Axiomatic Gaming, the parent eSports organization of Team Liquid, has raised $35 million in funding, an example of big investment money pouring into the industry.
The funding round, which cherishes Team Liquid at $415 million, was conducted by Ares Management. This investment group also holds minority stakes in conventional sports teams like Atlético de Madrid and McLaren Racing and provided a senior secured credit line to the San Diego Padres.
Last June, the company reported it had committed more than $1 billion for sports, media, and entertainment investments.
The investment is Ares’ first in eSports. It tracks other deals in the space, including a $35 million round for Misfits Gaming Group, a $60 million round for 100 Thieves, and a $12 million round for Ampverse. In addition, ReKTGlobal, owner of eSports teams Rogue and the London Royal Ravens, was purchased by a relatively unknown metaverse company, Infinite Reality, for $470 million in stock.
“We spent a lot of periods scoping out the eSports industry, unsure of whether we would invest or not,” says Kort Schnabel, partner and co-head of U.S. direct lending at Ares. It was lured by more than Team Liquid’s trial record of success in competitions since its founding as a Starcraft brood in 2000. “When we came across the Axiomatic option, it presented things we did not see in any other eSports opportunity we evaluated.”
Other investors in the round contain Revolution Growth, a Washington, D.C.-based venture capital fund comprehended in the media and entertainment verticals, and Hiro Capital, specializing in gaming and eSports investments.
Hungate states that the organization will be employing its new funds to reflect on potential acquisitions that could bring the team into new verticals and expand its fan base internationally. The team’s fastest-growing market is Brazil. It already supports Valorant and Rainbow Six squads and is about to break ground on a unique training facility; it is third after opening spaces in Los Angeles and the Netherlands.
The company now holds nine different revenue streams. In addition, 2021 saw an increase of 50% in top-line revenue, which envisions “accelerating further” this year. The changes are elements of a directional change for the industry, in which organizations are glancing to diversify their businesses away from exactly competitive play and the sponsorships it draws.
Axiomatic was founded by Peter Guber, part of the ownership groups behind the Golden State Warriors, the Los Angeles Dodgers, and LAFC, and Ted Leonsis, who owns the Washington Wizards, Capitals, and Mystics through Monumental Sports & Entertainment. Axiomatic also counts among its investors Michael Jordan, Magic Johnson, and motivational speaker Tony Robbins. In addition, it acquired a controlling interest in Team Liquid in 2016.
The group hopes to reproduce the loyalty seen by major sports clubs such as the English soccer team Manchester United, despite a shortage of hyper-local, multi-generational roots in any one location. Gamers also tend to attach themselves to an individual game title or player rather than being a fan of any one organization across all esports. As a result, axiomatic believes Team Liquid can produce plenty of value around its teams and fans without redefining itself through the metaverse or non-gaming creations, as other eSports organizations have done.
“We’re a competitive eSports team; we’re not a lifestyle brand,” states Hungate. “Whereas other eSports teams set themselves apart as exclusive clubs that you have to be cool to be a member of, we’re much more about inclusivity.”