Andrew Ehrenberg is the Head of Business Development at WagerWire and a Partner at Eberg Capital, who led rounds in both WagerWire and Commonwealth in early 2022.

“Currently in 14th, Angel of Empire, and in 15th, Mage”…

My brother and I looked at each other with empty expressions, speechless as our horse sat near last place in his first and only chance at running the Kentucky Derby. A good performance could have been so big for us, I thought. I wasn’t expecting a win, but after Mage finished 2nd just behind the favorite Forte in March in the G1 Florida Derby, I liked our chances to compete, especially with Forte being ruled out (or in horseman speak, ‘scratched’) ahead of Saturday’s race.

This was not looking good. Mage was sitting at the back of the pack, and silence fell over the people surrounding us. Mage is a slow starter, but a powerful finisher; we knew this, but would need quite the epic break to place anywhere notable. I felt powerless, but extremely proud of Mage and his ownership group, Commonwealth, for making it to this moment in the first place.

Photo: Mage at the back of the pack

A year and a half earlier,

I was in Austin, Texas with my friend Blake; in a discussion around investing in athletes, Blake told me about this company called Commonwealth that was securitizing shares of racehorses for non-accredited investors. Commonwealth allows anyone to buy into a horse, for as little as $50. As early investors in fractional collectibles-as-securities marketplace Rally Rd, we were familiar with the model and eager to learn more.

A week later, I met founder and CEO Brian Doxtator, who brought me through the nuts-and-bolts of the application, the SEC-filing process, and his broad vision for bringing this model to all sports where prize winnings could be distributed to shareholders as dividends. He also spoke about how this was markedly different from any other tradable security on the market today, because it came with an experiential calendar. In a time where the promise of community-based products, digital IP, and NFTs loomed large and sports betting continued to take the retail market by storm, the opportunity to capitalize on a young and primed new audience in horse racing was more palpable than ever. A few weeks after that, Eberg Capital decided to back Brian and lead Commonwealth’s seed round.

Photo: Original Commonwealth listing for Mage

In no reality did I imagine just 12 months later I would be at Churchill Downs in the 12th race watching a Commonwealth horse compete in the Run For The Roses. I believed in the community that Commonwealth was building and the vision that Brian and his co-founder Chase Chamberlain had, but I didn’t expect us to start winning big races across multiple horses so fast. Of its first 9 horses, one was the highest earning racehorse in 2022, returning investors a whopping $700 in profit per $50 share (a 1400% gain) on winnings alone, one was the 2022 Belmont Stakes favorite, and one was running in the Kentucky Derby after nearly beating the favorite in his previous race. And a few of the other six horses were off to pretty solid career starts as well. Winning is only one factor in Commonwealth’s success, but it certainly has helped put them on the map and rapidly build the brand.

When we originally invested, I thought this was more of a community play than an asset growth play, but I feel like I didn’t fully grasp the broader vision.

For perspective, horse racing is a $400 BILLION market globally, and outside of betting has not really touched the retail consumer market until now. Brian and Chase realized the potential and made some bold decisions that allowed the Company to gain an early advantage. One of the first things Commonwealth did was partner with Lexington, KY based WinStar Farms, one of the most reputable breeding farms in the United States. In 2018, WinStar’s horse Justify won the Triple Crown in iconic fashion, earmarked by a muddy win (or in horseman-speak ‘in the slop’) at the Derby. And this is one of numerous successful horses coming out of WinStar. This partnership put Commonwealth’s foot in the door to pursue some of the best pedigree horses in the world.

The quality of ‘deal-flow’ allowed for the concept of ‘the power law’ to take hold. In venture capital, power law is effectively the idea that with a diverse, but well-curated, set of early-stage investments, the probability of a few investments generating outsized returns from a small subset of the companies increases. For both VC firms and Commonwealth, the business model works out such that when the investors win big, they win big too. At its best, this can create a virtuous cycle where the reputation gains from winning big can compound into increasingly better access to the best available deals. I find this fascinating, but more on this later.

Mage rounded the final corner into the home stretch, still way in the back of the pack.

Seconds later, he makes a move to the outside and starts making a run. It feels a little too late, but there is something to it. He just keeps pushing with the help of his new Hall of Fame jockey, Javier Castellano. Javi had run 15 Derbies prior without a win, but was always known as a guy who fought until the end. Much like Mage, Javi could make up ground late in a race — a perfect match for his new colt’s running style. On Derby day, they appeared in perfect sync on the home stretch. Seconds later, Mage found himself in 9th place up from 15th and before we knew it Mage was on the board in 4th place and had closed in from the outside, smoothly cutting off the horses behind him.

He could do it.

I could feel everyone around me clench in shock, excitement, and anticipation. There was really something to this run. Mage had a head of steam as he passed directly in front of us and moved into second place, less than 100 meters from the finish line. Everyone started jumping and repeating whatever phrase they had started yelling, over and over again. Let’s go Mage. Let’s go Mage. Let’s go Mage… Vamo Javi. Vamo Javi. Vamo Javi… Come on! Come on! Come on!… Then, Mage’s head popped ahead of the leading horse, 2 Phils, and he never looked back. He crosses the finish line. I am numb with shock. I raise my hands in the air, let out a cry, and fall to the ground and break out in tears.

Photo: Mage crossing the finish line in first.

My brother Ethan leans over and hugs me from the ground and then pulls me to my feet. I feel outside of my body, my arms shaking from the elbow down. I can’t fucking believe it, we have to get to the Winners Circle. The people around us hug us, kiss us, congratulate us. I made them all a lot of money. My outward conviction about Mage led a lot of them to bet on him, with outright win bets paying 17 to 1. I’d be surprised if my julep-fueled Mage endorsements didn’t yield hundreds of thousands of dollars in bettor profits over the course of that day. I snap back into focus and yell out “How do I get to the Winner’s Circle?!” and frantically found some other Mage X Commonwealth owners who were heading in that direction.

We emerge onto the track, probably 100 strong, with over 100,000 people cheering. The immensity of the moment pulsed through me. Everyone on that track was a family at that moment. Everyone was so proud of each other, regardless of the size and scope of the role they played. We had done something that had never been done before — taken a young racehorse from inception to Derby win with a group of hundreds of small investors.

Another striking observation I made was how young the group was. This is a demographic that has largely lived outside of the horse racing realm until now. Commonwealth was changing that and this moment felt like an inflection point in that change. The promise of digital community that fueled the rise of web3 was delivering for the Commonwealth shareholders. We did this together. We all collectively made this possible, in a sport that has historically been dominated by Petro-State billionaires and old money. This was made possible through shared financial incentives, shared affinity, and shared experience. These components have long existed in isolation, but Commonwealth was able to bring them together in an authentic and powerful way that moved people. It most definitely moved me.

Photo: Jockey Javier Castellano tasting victory

Now, 400 of us are Kentucky Derby winners, and nobody can ever take that away from us.

We are 1 of 149 ownership groups since 1875 to be able to say that. And 15 million people around the world watched us do it on TV, and millions more watched replays across YouTube, social, and cable. And in a traditional sense, we had no business being there. We were not like any other group that had come before. We all got to be part of history together by fusing an old world culture with new world technology to create an unprecedented product. This is special, and other people could feel it.

I had the opportunity to meet Fantasy Football legend Matthew Berry at the Derby and got to spend some time with him at the NYC Sports Business Conference this week. In addition to being an awesome guy, he had some words for me that I will remember for the rest of my life. “When I got on the Top 5 New York Times Bestseller List, a friend told me — ‘Matthew, you are a New York Times Bestseller. From this day forward, you will always be that. Make them call you that’ — now, you are a Kentucky Derby Winner. You will always be a Kentucky Derby Winner. Make them call you that.” — chills. All 400 of us can get to say that for the rest of our lives.

The collective power of this moment harkens back to a moment I experienced in late 2021 when a group of early crypto adopters calling themselves ConstitutionDAO attempted to purchase an original copy of the US Constitution for $40 million. No single individual in this group could have done it themselves, but a 17,000 person collective was able to make a real run at it. I was a part of this group, and had friends who were leading the execution of the project. We went toe to toe with multi-billionaire financier Ken Griffin, who is one of the most liquid billionaires in the world. For perspective, last year Griffin spent $386 million in Miami on personal real estate. Beating us in the auction was pocket change for him, but our collective power and influence gave us the ability to compete in an unprecedented way.

Photo: Blake, my brother Ethan, and I in the Winner's Circle

Commonwealth brought this to the horse racing world — without the use of cryptocurrency. This is not a knock on crypto/blockchain; I see its value both for Commonwealth and in general, but Commonwealth did this the right way. We worked through the SEC to make this a regulated product, cultivated a grassroots community, and shipped a beautiful application that was easy to use for its target audience. And much like a DAO would, we built community, created shared financial incentives, provided outsized access and benefits to our members, and truly felt like we won and lost as a unit. And we onboarded thousands of people, many of whom were investing in something that was entirely new to them.

I was not a horse racing fan at all before getting involved with Commonwealth. I couldn’t read a racing program. I didn’t know the difference between a filly, a colt, and a mare. I didn’t understand the role of pedigree. I wouldn’t call myself knowledgeable just yet, but Commonwealth’s platform and community allowed me to put real skin in the game at a low entry price, connected me to a community of other horse racing enthusiasts who were all in this together, and gave me the opportunity to experience the power of the sport in real life.

WagerWire, much like Commonwealth, is a community of sports-lovers who love to speculate and actively engage with a community of like-minded investors.

And much like Commonwealth, many people in the core community are not part of the ‘old guard’ — they are not traditional sports bettors. They are sports fans who are seeking a more accessible entry point to a world that is new and complicated for them. I believe that bringing media, marketplace, experience, and community under one roof is the future of how many of the next $1B+ consumer brands will grow. This more mature digital world has enabled brands to take consumers on the hero’s journey alongside the brand. This will become the norm rather than the exception, and brands like Commonwealth and WagerWire are blazing this trail for the future.

I am a Kentucky Derby Winner along with 400 of my friends.

I am so proud of all of them for adopting this in the face of doubt and uncertainty. And I am most proud of the Commonwealth team, who had the vision and wherewithal to do things differently and anticipate the future. This team will change horse racing forever — and already has. But this is only the beginning. Onto The Preakness. Let’s ride.

Photo: The owners of Mage basking in victory