Esports Organizations: Raising And Spending Money

How does esports organizations raise money, and what do they spend it on? This research article covers Venture Capital fundraising, and the current difficulties of the industry.

After the hype around esports following the 2020 pandemic, the esports industry has faced financial challenges since 2023 caused by a slowdown in investments and sponsorship deals. As a consequence, large esports clubs face serious financial problems and even bankruptcy.

At the same time, esports is a young and developing field where teams and organizations need investments to grow and become or stay competitive. For instance, teams have to attract star players through high salaries in order to win championships while also paying tens of millions for a spot in a professional league (e.g., $20 million for a spot in the League of Legends EU region—the LEC).

In such an environment, raising money is crucial. On way of doing so is fundraising via Venture Capital (VC). Typically, VC firms "provide capital to firms might otherwise have difficulty attracting financing" [1] especially in their early stages. In addition, they often provide support through mentorship (e.g., on how to grow a business) and access to experts. In exchange, they get a stake in the company and even access to the management and become members of the board of directors.

“[The] problem in a market economy that VCs attempt to solve (in those deals), is (thus) to connect entrepreneurs with good ideas (but no money) with investors who have money but are looking for good ideas” [1]

📈 Venture Capital in Esports

According to the study that interviewed seven individuals from professional esports teams, VC fundraising is one way of raising capital. Often, teams start by raising money from family and friends (which I think is a terrible idea), angel investors, seeding rounds, corporate rounds, and series A, B, and C.

In the current situation (investors shying away from esports), raising money is hard. One interviewee said:

“The reason is the esports fatigue. As the cycles go like this in esports, when you're down at the pit in the valley of the cycle, here it's very difficult to raise money. [...] People are tired of esports, they've lost money, teams have gone bankrupt, they've squandered away millions of dollars so they have nothing to show for it. So that's a very difficult situation to go into.” [1]

Esports organizations appear to raise money via VC to spend it on: a) hiring new staff members or support short-term expenditures like player salaries, or b) fostering the development of projects such as an expansion to a new market or game. Thus, VC fundraising is a situational type of resource to leverage.

"Moreover, they use fundraising to build their brand image and engage fans as additional legitimacy signals. Additionally, professional esports teams which have already enjoyed some initial business successes can leverage them to attract funding aimed to further develop their activities internationally." [1]

The interviewees also told the researchers that fundraising isn't economically viable long-term. If organizations don't switch from a growth (spending money) mindset to a making money mindset, no company will ever survive and attract new investors.

“It's just not sustainable right now [...] I think any type of initial fundraising need to bootstrap a little bit, get players signed, and build a brand. [...] And then you need to think very quickly about pivoting that (source of money) into what products or what technology or what type of related business can you build that will sustain the esports team. [...] So yeah, the dollars raised need to be quickly allocated to something that's going to build your brand.” [1]

Thanks for reading, and I hope you all have a great week. Cheers,

Christian 🙂

References

[1] Lefebvre et al., 2025