technology

Esports Fund Raises $38 Million From Evolution Media, Cardinals

  • Investment fund ends a big cash round for the industry.
  • Vision Esports becomes largest shareholder in its properties.

Vision Esports, an investment fund focused exclusively on professional video gaming, has finished a $38 million funding round led by Evolution Media, the firm founded by Creative Artists Agency and TPG Capital.

It’s one of the bigger efforts to gather money in the fast-growing esports industry. Other new Vision Esports investors include baseball’s St. Louis Cardinals, Giants wide receiver Odell Beckham Jr., and NBA All-Star Kevin Durant. They join the New York Yankees, whose investment was announced last year.

With the cash influx, Vision Esports becomes the largest shareholder in its three properties: Echo Fox, the esports team founded by former NBA player Rick Fox; Twin Galaxies, a stats and ranking company; and Vision Entertainment, which produces esports video content.
The firm’s long-term goal is to have a business interest in all parts of the esports industry, said Managing General Partner Stratton Sclavos, a former San Jose Sharks co-owner.

“I saw this with the Sharks—the relationship between the leagues, the teams, the broadcast rights, the sponsorships and advertisers, and the media rights licensing,” Sclavos said. “We believe esports is pro sports, and is going to do that exact same thing. So we want to touch all those economic drivers.”

Take, for example, the upcoming pro-league built around H1Z1, a battle-royal video game. Twin Galaxies is operating the league, Echo Fox is one of its 15 teams, and Vision Entertainment is producing the live events for a digital streaming partner. Each new investor will gain an equity stake in all three properties, Sclavos said. He declined to comment on the financial details of the fund raising, but added that in total, the three entities are now worth “well north of $100 million.”

For a few years, Esports has been the investment du jour for traditional sports owners and tech ventures. The influx of money has drastically changed the world of professional video gaming. This year, both Activision Blizzard Inc. and Riot Games Inc., two of the world’s biggest publishers, launched franchised leagues modeled on the NBA or NFL. Esports was a $696 million industry last year and is on pace to be a $1.5 billion behemoth by 2020, according to recent research from Morgan Stanley.

There’s no reliable database on esports franchise valuations, but last summer, when many of the biggest teams were raising money for the new Activision/Riot endeavors, they generally took on investments of $15 million to $25 million. In August, Team EnVyUs raised $35 million from Hersh Family Investments, according to ESPN.

Vision Esports, formed last year by Vision Venture Partners, has a different kind of deal, however, one spread between all three entities. Both Sclavos and Fox are founding partners of Vision Venture Partners.

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