The most active esports investors

Viktoria Oushatova
Jan 20 · 7 min read

VC funds are the most active esports investors

Number of esports investors has grown exponentially over the years

Based on data from various databases (Tracxn, Dealroom and others), we estimate that currently there are about 400 esports institutional investors. We define esports investors as angels, incubators, venture funds, corporate companies and private equity funds that have done at least one investment in an esports company. In terms of the $ value invested in the esports market, venture capital funds are by far the most active investors (56% of total), followed by family offices (17%), strategic/corporate investors (15%) and private equity funds (12%) (Deloitte, 2018).

Majority of the institutional investors (c90%) have invested in only 1–2 gaming companies. Below we provide a list with the top 10 active esports investors based on the amount of capital invested and number of investing rounds (Tracxn, 2020). Most of them are venture capital funds with a few exceptions such as Tencent (strategic/corporate investor) and Raine Group (PE fund). Majority of the most active esports investors are based in the US.

Source: Tracxn

Esports-dedicated venture funds remain a small portion of total investors

Out of the total esports investors, venture capital funds are the most active investors. Yet, there are less than 10 esports dedicated venture capital funds worldwide. The most active ones are BITKRAFT, Play Ventures, Makers Fund, London Venture Partner, Konvoy Ventures, 1 UP Ventures and Dune Ventures. Most of the esports-dedicated funds have been founded in the past 10 years as the esports market matured from a niche to a mainstream sector.

Source: Rocket Capital

BITKRAFT (2015, US) — BITKRAFT is investing in Seed and Series A stage companies. Currently the fund has 42 active investments and 2 exits (Askott Entertainment and The Esports Observer). Some notable investments include VENN, Epic Games, Carbonated, Anzu and others. The portfolio companies are geographically diverse, with a slight focus on US market. The fund does not specialize in a specific esports sub-sector but rather has very diverse investments from game developers (Epic Games, Manticore Games) to broadcasters (VENN), in-game advertising (Anzu), audience monetization (FanAI) and betting (Roundhill Investments).

Play Ventures (2018, Singapore) — Play Ventures is investing in Seed, Series A and Series B stage companies. Although just recently founded, the fund has been very active with investing in c10 companies per year. Currently the fund has invested in about 23 companies as of its Fund I and in addition had made about 17 angel investments, 6 of which have been successfully exited. Some notable investments include Skan, Redhill Games and Reworks. The portfolio companies are geographically diverse, with a slight focus on Finland and UK markets. The fund is mainly focused on investing in game developers, but its portfolio also includes other gaming sub-sectors such as game development tools (Mod.io), programmatic advertising (Dataset) and storytelling application (Unrd).

Makers Fund (2017, US) — Makers Fund is investing in Seed, Series A, Series B and Series C stage companies. The fund has been very active with 34 active investments and 2 exits. Some notable investments include Bossa Studios (game developer), Parsec (cloud gaming) and Klang (game publisher). The portfolio companies are geographically diverse across North America (16), Europe (13), Asia (6) and Australia (1). The fund is focused on interactive entertainment with application in gaming. Portfolio companies are very diverse from game developers and platforms to cloud gaming, 3D animation and VR developers.

London Venture Partners (2010, UK) — London Venture Partners is investing in Seed, Series A and Series B stage companies. The fund has 23 active investments and one exit via an IPO (Unity). Some notable investments include Bossa Studios, Dojo Madness, Coda and Klang Games. The portfolio companies are based in US and Europe. The fund’s partners are former entrepreneurs with strong operating experience in gaming. Hence, the focus of the fund is mainly on game developers while there are also some exceptions such as cloud gaming (Polystream, Hadean), game coaching (Dojo Madness, Double Loop Games) and video analytics (Vintra).

Konvoy Ventures (2017, US) — Konvoy Ventures is investing in Seed and Series A stage companies. Although just recently founded, the fund has already invested in 17 companies and has one successful exit (Askott Entertainment). Some notable investments include Muxy.io, Bunch and Edgegap. Majority of the investments are based in North America with a few exceptions (Hiber and EQU8 in Sweden and Shapeshift Gaming and Game of Whales in Israel). The focus of the fund is on infrastructure technology, tools and platforms with the portfolio also including some exceptions such as music technology Blerp.

1 UP Ventures (2019, US) — 1 UP Ventures is investing in Seed and Series A stage companies. The fund has 17 active investments, some of which include Playable Worlds, Betadwarf and Frost Giant. The fund’s portfolio is entirely based in the US. The fund’s investment thesis is building a community of game developers and hence, it is mainly investing in such start-ups. There are a few portfolio companies that are exception from the game developer focus such as Double Loop Games (edtech) and Simwin Sports (media).

Dune Ventures (2020, US) — Dune Ventures is investing in Pre-seed, Seed, Series A and Series B stage companies. The fund was founded very recently and has only 6 active investments, some of which include Starform and Medal. The fund’s investment focus is on ventures that define next generation of entertainment.

Private equity investors show some esports activity

Private equity investors invested in esports for the first time in 2014. During the period 2014–17, their involvement remained low with only 9 investments in esports companies by PE funds (Deloitte, 2018). The number of deals picked up from 2018 onwards and so far, there are a total of c70 investments by PE funds (Tracxn, 2020). We have also seen the foundation of esports-dedicated PE funds such as ATU esports Growth Fund ($17m) and publicly trading funds such as New Waves Esports. However, esports-dedicated private and public funds are still rare and less common than VC esports only funds. Below we provide a list with the top 10 active esports PE investors based on the amount of capital invested and number of investing rounds (Tracxn, 2020). Majority of the PE funds active in esports are based in the US.

Tencent is the most active esports corporate investor

Strategic and corporate investors have been active esports investors before PE funds. For the past 10 years there have been about 100 investments by corporate and strategic investors in esports (Tracxn, 2020). By far, Tencent, a Chinese investment holding company, is the most active corporate investor and potential acquirer of esports ventures. Tencent has not only increased its activity in number of investments, but we have also observed an increase in the size of the investments (latest acquisition of Leyou Technologies for $1.5bn).

Other corporate investors mainly operate in two sectors — esports and entertainment and media. Some of the esports corporate investors worth mentioning are Esports Entertainment Group (EEG) which has done a few acquisitions in the past such as Lucky Dino ($30m), Helix and ggCircuit ($43m), Flip Sports and others; and Activision Blizzard, which acquired Major League Gaming for $46m in January 2016. We have also observed a lot of large ticket size acquisitions by media conglomerates such as Modern Time Group’s (MTG) acquisition of majority stake at ESL (via 74% acquisition of Turtle Entertainment), which it later combined with DreamHack, and its recent acquisition of Hutch Games for $375m. Another corporate investor worth mentioning is Sea Limited, a leading consumer internet company, via its digital entertainment arm, Garena, which acquired Phoenix Labs in the beginning of 2020.

Below we provide a list with the top 10 active esports corporate investors based on the amount of capital invested and number of investing rounds (Tracxn, 2020). 60% of the most active corporate investors are based in Australasia and 40% in the US.

Direct investments by family offices in esports are increasing

There is limited data on esports investments by family offices, but the little data available suggests that family offices have increase their esports portfolio allocation both via VC funds and direct investments. Venture Fund I by Bitkraft was backed by 3 family offices. According to Deloitte’s report, ‘The Rise of Esports Investments’, direct esports investments by family offices increased from 6 in 2017 to 15 in 2018 (Deloitte, 2018).

Expect more esports-only investors going forward

The ecosystem of esports investors is growing rapidly in size and activity. The only safe conclusion one can make is that investment activity has increased across all investor types and we expect to see more esports-focused investors going forward. We at Rocket Capital are extremely excited about the esports space and always interested in learning more about it. If you are an esports founder, investor, gaming enthusiast or simply share our passion about the space, feel free to reach out at akarsh@rocket.capital and viktoria@rocket.capital.

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