The blossoming competitive professional video games market has tempted another investment house, with Artist Capital Management raising $100m for its debut growth fund targeting the sector.
Artist said it believes esports is a groundbreaking secular growth theme, with an estimated audience of 380 million in 2018.
It said the tight demographics – 79 per cent of viewers are under 35 – and rising revenues of the sector ($900m last year) mean esports has “significant potential to expand in comparison to traditional sports leagues”.
Franchised esports leagues, such as Activision’s Overwatch League or Riot Games’ League of Legends North American Championship Series, could hasten the flow of fan, sponsor, and broadcasting dollars into esports, it added.
Artist ‘s Edge Fund will take concentrated positions in companies it believes are well positioned to benefit from industry tailwinds.
Josh Dienstag, Artist’s CIO, said, “Similar to the evolution of other internet verticals, we expect that a small number of esports companies will eventually win the lion’s share of industry revenue and market capitalization.
“We hope to partner with the entrepreneurs who are building those winning platforms.”
The Edge Fund’s current investments include 100 Thieves, the Los Angeles-based lifestyle brand and esports organization, Washington Esports Ventures, the owner of the Washington Justice team in the Overwatch League, as well as chatting and viewing apps in the ecosystem.
Matthew Lindholm, managing director at CAZ Investments, a principal supporter of the Edge Fund, said, “Our investors continue to prioritize access to innovative products that provide thoughtful exposure to burgeoning investment themes.
“Artist Capital Management was an early mover in esports, and the Edge Fund provided an institutional solution for esports investing.”
Artist said that in addition to the Edge Fund it had also raised $35m of incremental capital from its limited partners in separate, co-investment vehicles.
Those funds were all deployed in 2019 to further support Edge Fund portfolio companies.
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