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Just like in previous months, the esports ecosystem once again saw several esports organizations securing investments during October. To keep up with the rapid ongoing growth in the esports industry, teams have to continue looking for new funds to secure ever more expensive talent, geographical and competitive brand expansion, and acquiring slots in franchised leagues.
Once again, Tencent showed its intention of building a substantial and diversified portfolio of game developers by acquiring majority control of mobile developer Supercell. Furthermore, Nerd Street Gamers and Torque Esports added new funds towards building esports-specific facilities.
During the month of October, The Esports Observer tracked 16 esports industry investments combining for $283M USD ($53M more than last month) in disclosed investments. This marks the second-highest amount in 2019 after July’s $556.63M in disclosed investments. Financial terms were not disclosed for all deals highlighted in this article.
Tencent Takes Control of Developer Supercell
On Oct. 26, Tencent completed its acquisition of a majority interest in mobile developer Supercell by increasing its stake in Halti S.A., the Luxembourg consortium holding an 81.4% stake in the game developer.
The company filed a statement to the Hong Kong Stock Exchange, making public that Tencent acquired an additional 44,000 shares in the consortium via a $40M convertible bond, thus increasing its stake from 50% to 51.2%. The consortium was founded in June 2016 as a Luxembourg Société Anonyme solely to acquire Supercell. According to the filing, the consortium is now a subsidiary of Tencent.
German Media Company Becomes Sole Owner of Esports.com
German mass media company ProSiebenSat.1 Media announced the acquisition of news platform esports.com via its subsidiary 7Sports. Following the insolvency of its previous eSports GSA GmbH joint partner, eSports.com AG; 7Sports increased its stake in eSports GSA from 50% to 100%. While financial details of the transaction were not disclosed, 7Sports noted that the esports.com brand and domain are now wholly owned by it.
The joint venture between the ProSiebenSat1 subsidiary and eSports.com AG was first announced in December 2018. Following the acquisition, 7Sports disclosed plans to create its own esports leagues and tournaments in collaboration with strategic partners in the future.
Rogue Focuses on Esports Fan Engagement, Adds NBA Star Gobert
The esports business and League of Legends European Championship (LEC) contender Rogue and Call of Duty League franchise London Royal Ravens parent company ReKTGlobal acquired Fullcube, a relationship management platform. Earlier this year, ReKTGlobal and Fullcube collectively launched the Rogue Nation fan membership program. The companies plan to introduce similar fan solutions for esports teams globally following the business combination.
Additionally, the organization has added Utah Jazz center Rudy Gobert to its ownership group. Gobert is set to share his traditional sports world experience and help with strategic partnerships and integrations. He will also co-host live streams and create content with players from ReKTGlobal’s Rogue organization.
Talent and Money to Keep Teams Afloat
Longtime Team SoloMid (TSM) League of Legends player Søren “Bjergsen” Bjerg signed a new two-year deal with the organization, which includes an ownership stake in its League of Legends Championship Series (LCS) franchise team. For this to happen, the LCS is changing its ownership rules beginning with the 2020 season, allowing players to co-own teams that they play for (with league approval). However, only players who have played for at least three consecutive seasons with the same team will be eligible for equity in their respective organizations.
The esports organization Pittsburgh Knights announced that professional hockey player Evgeni Malkin has invested in the company. With this partnership, the company aims to exemplify its business model of taking the best practices from traditional sports and translating them into esports.
Victory Five (V5) parent company Shenzhen Weiwu Esports Technology raised over ¥100M ($14.12M) in a Series A funding round. The esports team was founded by Mario Ho Yau-kwan, who also serves as president of the Macao Esports Association and is the youngest son of Macau casino tycoon and billionaire Stanley Ho Hung-sun.
Making Tournaments Happen for Every Level of Competition
Competitive gaming platform nicecactus.gg (previously Esport-Management.com), closed a €5M ($5.5M) Series A financing round. The financing will be put towards building and refining the company’s product offering, attracting top talent in Europe and North America, and scaling the business. Additionally, the company launched the $1.1M Nicecactus Grassroots Esports Fund, which will help amateur and semi-pro players and teams take the next step into professional gaming.
Esports tournament software and management company Mainline raised a $6.8M Series A financing led by Work America Capital (a venture capital firm managing a $20M fund investing in Houston-based businesses), alongside investments from individual investors in professional sports and other strategic backers. The company plans to use the funds to enhance its esports tournament software technology platform; increase its marketing presence; hire development, marketing, and sales talent; and expand its event management customer base to new significant brands.
Vindex launched with initial funding of $60M to build a global esports infrastructure platform. In addition, the company acquired Next Generation Esports (NGE) and launched Esports Engine.
Torque Esports Corp. (formerly Millennial Esports Corp.) and UMG Media Ltd., entered into a binding letter of intent, whereby Torque will acquire UMG in an arm’s length transaction. The transaction is subject to the approval of UMG shareholders, Torque completing the acquisition of 51% of Allinsports, receipt of specific regulatory, court, and stock exchange approvals, and certain other closing conditions customary in transactions of this nature.
Esports Facilities on the Rise
Esports infrastructure company Nerd Street Gamers closed a $12M Series A investment led by publicly-traded discount retailer Five Below Inc. Other participants in the round were existing investors Comcast, SeventySix Capital, and angel investor George Miller. As part of the investment, Five Below and Nerd Street Gamers will build up to 70 or more 3,000 square foot esports spaces connected to select Five Below stores over the next several years, beginning with a multi-store pilot in 2020.
Torque Esports secured $2.8M in private construction funding to build out a 12,000-square-foot facility, which will include 30 Allinsports eRacer simulator setups for esports competition. It will also house a full-sized full-motion simulator that recreates the sensation of driving a real race car. The company looks to open the facility in 2020 in Miami’s Wynwood entertainment district, with plans to build additional international esports arenas thereafter. The Miami facility will be used to train both esports drivers and traditional racecar drivers.
Other Investments
Five Vectors, a music startup that works with up-and-coming artists and produces music tracks that are tailor-made for gaming audiences, closed a $1M seed round led by BITKRAFT Esports Ventures. Based in L.A. and Berlin, the company currently operates two brands: 2DEX, a gaming-focused music label brand; and Players Republik, a consumer-facing gaming brand creating apps and outlets for audio products.
Hiro Capital launched a €100M ($110M) venture capital (VC) fund to back innovators in the European Union (EU) and United Kingdom (UK) games, esports, and digital sports ecosystem.
According to Hiro Capital, it will use the funds to accelerate the growth of about 20 companies. The fund will generally invest at the post-seed stage, at Series A and B. As well as financial investments, Hiro Capital plans to mentor its portfolio companies to help them scale.
Easylive.io, a cloud-based service suite for producing, editing, and live streaming video content, raised $2.5M from French esports technology-focused venture fund, Trust Esport. According to the company, it plans to increase its workforce by almost 40% by the end of the year.
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Esports organizations in the likes of Team Liquid, 100 Thieves, Gen G. Game developers, including Riot Games and Blizzard. Non-endemic sponsors such as adidas, Anheuser-Busch InBev, and Jack in the Box and more. Sponsored by Lagardère Sports, and presented by Sports Business Journal / Daily, with support of The Esports Observer.
