Artist Capital Management, a growth-oriented investment management firm, has raised USD100 million for its first fund, the Artist Esports Edge Fund. The Edge Fund seeks to provide institutional investors with concentrated exposure to leading esports companies.
Artist Capital Management takes a theme-driven approach to investment research. The firm believes esports – or professional, competitive, online gaming – is a groundbreaking secular growth theme. First, the audience for esports is large (380 million unique viewers in 2018), global, demographically advantaged (79% of viewers are under age 35) and growing. Second, Artist Capital Management believes that esports revenue – at USD900 million in 2018 – has significant potential to expand in comparison to traditional sports leagues, with the NFL alone generating over USD16 billion of revenue in 2018. Third, the firm views the formation of franchised esports leagues as a key inflection point for the industry. 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.
Artist Capital Management constructed the Edge Fund to provide institutional investors with pure-play exposure to the esports investment theme. The fund takes concentrated positions in leading, private companies that it believes are well positioned to benefit from industry tailwinds.
“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 capitalisation,” says Josh Dienstag, Artist Capital Management’s Chief Investment Officer. “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 organisation, Washington Esports Ventures, the owner of the Washington Justice team in the Overwatch League, and leading chatting and viewing apps in the ecosystem.
Matthew Lindholm, Managing Director at Houston-based CAZ Investments, a principal supporter of the Edge Fund, says: “Our investors continue to prioritise 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.”
With a ten-year duration of capital, the Edge Fund partners with esports companies for the long term. The fund also has a flexible mandate and can invest across stages and in both primary and secondary securities. In July of 2019, the Edge Fund led 100 Thieves’ USD35 million Series B, and Josh Dienstag joined 100 Thieves’ board of directors.
“Artist Capital Management has been an excellent partner: they understand our industry, appreciate our differentiation and support our vision. The esports industry is fundamentally changing entertainment and brand affinity and we’re really happy to be working with a firm that recognises these trends,” says John Robinson, President & COO of 100 Thieves.
In addition to the Edge Fund, Artist Capital Management also raised USD35 million 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.
“Artist Capital Management is the premier institutional investor in esports. They know the industry better than anyone else and are deeply engaged to use that expertise for the benefit of their portfolio companies. They have been a terrific partner for us since the first day that we met them,” says Mark Ein, Founder & CEO of Washington Esports Ventures.