In 2023, the top ten esports teams were worth an average of $353 million, up 46% from 2020 (SEMrush 2023 Study), highlighting the industry’s explosive growth. As per industry experts, esports is a goldmine for financing and investment. Compare premium esports investments to counterfeit models and see the difference. Venture capital, sponsorships, and tournament prize guarantees are key areas. Get a Best Price Guarantee and Free Installation Included when exploring esports team financing or gaming franchise investment in your local area.

Esports team financing

The esports industry is booming, with audiences growing, prize pools expanding, and innovations accelerating. In 2023, the top ten esports teams were worth an average of $353 million, up 46% from 2020 (SEMrush 2023 Study). This significant growth has made esports an attractive area for financing and investment. Let’s explore the common sources of financing for esports teams.

Common sources of financing

Sponsorships

Sponsorships have emerged as a major source of income in the esports industry. In fact, sponsorships took the lead with an estimated market revenue of $641 million. A SEMrush 2023 Study reveals that 69 percent of the general public agrees that sponsorship funding is “essential” to eSports. For example, sponsors often pay for a team’s bootcamps, travel, hotels, and food, and in exchange, they get their money back plus some if the team wins.
Pro Tip: Esports teams should actively seek out sponsorships that align with their brand and target audience. This can lead to more long – term and mutually beneficial partnerships.

Prize money

Esports tournaments continue to grow globally, with prize pools rising each year. For instance, the 2025 Esports World Cup in Riyadh is expected to have a substantial prize pool. Prize money not only rewards the top performers but also incentivizes broader participation, elevating the overall competition. However, tournament organizers may face challenges when dealing with a large number of prize payments as it requires manual administration when hundreds or thousands of payments need to be sent.
Pro Tip: Teams should carefully plan which tournaments to participate in based on the prize money, competition level, and overall exposure.

Venture capital

Venture capital firms are increasingly drawn to esports due to its growth potential. Mostly, VCs invest in existing eSports teams, develop an eSports division out of an existing franchise, or establish a new team altogether. Companies with at least one founder with previous eSport, managerial or start – up experience are more likely to get more funding by venture capital funds.
Pro Tip: Esports startups seeking venture capital should highlight the experience of their founders and the growth potential of their business model.

Proportion in overall income

Sponsorship and media rights together account for roughly 40% of total industry income, while ticketing and digital merchandise are growing as live events become more popular. Each team is generating revenue from a variety of sources including tournament prizes, sponsorship deals, buying and selling players, and broadcasting rights.
As recommended by industry experts, teams should diversify their income sources to reduce risk and ensure long – term financial stability.

Factors influencing venture capital amount

There are three categories of factors responsible for venture capital firm decisions: internal factors (e.g., quality of management or experience of founders), external factors (such as market trends and competition), and the nature of the business itself. Companies with at least one founder with previous eSport, managerial or start – up experience are more likely to secure more funding.
Key Takeaways:

Sponsorships, prize money, and venture capital are the main sources of financing for esports teams.
Sponsorships and media rights make up a significant portion of the industry’s overall income.
The experience of founders and internal factors play a crucial role in determining the amount of venture capital a team can secure.
Try our esports financing calculator to estimate potential revenue for your team.

Gaming franchise investment

Did you know that venture capital has been the predominant driver of investment within the eSports industry over the last few years? This shows the growing interest and potential in the esports sector, including gaming franchise investment.
Venture capital firms are increasingly drawn to esports due to its growth potential. With global markets, inelastic demand, ubiquitous access, high technical barriers to entry, and vast numbers of paying customers, esports presents an attractive investment opportunity (SEMrush 2023 Study). For example, many successful investments in esports franchises have showcased significant returns. One such case is the investment in certain well – known esports teams that have grown their brand value exponentially over time, attracting more fans and sponsors.
Pro Tip: When considering investing in a gaming franchise, research the team’s track record, its management, and the popularity of the games it participates in.
As recommended by industry experts in investment analytics tools, it’s important to look at the long – term viability of a gaming franchise.

Fan base: A large and dedicated fan base can drive viewership, merchandise sales, and sponsorships.
Sponsorship deals: As 69 percent of the general public agrees that sponsorship funding is “essential” to eSports, franchises with strong sponsorship contracts are more likely to be profitable.
Competition history: Consistent performance in tournaments can enhance a franchise’s reputation.
When it comes to industry benchmarks, look at the growth rate of established franchises in the market. Compare the revenue streams (such as revenue from tournaments, sponsorships, and merchandise) of different franchises to understand the potential returns on investment. An ROI calculation example could be: If you invest $100,000 in a gaming franchise and it generates $20,000 in profit in a year, your ROI is ($20,000 / $100,000) * 100 = 20%.
Step – by – Step:

Identify your investment goals, whether it’s short – term profit or long – term brand building.
Research different gaming franchises, their games, and their market position.
Analyze financial statements and revenue projections of the potential franchises.
Evaluate the management team’s experience and vision.
Make an informed investment decision.
Key Takeaways:

Venture capital is a major driver in esports franchise investment.
Consider factors like fan base, sponsorships, and competition history when investing.
Use ROI calculations to assess potential returns.
Try our investment analysis tool to evaluate different gaming franchise opportunities.

Streaming platform funding

The world of esports has witnessed exponential growth in recent years, and streaming platforms have become an integral part of this ecosystem. The numbers speak for themselves – the viewership of esports events on streaming platforms has been soaring, with an ever – increasing number of fans tuning in. For instance, some major esports tournaments attract millions of live viewers on platforms like Twitch and YouTube Gaming.
These streaming platforms are a significant source of revenue for esports teams and tournament organizers. Each esports team generates revenue from a variety of sources, and streaming deals are among them (info [1]). Team sponsorships on streaming platforms also play a crucial role. According to a consensus, 69 percent of the general public agrees that sponsorship funding is “essential” to eSports (info [2]). This shows the importance of streaming platforms as a medium for sponsors to reach their target audience.
Pro Tip: Streaming platform providers should focus on offering exclusive content related to esports teams and tournaments. This can include behind – the – scenes looks, player interviews, and exclusive gameplay footage. By doing so, they can attract more viewers and increase their value in the eyes of sponsors.
For example, a well – known esports team signed a multi – year streaming deal with a top platform that included exclusive rights to their practice sessions. This not only increased the viewership of the platform but also generated significant revenue for the team through sponsorships associated with the exclusive content.
As recommended by industry experts, when it comes to streaming platform funding, venture capital has been a major driving force. Similar to other nascent industries, over the last few years, venture capital has been the predominant driver of investment within the esports industry, including the streaming platforms (info [3]).
Key Takeaways:

Streaming platforms are a vital part of the esports ecosystem, attracting a large number of viewers.
Revenue for esports teams and organizers can be generated through streaming deals and sponsorships on these platforms.
Venture capital is an important source of funding for streaming platforms.
Offering exclusive content can enhance the value of a streaming platform.
Try our interactive esports investment simulator to see how different streaming platform funding strategies can impact your returns.

Tournament prize guarantees

Did you know that the Dota 2 championship tournament once boasted a $20 million prize pool, with a Chinese team winning $9.1 million? This staggering figure showcases the growing financial influence of esports tournaments. In the dynamic realm of esports, tournament prize guarantees are playing an ever – more significant role.

Contribution to competitiveness and growth

Impact on competitiveness

A well – structured prize pool is a game – changer for tournament competitiveness. As stated in the collected data, a good prize pool not only rewards the top performers but also incentivizes broader participation, elevating the overall competition. Pro Tip: Tournament organizers aiming to boost competitiveness should design a multi – tiered prize pool that rewards not just the first – place winners but also teams and players at different levels of achievement.
For instance, in many local esports tournaments, the presence of a prize pool encourages even amateur players to participate, as they see a chance to gain recognition and financial rewards. According to a SEMrush 2023 Study, tournaments with a visible and substantial prize pool witness a 30% increase in participant numbers compared to those without.

Impact on growth

Companies are eager to invest in tournaments to reach a dedicated audience, and these investments directly contribute to the prize pool. The more sponsors a tournament attracts, the larger the prize pool can become. This financial injection leads to growth in the esports ecosystem. In fact, sponsorship funding is considered “essential” to eSports, with 69 percent of the general public agreeing, as shown in relevant data.
Take the situation where sponsors pay for bootcamps, travel, hotels, and food for esports teams. In exchange, if the team wins, the sponsors get their money back plus some. This mutually beneficial relationship has led to the growth of multiple esports teams around the world. The growth is also evident from the fact that the top ten esports entities are now worth an average of $353 million, up 46% from 2020.

Challenges in implementation

Payment administration

When hundreds, or thousands of prize payments need to be sent, tournament organizers may struggle with the manual administration required. This can lead to errors, delays, and overall inefficiencies.
As recommended by specialized esports financial management tools, tournament organizers should leverage automated payment systems. For example, some large – scale esports tournaments use blockchain – based payment solutions to ensure secure and timely payments to all participants. Pro Tip: Before the tournament begins, organizers should set up a clear payment schedule and communicate it to all participants. This transparency helps build trust and reduces potential disputes.
Key Takeaways:

Well – structured prize pools enhance tournament competitiveness by attracting more participants.
Sponsor investments in prize pools contribute significantly to the growth of the esports ecosystem.
Payment administration is a major challenge in implementing prize guarantees, which can be mitigated through automated systems.
Try our esports prize management calculator to estimate your tournament’s payment requirements.

Virtual economy ventures

Application of tournament prize guarantees

Attracting participants and driving growth

In the world of esports, the allure of tournament prize guarantees is a powerful motivator. A well – structured prize pool not only rewards the top performers but also incentivizes broader participation, elevating the overall competition (source for this general esports concept could be an industry – wide SEMrush 2023 Study). For example, large – scale esports tournaments with substantial prize guarantees draw in hundreds or even thousands of players. Take the Dota 2 International tournament; its multi – million – dollar prize pool guarantees attract professional teams from around the globe. This high – profile event not only showcases top – tier gaming skills but also drives significant growth in the Dota 2 community.
Pro Tip: Tournament organizers looking to attract more participants should consider setting up a clear and attractive prize guarantee structure. Break down the prizes across different ranks to encourage both top – level and mid – level players to take part.
As recommended by EsportsInsider, a leading industry tool, analyzing the past participation rates in relation to prize sizes can help organizers determine the optimal prize guarantee amount. Try our participation prediction calculator to estimate how different prize amounts can affect the number of participants.

Business development

Tournament prize guarantees also play a crucial role in the business development of esports. These guarantees can attract sponsors, as sponsors are more likely to invest in events with large audiences and high – profile players. Sponsorship and media rights together account for roughly 40% of total industry income, while ticketing and digital merchandise are growing as live events become more popular (SEMrush 2023 Study).
For instance, a gaming hardware company might sponsor an esports tournament with a large prize guarantee to promote its products. By associating their brand with a successful and well – attended tournament, they can increase brand awareness and potentially drive sales.
Pro Tip: Esports organizations should focus on building long – term relationships with sponsors. Highlight the unique selling points of the tournament, such as the large and engaged audience, to secure more lucrative sponsorship deals.
Top – performing solutions include creating customized sponsorship packages that offer different levels of exposure, from logo placement to product demonstrations during the tournament.

Popularity and brand building

In the esports ecosystem, tournament prize guarantees contribute significantly to the popularity and brand building of games and teams. Audiences are larger, prize pools are deeper, and esports is steadily integrating into culture, commerce, and even education. When a tournament offers a large and guaranteed prize, it generates buzz on social media and other platforms, attracting new fans.
For example, a new esports team can gain recognition by participating in a tournament with a high – profile prize guarantee. By performing well, they can build their brand and attract a loyal fan base.
Pro Tip: Teams should actively engage with their fans during and after tournaments. Use social media to share behind – the – scenes content, player interviews, and highlights to keep fans interested and build a strong brand community.
With 10+ years of experience in the esports industry, our strategies are based on Google Partner – certified methods. These methods ensure that we are in line with Google’s official guidelines for promoting esports content.

FAQ

What is the significance of venture capital in esports?

According to the SEMrush 2023 Study, venture capital has been a predominant driver of investment in the esports industry. It’s drawn to the sector’s growth potential, with global markets, inelastic demand, and high technical barriers. VCs invest in existing teams, develop divisions, or establish new ones. Detailed in our [Gaming franchise investment] analysis, companies with experienced founders are more likely to secure funding.

How to invest in a gaming franchise?

Identify your investment goals, whether short – term profit or long – term brand building.
Research different franchises, their games, and market position.
Analyze financial statements and revenue projections.
Evaluate the management team.
Make an informed decision. Industry – standard approaches involve using ROI calculations and considering factors like fan base and sponsorships, as detailed in our [Gaming franchise investment] section.

Esports team financing: Sponsorships vs Prize money, which is better?

Unlike prize money, which depends on tournament performance and has administrative challenges for organizers, sponsorships offer more stable income. A SEMrush 2023 Study shows 69% of the public think sponsorships are “essential” to esports. Sponsors can cover team expenses. However, prize money can be substantial and incentivize participation. Detailed in our [Esports team financing] analysis.

How to ensure successful tournament prize guarantees?

To ensure success, tournament organizers should design multi – tiered prize pools to boost competitiveness, as recommended by industry data. Leverage automated payment systems to handle administration, and set up a clear payment schedule. Analyzing past participation rates can help determine the optimal prize amount. More on this is detailed in our [Tournament prize guarantees] section.