Mentioned in this article
Companies:
BITKRAFT Esports Ventures, Corsair Components, Deutsche Telekom, Horizon Ventures, K5 Global, Logitech, Ltd.), Makers Fund, ReKTGlobal, Scuf Gaming, Trust Esport, Valor Equity Partners, World Gaming Network
As the year 2019 drew to a close, we took a look back at the esports industry’s investments in December. For the months of December, The Esports Observer logged 14 esports investments.
Several esports organizations raised funds to expand in the new year, including a $10M USD investment for G2 Esports secured from Alibaba co-founder Joseph Tsai who, as recently as two months ago, acquired the NBA’s Brooklyn Nets and is invested in further sports organizations.
Furthermore, a number of software developers including Genvid Technologies, Game.tv, and PatronGG raised additional funds to scale their development efforts further.
Following two months that saw more than $200M in disclosed investments, The Esports Observer tracked $82.71M in disclosed investments in the esports industry. Financial terms were not disclosed for all deals highlighted in this article.
Destination New York
Esports organization G2 Esports raised a $10M investment round from Joseph Tsai, a Taiwan-born Canadian billionaire businessman who co-founded Alibaba Group and serves as its executive vice-chairman, via his sports investment vehicle J Tsai Sports.
In August, Tsai became the owner of the Brooklyn Nets NBA franchise. Initially, he bought 49% of the franchise for $1B in 2017 and acquired the remaining 51% for $1.35B in September, making it the highest price paid for a U.S. sports franchise at $2.35B.
In 2019, the esports organization raised two investment rounds totaling $27.3M. Most of the investors participating are New York-based, where G2 Esports plans to open an office in early 2020.
“SK Telekom”
German esports organization SK Gaming added the German telecommunications company Deutsche Telekom as a new investor. Following this investment, SK Gaming has four shareholders of 25% each: Deutsche Telekom; Alexander T. Müller, CEO and founder of SK Gaming; 1. FC Köln, a German Bundesliga soccer club; and Mercedes-Benz, a German automobile maker.
In January 2019, previous SK Gaming majority shareholder ESforce Holding announced that it agreed to sell its 67% stake. In the subsequent transaction, Mercedes Benz and 1. FC Köln each acquired a 25% stake in the organization. SK Gaming CEO Alexander Müller told The Esports Observer that his organization was negotiating with all three outside investors before the January transaction and made the joint decision to implement a two-step investment process as Deutsche Telekom needed more time.
DragonX Acquisition by New Korean Esports Fund
Korean private equity firm ATU Partners launched a $17M esports private equity fund called ATU Esports Growth Fund. The fund’s limited partners include corporations such as Kakao Games and The E&M, as well as institutional investors Woori Technology Investment and SB Partners.
Additionally, the fund made its acquisition of Korean esports organization DragonX (formerly Kingzone Dragon X) and investment in California-based talent agency AZYT public. The fund plans to expand the DragonX brand into China and the U.S. by bringing Korean talent into those regions through the establishment of regional teams, especially in games that don’t have a good competitive infrastructure in Korea, such as Counter-Strike: Global Offensive and Fortnite.
More Teams Raising Funds
ReKTGlobal, parent company of League of Legends competitor Rogue and Overwatch League’s London Royal Ravens, added 22-year-old American professional tennis player Taylor Fritz to its portfolio of athlete and celebrity investors. Fritz is the third traditional sports professional to join the ReKTGlobal investor group over the past six months. The company previously added Washington Redskins’ Landon Collins and Utah Jazz’s Rudy Gobert as investors.
Andbox added Michael B. Jordan, an actor known for his roles in “Black Panther” and “Creed,” as an investor. The company, which is owned by New York Mets owner Sterling.VC, operates the New York franchises for the Overwatch League and Call of Duty League – Excelsior and Subliners, respectively.
Capital for Esports Software
Esports tournament platform developer Game.tv raised a $25M investment round led by Intel Capital. The company plans to use the investment proceeds to grow its communities and scale the development of its core product, Tourney. Game.tv is run by CEO Rosen Sharma, who has also served as president and CEO for BlueStacks since 2011 and raised capital from Intel Capital before.
Esports tournament platform developer Mogul received binding commitments to raise a $3.97M AUD ($2.71M) investment led by CPS Capital via a share placement. The Australian Stock Exchange-listed company will issue 397M ordinary shares at $0.01 AUD per share to investors. Mogul will use the funds raised to work on the monetization of its tournament platform through 2020 and continue its development.
PatronGG raised a $1M Seed Financing Round led by BITKRAFT Esports Ventures. Trust Esport, a French esports technology fund, participated in the round. Proceeds of the investment will be used to build out PatronGG’s engagement platform, Kokyo.gg, by expanding into new games, broadening match data, growing the team, and securing team partnerships. In 2017, PatronGG first received a Seed investment led by BITKRAFT Esports Ventures to become part of the BITKRAFT Seed Fund.
Genvid Technologies secured a $27M Series B investment led by the merchant bank Galaxy Digital’s interactive content and technology space division, Galaxy Interactive. Other investors participating in the financing round include existing investors March Capital Partners, OCA Ventures, Makers Fund, and Horizon Ventures; as well as new investors Valor Equity Partners and K5 Global. The proceeds of the investment will be used to further accelerate the company’s software development kit (SDK).
More Investments
Gaming peripherals and PC components manufacturer CORSAIR agreed to acquire custom controller manufacturer SCUF Gaming and its patent portfolio. The transaction is expected to complete by the end of December 2019. A rating by Moody’s Investor Service, published on Dec. 3, revealed that CORSAIR planned to raise a $115M add-on, new equity from the sponsor (EagleTree Capital), and rollover equity to fund an acquisition of a console peripheral company, repay $36M outstanding on a revolver, and pay related fees and expenses with the proceeds.
Esports tournament management service CHALLONGE! was recently acquired by Swiss peripherals manufacturer Logitech. CHALLONGE! was previously owned by streaming software XSplit developer SplitmediaLabs, which acquired the company in July 2016.
Malaysian gaming community startup MegPlay raised a six-figure Seed funding from TBV Capital and angel investors. Founded in early 2019 by Constance Lim, MEGPlay started as a community platform that rewarded gamers for participating in esports/gaming-related activities sponsored by brands.
U.K.-based cinema chain Cineworld Group signed an agreement to acquire Canada-based cinema chain Cineplex in a $2.8B CAD ($2.1B) friendly takeover deal. In an attempt to diversify its business and counteract declining attendance, Cineplex created an amusement and leisure segment that includes a focus on esports. The company owns the World Gaming Network, the Collegiate Starleague, and the Canadian Championship Series.
