BettingStartups Capital on what makes them write a check—and what sends them away

Three months after launching BettingStartups Capital, Jesse Learmonth and Paris Smith spent an hour fielding live questions from founders during a Defy the Odds Office Hours session—on due diligence, AI, founder qualities, and where they think the current investment climate is getting ahead of itself.

The fund targets checks of $100K to $250K into early-stage founders across sports betting, iGaming, B2B infrastructure, and adjacent categories. At the time of the session, the pair said they'd reviewed close to 100 deals, and closed five.

On what actually moves them at the earliest stage, Learmonth was direct: you can't run a fundamental business analysis when there's no revenue and no KPIs. What you can evaluate is the person. "Betting on the jockey, not the horse is what I always like to say," he said.

The framework he and Smith apply borrows from Smith's Pinnacle-era hiring philosophy—hungry, humble, smart, and passionate—with Learmonth naming humility as the most important of the four. Not passive humility, but the kind that coexists with conviction.

"You have to have a deep level of conviction to the point where it's almost like delusional conviction around your idea," he said, "but you also have to leave yourself open to letting the market and people give you feedback."

Smith added her own signal for when something's off: "Sometimes people are more interested in raising the money than talking about what they're building, and that's always a big red flag for me."

A question about due diligence prompted a candid admission: at check sizes of $100K–$250K, the fund isn't running 60-day technical audits. They're spending time with founders, interrogating assumptions, and stress-testing the business logic. What they're also doing, given that iGaming is a small industry, is checking references quietly. Smith noted that founders sometimes drop names of partners or operators in their decks without those people knowing who they are. "We are a very small community," she said, adding she's even received collateral with her own name and image in it.

On AI, Learmonth said investor expectations have hardened—it's now assumed that AI is forming the core of a company's operational infrastructure. But he flagged a growing irritant: decks that lean so heavily on AI-generated framing that the founder's own voice disappears.

"In some instances, I do think people are over-relying on AI to help them frame the story and the narrative of what it is they're building."

On IP, his position was similarly grounded: with product development costs near zero, distribution, brand, and partnerships are the real moats now—not the underlying technology.

The sharpest exchange came on prediction markets. Learmonth said roughly a third of the ~100 decks they've reviewed sit squarely in the PM category, and he raised two concerns.

First, valuations: "The valuations of some of these early-stage prediction market companies are not, in my opinion, grounded in reality of the market right now"—drawing a parallel to the 2021 zero-interest-rate environment, when everything was "to the moon."

Second, and more pointed, the legal ground itself. "It is not settled science that sport event contracts in America are here to stay for the long haul," he said. "There's a lot of bets being made right now on the fact that this is here to stay, and I don't think that's true."