Viewpoint: Why Guild Esports’ IPO Plans Need To Raise Red Flags
When I first checked my phone Tuesday early morning, I saw a notification about Guild Esports preparing a going public (IPO). For a second or so, I did question if I was still asleep and having an odd dream because the idea of an essentially empty esports shell with an elegant name attached to it is absurd to me.
Prior to I share my viewpoint on the esports organization’s most current plan, let’s rapidly look at the realities. Guild Esports is a British esports company that was established in September 2019 under the name The Lords Esports. Later that year, the company raised a ₤ 150K GPB ($ 195K USD) investment in exchange for 11.7% of its shares from investment firm Blue Star Capital, that made 5 more investments of approximately ₤ 150K ($ 195K) each around that time, consisting of financial investments in Singapore-based Dynasty Esports, Indian Googly Esports, and Canadian The Drops Esports.
In June 2020, the company first appeared on the radar of many people in esports and many outside the environment. The business raised a second round of financing, protecting a ₤ 5M ($ 6.5 M) private funding round. The financing made headings worldwide since former professional soccer gamer David Beckham obtained “a significant minority stake” in the business through his financial investment lorry DB Ventures. Parallel to the investment, the company rebranded to Guild Esports and staged its “global launch.”
Along with the financial investment and brand launch, the organization announced that it is targeting a follow-up ₤ 25M (32.5 M) funding round at a company valuation of ₤ 100M ($130M). Considering that Guild’s jump into the spotlight, the company selected up a Rocket League team and FIFA gamer Niklas “NRaseck” Raseck.
Now the business is back with huge news. It’s planning to do an IPO on the London Stock market and raise ₤ 20M ($26M) at a valuation of ₤ 50M ($65M) to finance its growth strategies, including recruiting up to 20 video gaming specialists. According to a release by Guild, approximately 40% of the company’s shares will be offered through the listing.
My first impression is that I’m looking at a company, which is about to do an IPO while it has next to no history in esports, a tiny fanbase, likely almost absolutely no revenue, no franchising slots in any appropriate esports format, basically no possessions, and so on. But a couple of names to put out there, primarily David Beckham.
Beckham is certainly a name that draws attention and assisted Guild Esports’ position its news on planning to go public in newspapers internationally. Nevertheless, it has yet to be clarified what role he will really play in the advancement of the esports company. It needs to be assumed that Beckham’s service efforts over the next few years will primarily be concentrated on his Significant League Soccer (MLS) task, Inter Miami CF, an MLS growth group that debuted this year.
Another name Guild Esports gave the table is Carleton Curtis, who acts as the organization’s executive director. Curtis previously acted as vice president programs at Activision Blizzard considering that 2017 and was accountable for the international method and vision of the Overwatch League, Call Of Duty League, and Major League Gaming. While Curtis certainly brings great deals of experience in the esports ecosystem to the business, you could also argue that the performance history of a few of his jobs reveals a lack of understanding of how to construct a sustainable company design. Especially the Overwatch League and Big League Gaming are 2 tasks that, in my opinion, are financial failures in regards to their international strategy and vision.
Also questionable is the reality that the company’s targeted valuation was cut in half from ₤ 100M ($130M), indicating an unrealistic technique to evaluating their job. For contrast, when Astralis Group, which owns among the most effective Counter-Strike: Global Offensive teams of all time and a franchise in the League of Legends European Champion (LEC), went public on the Nasdaq OMX Nordic market, the business raised approximately $22M at an assessment of $75M.
My existing conclusion on the issue is that Guild Esports is attempting to avoid several steps in developing a solid esports organization. The IPO does not look like a financial investment opportunity that belongs on the free market because it’s at this point no more than an easy bet on an empty esports shell ending up being a one in a hundred company that has the ability to discover a sustainable company model based on the clout the names connected to the company bring. Obviously, no information in the type of an IPO prospectus have been made available up until now, which would permit a more fact-based judgment of the IPO and Guild’s organization model.