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September was a busy month in the esports industry as The Esports Observer logged 17 esports industry investments. Five teams raised additional funds to grow their businesses including a $30M USD Series A secured by U.S. organization Dignitas and the NFL’s San Francisco 49ers cornerback Richard Sherman backing Luminosity Gaming. The team also finalized a business merger and investment. Several esports tournament organizers added additional funds including the acquisitions of highschool focused PlayVS and collegiate esports organizer AVGL. Furthermore, Huya and ESL agreed to create a joined venture.
During the month of September, The Esports Observer tracked $230M 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.
Dignitas Raises $30M to Close Merger with Clutch Gaming
U.S.-based esports organization Dignitas raised a $30M Series A funding round to close its previously announced merger with Clutch Gaming and to provide expansion capital. The investment was led by Dignitas’ controlling shareholders Harris Blitzer Sports & Entertainment (HBSE) and Fertitta Entertainment.
Additionally, new institutional investors Susquehanna Private Equity Investments, Delaware North, and Loud Records founder and hip-hop pioneer Steven Rifkind took part in the financing. The organization’s ownership group owns several sports and entertainment assets including the NBA teams Houston Rockets and Philadelphia 76ers, among others.
Moreover, Dignitas has formed a new parent company called New Meta Entertainment (NME), a digital sports and entertainment company operating in three primary verticals: esports teams, content and marketing, and investments.
The company currently runs several professional esports squads competing under the Dignitas banner in games such as Counter-Strike: Global Offensive, Super Smash Bros., Rocket League, SMITE, and Clash Royale. Additionally, it operates Clutch Gaming’s League of Legends Championship Series (LCS) and Academy team, which will be officially rebranded to Dignitas in January 2020.
Michael Prindiville, who spearheaded Dignitas’ June 2019 merger with Clutch Gaming, has been named the CEO of NME. Most recently, Prindiville served as CEO of Dignitas, the esports organization acquired by HBSE in September 2016. The Esports Observer talked to him about Dignitas, global brand expansion, and synergies between sports and esports.
Huya Becomes ESL’s Partner in China Expansion
Swedish media firm Modern Times Group (MTG) entered into a binding term sheet with the Chinese livestreaming platform Huya to expand into the Chinese esports market. The strategic partnership will include a new joint venture company with MTG portfolio company ESL Gaming, of which Huya will acquire $30M worth of primary and secondary shares in ESL, at a pre-money enterprise value of $425M. As part of the deal, ESL will issue new shares at a value of $22M to increase capital to be used for further expansion.
Through the joint venture, ESL and Huya are looking to host and build local esports competitions in China, which will be integrated into ESL’s global esports tournament calendar.
This agreement marks ESL’s first new shareholder since MTG’s initial investment in the company in 2015. The news follows a recent announcement that ESL would host an Intel Extreme Masters tournament in Beijing-Haidian in November, and media partnerships throughout the year between Huya and western esports companies, including Team Liquid and ESL.
Industry Veterans Building Esports Network
A group of industry veterans including Mike Morhaime, co-founder of Blizzard Entertainment; Marc Merrill, co-founder of Riot Games; Kevin Lin, co-founder of Twitch; and Amy Morhaime, Blizzard’s former head of global esports, teamed up to invest in a new streaming network going by the name of VENN. Financial details of the investment were not disclosed.
Launching in 2020, VENN is a new post cable network designed to “unite a fragmented media marketplace” and is aimed at “core gaming, esports, and entertainment audiences,” per the announcement. VENN is planning live studios in New York and Los Angeles, maintaining a digital presence on streaming platforms, social networks, video on demand, and 24/7 linear content.
VENN announced that it closed a $17M seed funding round co-led by BITKRAFT Esports Ventures. In addition to the aforementioned investors, aXiomatic Gaming; BDMI; YuChiang Cheng, co-founder of World Golf Tour and president of Topgolf Media; Life Line Financial Group; and Reimagined Ventures participated in the financing.
VENN was founded by Emmy-award winning producer Ariel Horn and former Vivendi Games Global Director of New Media Ben Kusin. Horn served as global head of esports content and an executive producer for the League of Legends Championship Series (LCS) for six years before departing in January.
Strategic Investments Repositioning Teams
Southeast-Asian esports franchise Team Flash, the reigning Arena of Valor World Champion, secured a $1.5M seed investment led by Singapore-based family office Octava. Proceeds from the investment will primarily be used for international expansion and to secure Team Flash’s market leadership in Vietnam, according to a release. Other private investors before this fundraising round include regional sports marketing agency, Reddentes Sports.
Swedish esports organization, The Final Tribe, acquired all Godsent assets, rights, and accounts in exchange for newly emitted shares in the company given to key stakeholders in Godsent. According to the organization, two of its main competitive goals for 2020 are to build a Counter-Strike: Global Offensive team that can compete with the top organizations in the scene and qualify for Valve’s most important Dota 2 tournament, The International. The 2020 edition of the tournament will take place in Stockholm, Sweden.
Following a $25M subscription receipt financing in March, Luminosity Gaming parent company Enthusiast Gaming Holdings announced that it had completed its previously announced business transaction with J55 Capital Corp, Luminosity Gaming, and Aquilini GameCo. Furthermore, Enthusiast Gaming acquired a non-controlling stake in the OWL’s Vancouver Titans, which it manages, based on a long-term services agreement with the team’s owner.
Additionally, Luminosity Gaming made public that NFL player Richard Sherman has joined Luminosity Gaming as a shareholder and global brand ambassador. Sherman will appear at Luminosity Gaming activations in the year ahead and will help with player personnel decisions as the organization’s newly-named captain.
Unconfirmed reports claim Zieben Group president and real estate investor Lee Zieben is purchasing esports organization and the exaugural Call of Duty World League champion eUnited. According to those reports, Zieben is in the process of raising $50M to fund an esports-focused holding company.
Tournament Organizers Secure Liquidity to Scale
BITKRAFT Seed Fund portfolio company BoomTV has acquired collegiate esports organizer American Video Game League (AVGL) for an undisclosed amount. The AVGL is one of the largest producers of collegiate esports events, content, and community initiatives that have included over 1,200 colleges. Financial details of the transaction were not disclosed.
PlayVS, a software startup building a platform for competitive experiences focusing on high school esports, announced it raised a $50M Series C led by return investor, New Enterprise Associates, with participation from Battery Ventures, Dick Costolo and Adam Bain of 01 Advisors, Michael Zeisser, Sapphire Sport, Dennis Phelps of Institutional Venture Partners, and Michael Ovitz, co-founder of Create Artists Agency. This latest investment round brings the company’s total funding to $96M.
Global esports tournament platform XY Gaming raised a $2.5M seed funding round co-led by KB Partners and Varga Capital. KB Partners’ portfolio includes data analytics firm MVPIndex, as well as esports community and content platform Upcomer. The company says that it will use the new capital to enhance its advertising offering by developing a new branded tournament model and expanding its advertising vertical, to better enable direct brand engagement.
Indian esports platform SoStronk’s parent company Archetype Entertainment has raised an undisclosed amount of funding from Inflection Point Ventures—an early to mid-stage Indian venture fund. The company aims to utilize the funds for research and development, growing the team, marketing, and quality assurance.
Other Investments
LTN Global, a provider of broadcast-quality IP video transport solutions, has entered into an agreement to acquire Make.TV, developer of a cloud-based service that enables content creators to access, curate, and publish live videostreams to affiliates, social media, and over-the-top media service platforms. The company’s current esports partners include ESL, Mixer, Beyond The Summit, VG Bootcamp, FACEIT, and PGL.
Amazon-owned livestreaming platform Twitch acquired IGDB (Internet Games Database), a website aggregating relevant information about games. After the completion of this strategic acquisition, IGDB’s database will help Twitch improve its search and discovery feature by feeding into it.
California-based developer Manticore Games secured $30M funding in a Series B investment for its upcoming product, an online game creation platform. The financing was raised from returning investors from Manticore’s Series A in 2017, Benchmark, BITKRAFT Esports Ventures, Correlation Ventures, and SV Angel, in addition to new investors M Ventures, Arrive, Sapphire Sport, and Tuesday Capital.
Swiss gaming and PC peripheral manufacturer Logitech entered into an agreement and plan of merger with livestreaming software developer General Workings (dba Streamlabs). Logitech will pay approximately $89M in cash with an additional earnout of up to $29M based on Streamlabs’ net revenue subsequently to the merger.
