Esports organization Fnatic raises $19 million for big expansion

[May 01, 2019]   By Hilary Russ

NEW YORK (Reuters) - Fnatic, the London-based global esports team owner, has raised $19 million in new funding and restructured its leadership as it plans a major expansion, the company said on Wednesday.

The company plans to further expand in Asia and North America and grow from a headcount of 150 people now to 1,000 in the next five years, founder Sam Mathews told Reuters.

It will use the investments to strengthen its teams with new nutrition and psychology programs, and physical training coaches for players - lessons Mathews said he took from the British cycling team.

It also plans to launch a new line of audio equipment, particularly headsets.

Esports - professional video game competitions that are watched by throngs of fans live and online - have been around for over a decade but have seen audiences and sponsorships grow significantly in the last couple of years.

It has also attracted big brands looking to advertise to young fans and sponsor teams and stars, including Walt Disney Co, Hershey Co and Toyota Motor Corp.

Global esports revenue will hit $1.1 billion in 2019, up 27 percent since last year amid an increase in advertising, sponsorship and media rights to competitive video gaming, according to the gaming analytics firm Newzoo.

Esports will be one of "the most valuable sports in the next 10 years," Mathews said.

Fnatic, one of the oldest and largest teams in global esports, has won major titles in several games, including League of Legends and Counter-Strike. It currently fields teams in 10 different games and also sells its own line of gear and clothing.

Mathews started Fnatic in 2004 with $40,000 in family funds and help from his mother, Anne.

Esports - ESL One - Dota 2 Major - Arena Birmingham, Birmingham, Britain - May 27, 2018 Fnatic in action during their 3rd Place Playoff match. Reuters/Ed Sykes/File Photo

The company previously raised about $7.5 million in financing, including from Raptor Group Holdings, founded by investment manager Jim Pallotta, co-owner of the Boston Celtics professional basketball team.

In 2015, Fnatic acquired the gaming equipment maker FUNC in order to produce its own gear, including keyboards and mice, which are now sold in over 400 Best Buy stores in the United States.

The new investment round was led by tech entrepreneur Lev Leviev of LVL1 Group, who also joins the board, Fnatic said in a statement.

The investment round also includes British venture capital firm Beringea, Hong Kong private equity firm BlackPine, London-based investment firm Unbound and venture capitalist Joi Ito, who is also director of the MIT Media Lab.

Under the new leadership structure, Mathews will be chief executive. Nick Fry, former CEO of the Mercedes AMG Formula One motor racing team, returns to Fnatic as chairman, while Glen Calvert, founder of advertising firm Affectv, was appointed chief operating officer.

(This story corrects paragraph 13 to show tech investor Lev Leviev is the lead investor, not the Israeli diamond mogul of the same name)

(Reporting by Hilary Russ; Editing by Bill Berkrot and Jon Boyle)

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