How to Get Investors In Esports

Many startup esports teams, tournament-hosting services and communities are hoping to grow sheerly off of sweat equity (time and effort). Although this works well, it takes time and is a very low barrier of entry approach that bales in comparison to having real capital to work with.

With that, you likely wonder how to get capital for your organization. There a number of ways (I will list below), but a popular way is by getting investors.

How do you get investors in esports? To get investors you need to construct a thorough business plan, showcase the competency of your founding members and develop strong business connections.

In this article, we will go more into depth on how to get investors in esports, things you will need to do and at the end, I listed a few other ways to generate capital for your startup.

The Process of Getting Investors in Esports

If I were to simplify and outline this process, which I’m going to do for the sake of this article, I would look at the process as three steps. The steps of getting an investor in esports are:

  1. Determining a valuable product or service
  2. Building a thorough business strategy
  3. Networking with wealthy people or people with connections to wealth

This is the most simplistic way I can break it down for anyone really new to the world of investors and business.

The reason I’d focus on more of something along the lines of this instead of some angel investor route is that what you’ll see is that in esports, it’s difficult to really get investors for reasonable rates just considering how hit-or-miss the industry is.

Instead, I’d recommend you find a less classic investor to pump some capital into your business venture.

That said, if you are looking to create a digital tool, this article may be less applicable for you like a more traditional route would still work well for you. Nevertheless, this methodology would still work.

1. Determining a Valuable Product or Service

Look, when you see any investor, there are really 3 things they most care about. A) is your product or service actually good, B) is this product or service something that would take off in this marketplace and economy and C) are the founding members competent enough to have their product meet the standards they are proposing and able to communicate that well enough in the market place.

Well for this step, we are looking at both A and B of that equation. Before any investor can invest, they need to believe in your product/service. They actually have to like it and believe it to take off.

What will make it take off? If the market would value your product/service enough that they’d pay for it.

You heard me right, the evaluation is not how much enjoyment you get from running what you run, nor if what you are doing is friendly.

You may enjoy running an esports team or an esports community, but unless it can make money, you aren’t going to get investors.

This is where a unique selling proposition, or USP, comes in. What makes your venture unique? How will you stand out from the hundreds of other grassroots teams and communities?

Why will your tournament organizing business matter in the general landscape?

These are the types of questions you have to be able to answer. It logically needs to be unique and separate enough for an investor to see any opportunity in it.

They don’t care if it was always your dream to run an esports team, but what they do care about is if your esports team players garner 10,000 CC on streams, have strong personalities and are participating in tier 1 tournaments.

Why? Because that’s something you can work around and that’s a great starting point to make money.

A good way to tell if you seriously have a USP that seems valuable to the marketplace is by surveying your prospective consumers and even just asking friends who fall under your demographic.

Surveys are the most powerful and they can even be something on a random forum or sites like Reddit. The traction you get behind that survey is left to your own ability to make a compelling case for people to fill it out, but if there’s a will, there’s a way.

Just having the right starting point won’t be enough, nor would be a good USP, but you will need to know what you will do with those.

That leads us to the 2nd point.

2. Building a Thorough Business Strategy

Once you have a product or service that has a decent USP and at least you believe in is a great starting point.

But what’s more important and a lot more work, anyone can easily get step 1 done after long periods of thinking. There is a saying, “everyone has a million-dollar idea, but not everyone is willing to executing on it”.

The main reason why is mostly due to fear, but the fear isn’t of the action itself, is the overwhelmingness of what actions need to be taken and how can one overcome the chance of failure.

If you are reading this article, you are probably beyond the point of at least coming up with an idea and some form of an understanding of your next steps, but do you really have some good idea of what you will be doing onwards.

A good book recommendation (and as an entrepreneur, you need to read) on the subject is Your Next Five Moves by Patrick Bet-David (US link) (CAN link).

*Note, the hyperlinks above are Amazon affiliate links that generate my company a bit of revenue per sale. Purchases using those links are very appreciated as it allows me to create more transparent content like this that you wouldn’t find other business professionals providing elsewhere!

I can’t go in-depth on this specific step in this article, because it would end up becoming my longest article to date, but I will give you a few heads up in terms of what you’d want to do.

One thing without a doubt is you will want to document market evaluations and statistical data as much as possible.

Speaking of documenting, it’ll be very appropriate to fill out a business startup plan. There are many templates or formats online to use that are business standards.

For example, in Canada, the Canadian government (or some institutions linked closely to the government) has provided the optimal document for startup companies to use when approaching investors.

An investor needs numbers and needs to be able to fully follow your train of thought on your business moves in the coming years (3-5 years typically). This is also a clear show of your competency and experience in business as a whole.

You will want to understand at least what your next 5 years look like from sales projections to cornerstone business decisions.

There are a lot of good resources on the topic, so this article won’t be one of them.

3. Networking with Wealthy People or People With Connections to Wealth

The last step is network, network, network. Your network is your net worth (as the adage goes). You need to now get in contact with people with disposable income. It doesn’t have to be crazy wealthy people, just people with at least 50k to 500k of disposable capital at their disposal (depending on how you are looking for, but I’d assume most of you aren’t looking for really anything over 100k).

That opens up a massive amount of options in terms of who you could possibly pitch your idea to. You just need to find them and have the ability to communicate your idea with them.

This is where an elevator pitch is a good idea to construct. Practice it and be able to deploy it at a moment’s notice (kind of like practicing your own background synopsis).

Attend networking events, go to high-end business conferences or put yourself in situations where you have to talk with well-off individuals for other day-to-day activities.

In the book The Book of Esports, the author runs us through the story of how Rogue Esports was founded as an esports team.

When they started off, they were looking for investors as well. They knew they needed business connections to do that.

So, they started a consulting company to build relationships with wealthy people. Obviously, it wasn’t their sole purpose of running the company was strictly to get into esports, but they continually would tell their clients about the business venture in hopes of getting someone’s interest in investing.

In the end of that, they got a few offers of good money to startup their organization. The org is now worth several million.

Step 2 is the most work but step 3 will be the hardest to accomplish. Keep refining steps 1 and 2 as you continue to attempt step 3, don’t get discouraged from your first dozen of ‘no’s or so.

Remember that these people are very careful with their wealth, since it’s a large amount that they worked hard to obtain, most people would avoid investing in a high-risk investment like esports.

That doesn’t mean you couldn’t succeed or your idea is bad. That said, don’t be delusional if you get 1000 investors telling you this is a terrible idea.

Improve Chances of Landing a Sponsor

Those steps were just a quick overview of the general process. This article was meant as a starting point to at least help you know what steps to start with and continue to research on each specific aspect yourself.

That said, there are a few things I can easily throw your way that will significantly help you on your journey. I won’t dwell too much on those, but I wanted to throw them in here anyway.

Having a Successful Track Record or a Business Partner Who Does

History repeats itself. If you are known or have prior business ventures that have succeeded in the past and you got a good buy-out, it significantly increases your chances of repeating that (at least from the POV of an investor).

That isn’t to say by having multiple failed business experiences makes you more likely to fail than someone who never ran a business, obviously because you gain a lot of experience through those ventures.

That said, when investors are determining who to invest in, they are partly investing in the project, but they are more so investing in you since you will make the idea or break it.

If you don’t have a successful track record (as almost everyone on this article shouldn’t), you may want to look for a business partner that may have one.

There are caveats to working with a business partner, but for the sake of investors, the more the merrier. And if with them they bring experience from other successful ventures, that’s a massive plus.

Have a Strong Founding Team

I’m repeating myself here, but the investor is picking you as much as your idea.

Have a competent founding team that knows what they are doing. Having top people in an industry or at least a portfolio of good experience from the past is a massive asset to bring to the table.

Here are some of the earlier members of my first failed business venture; Soliac Association. Most of the people in the photo were volunteers for our hackathon event, but regardless your team is important.

Developing Sales Skills

These are massive in everything business. From everything to selling products to getting investors, sales skills are the king of business.

With that, having strong sales skills will help you not only for investors but also ensuring your business success.

Whenever I look to build a skill in something, books are always my go-to location.

Here are my top book recommendations for sales that are MUST READS, especially for beginners:

*Note, the hyperlinks above are Amazon affiliate links that generate my company a bit of revenue per sale. Purchases using those links are very appreciated as it allows me to create more transparent content like this that you wouldn’t find other business professionals providing elsewhere!

Other Means to Build Business Capital

Lastly, don’t think that investors are the only way to get money for your business. There are other means of which you can gather capital.

Below are the main few that you could opt into. You may even realize you like one of the other options more than investing.

Crowdfunding

Crowdfunding is one of my favorites. It allows the market to fund ideas that the market likes, not only ensuring success but reducing the overall risk for any individual person in the process.

It’s basically charity with small perks, but I’d honestly support a crowdfunder if it was a product or service I wanted to see in the world. Throw in a 6-month free perk onto it and count me in.

There are a lot of good sites to see how to crowdfund and you have to be very methodical about how you set up your crowdfunding campaign.

Most crowdfunding sites end up not letting you take out any money unless you hit your target. That means perfunctory efforts won’t cut it and it’s a win-win for all.

I’ve run a few crowdfunders in the past to no avail (but to be fair to me, I was much younger back then), including being hired to actually build out a crowdfunder for a startup company.

Above is a legit crowdfunding page I created on gofundme.com to run a Greater Toronto Area wide esports tournament. We ended up running the event with like $10 for the prize pool.

Acquiring Grants

Governments and nonprofits sometimes throw grants at companies in hopes that the company grows to create more jobs and boost the economy.

For the most part, I mainly seen bricks and mortar grants but you should definitely check what you can make off these when you are starting out.

The nice thing about grants is that it’s just free money.

Acquiring Business Loans

Loans are different where you have to pay them back with interest. I highly recommend that if you are considering loans that you register your business as an LLC, LLP or Corp before even considering it.

Business is such a risky thing to work on, if you are running a sole proprietorship and you take one out, you could end up having to file for bankruptcy (sorry fellow Canadians, you can’t file an LLC for some reason, the only limited-liability options are LLP and Corp).

Not to mention that esports has a lot of luck-based elements such as the success of your players in a tournament or how free publicity is directed or repelled from your business.

Not legal advice but more so common sense (not to mention banks are less willing to provide a loan to a sole proprietor structured business anyways).

Saving Up Prior to Launch

Another common sense one but one people to quickly discard. If you have to invest sweat equity and take about 5 years before making a profit versus working a normal job for about a year or 2 and break even after 2 years and accelerate significantly faster after that point with starting capital, why not just work a bit to save up before starting your business venture.

You know the saying, “it costs money to make money”.

Not to say that kind of comparison can always be made, but running without money makes business so difficult.

Why not consider saving up from a normal job for a few years before starting your company up.

I know many esports teams start off that way, including Lazarus Esports which started significantly (not completely to my knowledge) from investors.

Finding a Business Partner with Financial Reserves

Lastly is picking up not an investor but a business partner that has some money.

Depending on what you bring to the table, that may not be possible (as they’d like more shares of the company), but if you have some really strong talents and IP, you can still strike a deal with someone who can bring their money and connections along.

This is not my favorite option, I’m decently against business partners in general, but it is still an option and one to be aware of if you just lack connections overall.