Fantasy eSports site Vulcan raises $12 million
The fantasy site for betting on professional video gamers has Silicon Valley investment from Sequoia
If you're still getting used to the idea that 89 million people frequently watch competitive video game playing, or eSports, and that the United States government recognizes League of Legends players as professional athletes, you're going to have a hard time wrapping your brain around fantasy eSports.
Similar to fantasy sports sites FanDuel and Draft Kings, fantasy eSports site Vulcun allows users to draft their own teams based on real League of Legends, Dota 2, and Counter-Strike players. Vulcun users place bets on the success of their fantasy team, which is determined by the real-life performance of the players at eSports events.
Today, only 11 weeks after it launched, Vulcun announced it has partnered with Silicon Valley kingmaker and venture capital firm Sequoia and has raised a $12 million Series A round of financing. In non-investment-speak this means that Vulcun previously raised $1.3 million to get off the ground, and things are going well, so they're raising more money to grow.
Participating investors in this new round include a mix of entertainment companies like top Hollywood talent agency CAA and Universal Music Group, as well as individuals who already made their millions in gaming like Zynga's Mark Pincus and Kevin Chou of mobile gaming company Kabam. Other investment firms like Matrix Partners and Battery Ventures also participated.
Vulcun isn't the only eSports fantasy site. There's AlphaDraft, and League of Legends developer Riot has Fantasy LCS, where players compete for bragging rights only, not real money. But with what Vulcun is calling "one of the largest direct investments ever made into an eSports company," it seems like it's emerging as the leader in that space.
Vulcun didn't disclose how much money it's making and how many users it has, but it did say that 858,000 teams were created with the service, and that it has paid users $760,000 in prizes. The top earner made $32,000 alone.
"eSports leagues will be the NFLs of the 21st century, with truly global fanbases and games that today's youth relate to," Matrix Partners partner Josh Hannah said in a press release. "Tournaments for eSports already draw larger live audiences than most traditional sports, and are just in their infancy. Vulcun.com provides the connection between fans and the emerging stars and teams in eSports."
I doubt that Hannah, Sequoia, CAA, and the other investors tried to understand Jungling and other fundamental but very confusing aspects of League of Legends before making their investments, but you don't have to know a lot about eSports to see that it's growing fast.
Just yesterday, ESL revealed that its eSports event in Katowice, Poland last month hit a peak of more than one million viewers on Twitch, a 37 percent increase from 2014 and a new Twitch record. The latest report from research firm Newzoo found that eSports revenues totaled $194 million last year, and predicts that the eSports economy will generate at least $465 million in 2017.
In short, there's a lot of money to be made in eSports, but allow me to slow our collective roll by reminding you that eSports has a lot of growing up to do. The business still has cheating, doping, and discrimination problems. More pertinent to the fantasy eSports business, it has a match fixing problem.
I asked Vulcun CEO Ali Moiz about how professional players might be able to take advantage of his service and he explained that Vulcun simply doesn't allow professional players or team staff to use it.
Which, you know, is not the most reassuring answer in the world, but it doesn't really matter. For now, with so much money to be made, eSports companies' understandable attitude is to grow first and figure out the problems later.