Team Liquid cheers on its «Dota 2» team at ESL Hamburg in 2019.
Axiomatic Gaming, the parent company behind esports organization Team Liquid, has raised $35 million in funding, the latest example of big investment money flowing into the industry.
The funding round, which values Team Liquid at $415 million, was led by Ares Management, an investment group that also owns minority stakes in traditional 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 announced it had committed more than $1 billion for sports, media and entertainment investments.
The investment is Ares’ first in esports and follows other deals in the space over the past seven months, including a $60 million round for 100 Thieves, a $35 million round for Misfits Gaming Group and a $12 million round for Ampverse. Last month, 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 time scoping out the esports industry, unsure of whether we were going to make an investment or not,” says Kort Schnabel, partner and co-head of U.S. direct lending at Ares, who was lured by more than Team Liquid’s track record of success in competitions since its founding as a Starcraft clan in 2000. “When we came across the Axiomatic opportunity, it presented things we did not see in any other esports opportunity that we evaluated.”
Other investors in the round include Revolution Growth, a Washington, D.C.-based venture capital fund known in the media and entertainment verticals, and Hiro Capital, which specializes in gaming and esports investments.
The organization will be using its new funds to look at potential acquisitions that could take the team into new verticals, Hungate says, and to grow its fan base internationally. The team’s fastest-growing market is Brazil, where it already funds Valorant and Rainbow Six squads and is about to break ground on a new training facility, its third after opening spaces Los Angeles and the Netherlands.
According to Axiomatic CEO Mark Vela, the company now has nine different revenue streams and in 2021 saw an increase by 50% in top-line revenue, which he expects to “accelerate further” this year. The changes are part of a directional shift for the industry, in which organizations are looking to diversify their businesses away from strictly competitive play and the sponsorships it attracts.
Axiomatic was founded by Peter Guber, who is part of the ownership teams 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. It acquired a controlling interest in Team Liquid in 2016.
The group is hoping to reproduce the loyalty seen by major sports clubs such as English soccer team Manchester United, despite a lack of hyper-local, multi-generational roots in any one location. Gamers also have a tendency to attach themselves to an individual game title or player rather than being a fan of any one organization across all esports. Still, Axiomatic believes Team Liquid can produce plenty of value around its teams and fans, without needing to redefine itself through the metaverse or non-gaming products, as other esports organizations have done.
“We’re a competitive esports team; we’re not a lifestyle brand,” says Hungate. “Whereas other esports teams set themselves apart as being exclusive clubs that you have to be really cool to be a member of, we’re much more about inclusivity.”
