Why Drake backed 100 Thieves is worth the 35 Million Series B (100 Thieves Represented by Ryan & Jen)
It must be the question, I get the most when talking about #esports with VCs, major corporations, #television producers, and everyone interested in the space: Do these investments make sense? Are esports organizations worth a 35M Dollar Series B, like we just had with 100 Thieves. The answer is: Yes, when a) their branding is top-notch, b) their management understands the dynamics of the market and c) they have multi-layered income streams. #NadeShot has dominated #CallofDuty esports for 10 years, he understands this market super well and two of his partners made their money in the music buiz: #Drake and Scooter Braun, that massively supports 100 Thieves with his connections in Hollywood, the fashion and music buiz- that’s the guy who discovered a kid from Stratford and turned him into a 1 Billion Dollar brand: #JustinBieber.
To understand these investments, it’s always worth a look at the lineup: Nades investors are Salesforce founder Marc Benioff Dropbox Founder Drew Houston, Dan Gilbert (owner of the Cleveland Cavaliers) and Sequoia Capital - trust me these guys know how to run a due diligence.
How to make money in esports?
What a lot of people don’t understand is that esports today from a pure business standpoint is branding first, competitive second. If you look at an esports team and their evaluation, it’s less important that they win every game. It’s way more important that they have their branding down: That they invest heavily in content production, scale their YouTube, Twitch, and Twitter on a month-to-month basis because branding is where the money is.
You build a mother brand - that’s 100 Thieves, you surround them with already big names that are highly scalable - #CouRage has a shot to become the next #Ninja if he plays his cards right. And the more of these content creators you’ll onboard, the more brand you’ll build, the more merch and apparel you will sell. 100 Thieves uses #Supreme styled, super limited drops that generate revenue instantly - they drop a line of merch, make 500K in 5 minutes. You can’t overdo it, but it’s a much more reliable source of income than tournament wins.
Investors won’t recoup 35M if teams just win a bunch of championships. Of course, 100 Thieves want to compete and win Worlds at some point to increase brand loyalty and their staying power within the scene. But the competitive side of things is not going to pay the bills, content creation and product sales will which is also a more reliable model: You can always lose in the semi-finals, that happens to the best. But you don’t fall from 755.000 Youtube subscribers to 0 views overnight.
Let’s break down why 100 Thieves business model will likely work:
A) Their content creation is top-notch and that’s the most important KPI for brand deals: This video here is the dream of every CMO:
Their major sponsors like #CashApp, #Totinos, #SecretLab, #RedBull - they all see their marketing dollars at work here in a perfectly crafted video that highlights and connects them with some of the strongest personality brands in the space - like #NadeShot himself (3.2M subs on YT) and #CouRage (2.2M). Given all these sponsorships, the compound to a high percentage pays for itself. So we are off to a good start.
B) The 15.000 square foot CashApp compound at Jefferson Blvd. in LA is a beautifully designed HQ with certain Apple vibes that will create huge amounts of value for all sponsors.
It would be fun to crunch the numbers but if Scooter Braun brings Justin Bieber or Ariana Grande with him for a video - which he likely will, that would create millions in media value for 100 Thieves sponsors. The fact alone that this partnership is building such a strong bridge between gaming, esports, and the music business is literally the smartest thing that ever happened in esports. They already had a couple of activations between Ariana and CouRage. Nade and Scooter are also buddies, which you can see in this video - this is clearly not a pure business transaction but based on a passion for building an empire together.
C) They have a strong apparel business leveraging #Supreme styled, super limited runs.
100 Thieves is also one of the few organizations that has hired top-level executives from the fashion and sports apparel world and has an in-house design team. 100 Thieves also runs their fashion store already in LA. Fashion is highly scalable, so this is an important move to create ongoing value for its investors.
D) 100 Thieves is not just an esports organization they are a media company.
Nade has hired a big amount of influencers already and will reinvest heavily in the next years in this layer of the business. The great thing about influencers is, that they generate reliable income via twitch and Youtube.
That’s the reason in short why I believe this model has a big future in esports because it’s multi-layered. As a company, you need multiple streams of income and that’s what we have here:
High risk, high reward (they scored 3rd in Fortnite World Cup bringing in 2.7M USD in price winnings) meet reliable income sources (sponsorships, product placements, YT, Twitch, fashion sales). This is how you combine intelligent brand voice with smart investment decisions to build and scale a company in a healthy way into an empire.