Based on a Twitter discussion, I would like to publish a few articles about building and managing esport teams in the next few days. I am consulting with some teams and based on my 20 years of experience as a consultant and my own entrepreneur, I trust myself to claim that in the current time you can’t boot a team of esports. If you don’t know, Bootstrapping is a way of setting up a business that works entirely without external financing. The term is based on the Baron-Münchhausen story, in which he pulls himself out of a swamp by his hair, and he describes a process in which founders forego external help and independently finances to build a company. Accordingly, my statement is of course only valid if I have really commercial intentions with an esport team.
Of course, my post does not rule out the possibility that someone can run an esports team for fun or because they have a passion. You might also find a small sponsor who supports you with 100-200 euros a month. Apart from the legal assessment, however, I do not mention this as a commercial esports team from which 10+ people could make a living in the future.
My article is therefore explicitly about a team (or a company that manages/operates teams) that seriously wants to make money with esport, in at least 5 digits per month. This is currently possible, but you have to observe some rules of the game.
My opinion on this may sound harsh, but it is the result of many years of entrepreneurial experience, careful observation of the scene from an entrepreneurial point of view and a greater number of conversations.
The rebuilding/establishment of a long-term successful esport team is not possible without sensible investors. And it is important that word investors do not confuse with sponsors.
Investors are needed to give the company that the team/teams operates an initial financial cushion in order to
- Salaries to pay
- Employ paid people in marketing, sales and management
- office and expenses.
- Optimally provide a training room for teams
- expenses for lawyers, tax advisors and other persons.
- to finance travel expenses.
These investors typically get a share in the company and thus in the future profit, are even involved in business in an advisory capacity as part of a business angel activity or benefit from a profit transfer agreement. In order to convince investors, one has to create a business plan, which has to convince in text and figures. The business components are much more important than details of the teams, games or other circumstances. Typically, Business Angel and other investors invest in teams and concrete ideas and ideas. These points, and thus, for example, professionalism, must be particularly convincing.
All these things are usually not to be done from own capital or low income. Without these things, however, players and other employees cannot be tied up in the long term to prevent their change and provide continuity to sponsors.
Investors must therefore be distinguished from sponsors. Sponsors, unlike often investors, are interested in the actual day-to-day business, as they draw a direct use from the sponsorship activity, namely, generally want to get an advertising effect. In order to acquire long-term potent sponsors, in addition to professionalism, consistency is particularly relevant. Consistency is a mixture of growth and confidence in equal quality, for example in social media channels or through tournament wins. And here we come to the heart of what I say. While professionalism is a matter of hiring management and commitment, and thus in principle, to which bootsare is accessible, consistency can usually only be achieved through salary payments and other financially burdensome obligations. A team that changes its setup 2-3 times a year, which is difficult to contract and which cannot train professionally and consistently, will usually not be able to provide consistency. Without consistency, hardly any sponsor will provide a new team with significant funds to fund the organization, which will also make it possible to generate profits. At the very least, a sponsor will not commit to relevant cash payments in the long term, which in turn will allow the team planning certainty and growth. At best, the build-up is miserablely long and either the great hype is over in a few years or at some point the competitive situation, especially internationally, is so great that greater relevance is hardly possible any more.
However, sponsors are important to make the company/team profitable, thus making it independent of the investor funds and finally repaying the invested money to the investors, interest-bearing. To find reliable sponsors, you need to have a reasonable concept, a compelling media deck and, of course, reach in social media channels or attention to tournaments and the like.
However, as you can see in my shortened presentation, sponsors and investors are different things, but they are related.
An investor-funded esports company, with a professional management team, as larger sponsors can also offer themselves as partners, is perfectly conceivable financially. I produced corresponding figures for clients last year. However, this requires well-designed business plans, professional planning of revenues, a clean and professional implementation of the business and legal structures and, of course, a good knowledge of the esports scene. I can help clients with all these points if they are willing to work success.
In the next few days, I will devote myself in more detail to individual points and, of course, I will be happy to answer any questions. If I am interested in working together, I am always available via my communication channels.