on an intra-state basis. And this long-anticipated liberalization is contributing to an influx of capital into early stage venture-backed startups in related, unregulated gaming verticals, including social casino (free-to-play casino-themed social and mobile games), virtual currency betting games and real-money fantasy sports games. These include high-ARPU (average revenue per user), skill-based, entertainment-oriented products, which have the potential for downstream exits to commercial gaming operators, as the US market begins to open up. This regulatory anticipation was reflected in the questions from the crowd.

A quick recap of the last 12 months of funding activity in fantasy sports and social sports betting include Kwarter’s $4M raise from Deutsche Telekom/T-Venture for their P2P social betting product; Predictive Sports’ $4.7M raise led by Trilogy Equity Partners for their 2^nd screen companion app for live events and P2P social betting, and Comcast Ventures’ investment in FanDuel’s $11M Series C led by my colleague Andrew Cleland. FanDuel is the leading Daily Fantasy Sports gaming platform.

Here’s a quick rundown of some of the questions the panel was asked, as well as my responses. I’d like to thank Michael Sroka, a former Zynga colleague, sports gaming expert and now VP of Mobile at Fanhood Sports, for helping to shape the thoughts below:

What is the impact of both mobile and social on both fantasy sports and Sports betting?

Sports is a huge market. There have been a lot of attempts to create mobile and social product, and not really that many big wins, yet. Bleacher Report’s $200M sale to Turner Broadcasting being one of the few material exits. Part of the reason for this is the complexity of licensing data, and procuring team and player likenesses to build a compelling user-facing product. However, social media is a great avenue for consuming sports content, and sports gaming content. Facebook’s open graph is designed and intended for media consumption and Facebook is beefing up the newsfeed over other viral channels to surface relevant, live content – and few content genres fit as well as sports. Sports gaming companies that can harness these changes on web and mobile can start to create a distribution advantage.

What ways do you see potential regulatory change effecting these industries and how are different participants (gaming companies, sports books, betters, investors) getting ready for these?

There are great businesses to be built regardless of changes in regulation – and not just in virtual currency betting products with no cash out. Fantasy sports and pari-mutuel betting are skill-based, real-money genres receiving increasing attention, and are specifically carved out of the UIGEA. They can be big businesses today without further deregulation. However, changes in regulations may enable higher LTV business models for sports games vs. other media or gaming products. Anyone who can aggregate and engage these audiences will be valuable down the road if regulatory changes continue on their current path.

How do both gaming companies and sports books think about the catering to casual users vs. hardcore users?

As Michael Frank, our moderator pointed out, approaches may be very different if you are a line setter vs. more of a marketplace. Leading sports gaming product managers think about market segmentation by type of user: Hardcore, Midcore and Casual. Hardcore players are people who participate in real money gaming (offshore or offline) and who manage pay-to-play fantasy leagues. Midcore players participate in fantasy leagues on a regular basis. Casual players watch ESPN SportsCenter a few times a week and are most underserved. There are 35M Fantasy players (85% Football) and 75M people who fill out at least one fantasy sports bracket a year. The opportunity in casual is also huge. It also requires a product that is lightweight, low-time commitment, low knowledge. In contrast, hardcore and midcore crowds seek a more involved experience.

What are the most exciting new products in both fantasy sports and sports betting?  

We’re seeing lots of great ideas come to us for funding. Some of the more exciting ones include Short duration fantasy; Live betting (mobile is particularly well suited to engage in-game); and Sports simulation games (stats based games that are not real event driven. Top11 is killing it – I’m a big fan of the category, having grown up playing games like Championship Manager).

What are the attributes that make a sports gaming startup fundable?

1.) Market opportunity;  2.) A high-engagement, entertainment product that fits with the opportunity; 3.) Real competitive differentiation like first mover advantage in a market where liquidity matters; 4.) Compelling unit economics (CPA vs. LTV) ; 5.) The right team; and 6.) A fair valuation.

I’d like to express my appreciation to my fellow panelists Guy, Gill and Brandon for their insightful comments, to Michael Frank and Net Service Ventures for hosting and moderating, and to Twitter for the great venue.

We at Comcast Ventures look forward to more exciting innovations in fantasy sports and sports gaming. If you’re working on a startup in this area, we’d love to hear from you. You’ve picked a market that has some strong tailwinds behind it!

As the population soars (7 billion today, 9 billion tomorrow), and more people choose city centers over suburban sprawl (three-quarters of the U.S. population lives on just 3% of U.S. land, and 70% of the world population will live in cities by 2050), there is a new premium on space, and a new cachet in having a physical presence. Case in point: in a recent survey in The Curve Report, digital trendsetters (those who regularly tweet, post, pin, check-in and try out the latest digital platforms and tech devices) ranked, ironically, a brand’s real world presence as two times MORE important than a brand’s digital presence (including its Facebook page, Twitter activity and apps). This doesn’t signal a shift away from digital (online shopping and cloud storage are here to stay – and grow) but, rather, an increase in the desire to supplement all-things-d with more-things-p (physical, that is).  So what do you do if you are a start-up still flirting with getting out of beta, let alone kicking around the idea of opening up shop?  After all, getting a URL address is a cinch, but getting an address IRL isn’t as easy as ‘Go Daddy’. Fortunately, a surge in elastic environments, or “beta spaces,” may just help digital brands find their footing in the physical world, sans additional rounds of funding.  Elastic environments are flexible, multi-purpose infrastructures that can adapt to meet an evolving set of needs, and they are likely to be commonplace in future urban centers. On a small scale, these beta spaces can look like Sao Paulo’s The Gourmet Tea, a compact Mondrian-style cube that unfolds into a boutique shop that can suit a variety of retail needs; on a large scale, they can take the shape of 11 11, a multipurpose, premium parking garage in Miami that doubles as a venue for weddings, wine tastings, yoga classes and more. Like ready-made pop-up shops, these multi-purpose stores and venues can provide real world shelf space and low-cost leases for new brands eager to “get real” without the commitment of brick-and-mortar. Elastic environments make sense not only for a world with limited space, but also for a population with limited attention: with 35% of 18-49 year olds in a recent Curve Report survey saying “the pace of life is so quick today that what happened a year ago feels like “history”, a year-long lease may be a serious liability.

Our take: Physical is knocking off digital and going “beta.”  Whether you are a big brand with seasonal foot traffic, or a start up that wants exposure outside of the 2D screen, keep an eye out for beta spaces that offer a more flexible way to get physical.

One Plus One Clearly Equals Three.

This morning, Jawbone announced that it has acquired BodyMedia. Two industry leaders in the mobile health and body monitoring space have joined forces, and I can’t help but hum aloud the R&B hit from McFadden & Whitehead, “Ain’t No Stopping Us Now.”

Jawbone, best known for its Jambox speakers and Icon headsets, recently set its sights on the lifestyle tracking arena with its Up wristband. Consumers’ thirst for insights about their bodies continues to grow unabated, and by taking Jawbone’s success with Up and coupling it with BodyMedia’s healthcare heritage, one plus one clearly equals three. It was just 11 months ago that we invested in a very talented Pittsburgh team led by Chris Robins and Ivo Stivoric.  In that short timeframe, we have seen BodyMedia announce Core2, their next flagship product due out later this year, enabling heart rate tracking on a smaller, more elegant multi-sensor, on-body armband.  We’ve also been reminded of the power of this class of products in fostering and supporting true behavioral change in a weight loss setting.  Witness the transformations of the contestants on The Biggest Loser earlier this year with a little help from their BodyMedia devices, of course.

Today’s accelerometer-based devices accompanied with simple mobile apps are akin to single cell organisms. Tomorrow, we will evolve to a world that only has multiple sensors, multiple form factors, multiple body locations, and multiple apps. One needs tons of consumer empirical data and years of mapping it to real daily activities to cross the last mile in this category. Only the history, the scale and the science of Jawbone and BodyMedia can effectively make this journey. It’s been an honor and privilege to support the BodyMedia team. Now, we look forward to collaborating with them and the entire Jawbone team as they push body monitoring and wearable health to new heights. As we look forward to the dawn of a new revolution, it’s now clear that Jawbone is the one to beat.

Genacast Ventures invests in Internet technology entrepreneurs with a vision and passion for forging new markets or disrupt old ones. Established in 2008 as a partnership between serial entrepreneur Gil Beyda (Real Media and Tacoda) and Comcast Ventures, Genacast’s commitment to helping exceptional entrepreneurs build great companies is already experiencing success with its first investment Invite Media being acquired by Google (Public, NASDAQ:GOOG) and its second investment Demdex being acquired by Adobe (Public, NASDAQ:ADBE). Current portfolio companies include DoubleVerify, PackLate, Enterproid, Mortar Data, LeadiD and YieldMo. Genacast invests up to $1M in 4-6 seed-stage start-ups each year.

Angel and seed-stage investing has grown dramatically over the past several years with the number of funded start-ups tripling over the last three years. I am a huge fan of growing the number of start-ups that get funded and let the market decide if they are worthy enough to survive…let 1,000 flowers bloom. However, funding too many start-ups affects the whole ecosystem.

There is a limited amount of human capital (engineers, salespeople, etc.) to power these start-ups. If spread too thin, start-ups are not able to hire good talent to give their ideas a fighting chance. Having to compete for talent might force start-ups to settle for inferior talent or over-pay for talent thus reducing their runway.

While funded start-ups have tripled over the last three years, follow-on (Series A) investments in those start-ups has only increased by 50% over that period. And 45% of start-ups that were seeded in 2010 received Series A funding in 2011 while only 27% of start-ups that were seeded in 2011 received Series A funding in 2012. This results in larger number of start-ups not receiving funding to continue operations. Some shutdown, others plot along never reaching their full potential. This is cyclical and the investment ecosystem will correct itself. If fewer start-ups are getting follow-on funding then fewer angel/seed-stage investments will be made.

However, angel/seed-stage investors need to be patient when selecting investments. There is a temptation to accelerate the number of investments, seeing fellow investors making record number of investments. Traditional venture capital has always been about quality, not quantity.

Genacast Ventures’ unique structure is well positioned to allow us to be thoughtful and patient. Genacast is an evergreen fund with just two limited partners (investors): Comcast Ventures and Gil Beyda. Typical funds have tight time constraints from which to deploy capital and then raise the next fund, typically 4-5 years. Being an evergreen fund, Genacast has no such pressure so is able to wait for the right start-ups to come along to fund. It is our hope that without this time pressure, we will make higher quality investments. But that is for time to judge.