Why the Free Postcode Lottery is our perfect first investment

By March 17, 2017News

The Free Postcode Lottery (FPL) is exactly the type of disruptive digital start-up ZEAL Investments (ZI) is looking to help turbo-charge. FPL was founded in 2011 by Chris Holbrook who initially hoped the site would make him a some more beer money on the side. Since then, FPL has shown serious organic growth in the UK and now boasts over 300,000 daily active users with revenue of £1mn and £400k in EBIT in 2016 alone. In a nutshell, FPL has become the top free-to-play, ad-funded lottery in the UK.

ZI was launched to help game-changing lottery start-ups like FPL grow. We’re interested in two types of investment:

  1. New lottery business models
  2. Products or services that can be used in our existing businesses

We’ve always believed that a non-licensed model that eliminates one of three gaming pillars and is either free, skills-based or doesn’t pay out prizes, would be a strong investment candidate. FPL is a prize game built on a raffle mechanic and gives away money to players for free. Jackpot! We were immediately excited by FPL’s impressive traction and industry impact over the last five years, as well as by the team themselves.

2017_03_17_fpl_v1A start-up’s character is defined by its formative people and this of course, plays a huge role in attracting early investment. Chris and Will, FPL’s founder and commercial director respectively, are both impressive personalities and can only be described as hard-working, ambitious, dynamic, business-minded and authentic. Thanks to them, FPL has managed to build a loyal and engaged community of players and thus, presented an investment opportunity that ticked the following key boxes for us:

  • Vision: FPL has a clear vision for what it wants to achieve – to become the leading global lottery that anyone can play for free.
  • Differentiation: FPL was the first free lottery of its kind in the UK. Chris chose to create something different, rather than compete with other lottery business models. FPL started small and is now the leading player in this space.
  • Traction: FPL built a small and successful business in the UK in five years with a solid product-market fit that enabled organic growth and significant financial returns.
  • Regulatory edge: FPL is a free lottery and thus is non-licensed. This enables fast, cheap international roll-out with no long-cycle regulatory requirements. It’s a fascinating model that has exponential growth potential with the ability to create a global monopoly via dense network effects – and one that ZI is very interested in supporting.

After our first meeting with Chris and Will, it was clear that an investment from us could help FPL ramp up its business growth in these three focus areas:

  1. Paid marketing in the UK
  2. International expansion
  3. Optimisation (maximising the lifetime value per player)

Free Postcode LotterySo, in December 2016 we injected £1 million into FPL and signed on as an advisor to provide strategic, networking, data and compliance support over and above the financial commitment.

The FPL team has created a business with huge potential to fill a particularly interesting gap in the market. It’s a fascinating initiative that could truly disrupt a slow-moving global lottery market with fresh and original ideas.

If your start-up has similar ambitions to shake up the lottery industry and propel the sector forward, get in touch with our investment team today.

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