This Esports blog is the first of a new series by Fuel Ventures inspired by Y Combinator’s RFS page. The aim of the series is to let everyone know what ideas have our heads turning and why. We welcome your responses, thoughts and feedback. Please start a conversation with Oli at oliver[at] or on LinkedIn, especially if you are a startup in this space.

Gaming is the fastest growing form of entertainment in the world and Esports is the fastest growing sport. The sector is still, in its infancy. We’re only now experiencing a professionalisation of gaming that will match the professionalisation of physical sports like football, basketball or cricket. That got us thinking. What technological advances have footballers, golf enthusiasts and tennis coaches already witnessed, that League of Legends champions, CDL coaches and Dota 2 viewers are yet to see?

One answer is a data-led understanding of gameplay. With every increase in competition viewership, more money piles into esports, and with that, the stakes only go higher. Dota 2’s The International had a cool prize pool of $34M last year, up from $25M the year before. That pressure is encouraging players to look for advanced methods found in physical sports for an edge over their competitors. Just as physical sports have a handful of $500m+ sports analytics companies such as Hudl (US), Stats Perform (US), Exasol (Germany), esports will grow their own providing a heap of different services.

Esports is under-monetised and growing fast

We really are only at the beginning of this revolution in esports. The average esports fan is under-monetised with average spend of ~$4 compared to $40-$50 in other major sports. That helps to explain why the best CS:GO players (one of the most popular esports games) will earn $300k a year. To put that in perspective, the smallest payroll in Ligue 2, French professional football´s second-highest division, is roughly $3.5M. That is all to say, we are only at the beginning of the professionalisation of esports. Moreover, the opportunity for a radical improvement in the way we understand esports goes further than helping professionals get better at the game.

For example, EsportsOne is hoping to redefine the way esports enthusiasts consume their favourite games. The company has realised that these deeply complicated games need analysis at a level comparable to what we already have for physical sports. Founder, Matthew Gunning, explained the opportunity: “Imagine the yellow flag markers for first downs or a stat box that displays when watching NFL games on TV. That’s the statistical insight and enhanced viewing experience that Esports One will provide.” They have since expanded their offering. Now using these insights to create an esports fantasy league platform. They started with League of Legends and the platform has seen meteoric growth this year.

Gaming is ripe for data-led disruption

In our opinion, the data-savvy generation of esports viewers and casual gamers makes for an even larger appetite for a ‘moneyball’ moment in esports than there was in physical sports. The demand is even greater for digital sports than physical sports because gamers naturally expect the data to be there. For example, take U.GG. The platform provides League Of Legends players with crucial stats on the balance of the game after every Riot 'patch'. The website has over 16.5M monthly visits. For games with a larger western audience such as Warzone, the story is no different. The same natural concern for game data and statistics is consistently found amongst the highest performing content creators. Pictured below is Nickmercs breaking down ‘Time-To-Kill’ stats for Warzone guns in a video that has reached 900k views in 3 days. We believe that using data to help players to understand the way they play, has what Andressen Horowitz call ‘Product-Zeitgeist’ fit.
Rudimentary Esports analytics by Youtuber, Nickmercs
Right now, players are using rough and ready data points like ‘Kill-To-Death-Ratio’ to compare their peers and esports idols. That's because its all that the games publishers will provide. However, as Philip Mayman (foremost sports analytics academic from Fairfield) notes, the development of technologies such as Computer Vision and AI technology is circumventing the publishers. These technologies have opened the door to a richness of data for esports that goes far beyond these crude statistics. New players are bringing advanced analytics such as heat-maps and skillset breakdowns to the table. Ultimately, we believe that startups that can unlock insights for esports players will redefine how gamers play … with huge financial opportunities to match.

We’re looking for seed-stage UK based companies that are going to shape the future of Esports analytics. Get in touch if that’s you.
Insights from Adam Feldman - Analyst. Check out some of our other recent investments, including Gamebake (previously Yello Games), here.

About Fuel Ventures:

  • Fuel Ventures is a leading early-stage technology investor, investing in fast-growth UK and European businesses that have the potential to return between 10x and 100x.
  • Entrepreneurial driven fund led by multi-exit entrepreneurs with £200m+ in exits.
  • An advisory committee with over 50+ years’ experience, and exits totalling £2b+
  • We now have 35 portfolio companies and after only 4 years our first fund has a 7.4X valuation uplift, validated by third-party follow-on investors.
  • We screen 3500+ companies a year using our thorough due diligence processes internally, cherry picking the best 10 companies that have the potential to achieve 100x returns
  • We put a director on the Board of every company we invest in and take an active and hands-on role in the management and development of each company, plus bring added extra value through our network of sector experts.
  • We invest in commercially scalable technology companies, with operating gross margins between 30% - 90%
  • Targeting a minimum of 10x return on investments over a 5-7 year horizon.
  • Generous HMRC EIS tax benefits including 30% income tax relief, 0% capital gains tax on exit, loss relief, and inheritance tax relief for UK taxpayers.
  • We invest in every fund ourselves, with a large 10% personal investment alongside our investors, this is £2,000,000 - £3,000,000 into every fund!
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