Rapper Offset, a FaZe Clan investor, and its CEO Lee Trink at a merchandise pop-up shop in Los ... [+]
Updated: April 17, 2020, 11:10a.m. E.T.; Adds the value of the raise and additional names of individual investors.
Esports company FaZe Clan announced that it has closed a $40 million round of funding led by music mogul Jimmy Iovine and NTWRK, a mobile e-commerce platform known for working with top brands like Nike
The exclusive partnership grants NTWRK the direct-to-consumer rights to FaZe Clan’s products and allows them to do limited-edition merchandise drops.
“I do not look at this terrible moment as an opportunity,” Lee Trink, CEO and co-owner of FaZe Clan, said about how he managed to raise money during a pandemic. “But we are fortunate we are in the right industry for a moment like this, when everyone is turning to esports and streaming, and we are positioned to be bigger on the other side of it.”
He added, “That’s why you see investors like Jimmy getting in on this, and for the long term.”
Forbes valued FaZe Clan at $240 million in its most recent ranking of the most valuable esports organizations. The company has uniquely positioned itself as much as a lifestyle company as an esports one, reliant more on the former category than the latter for revenue. It only recently joined the esports franchise trend, opting to license its name to Atlanta Esports Venture’s Call of Duty League team, Atlanta FaZe. Its bread and butter is its seven-figure deals with Nissan and Gfuel to sponsor its content.
Trink confirmed the multimillion-dollar investment involved a small single-digit ownership stake, and gave Iovine a board seat. Through a press release FaZe Clan later revealed the full amount raised was $40 million. In addition to rapper Offset, who originally invested in the company in August 2019, individual backers include music industry veterans Guy Oseary, Sylvia Rhone, Troy Carter, entertainers Pitbull, DJ Paul, Chris O’Donnell, and NBA players Josh Hart and Jamal Murray, among others.
Jimmy Iovine adds FaZe Clan to his investments that most notably include Beats Electronics and more ... [+]
“We are more valuable because Jimmy brings more than money,” Trink said, noting the paths of the two masters of promotion crossed in their previous lives when Trink was president of Capitol Records and Iovine was at Interscope, which he founded in 1990. “Jimmy brings Jimmy to the table.”
FaZe Clan has more than 40 individual video gamers signed on as talent and 20.3 million social followers across YouTube, Twitter and Instagram, more than the Dallas Cowboys (7.5 million) and the New York Yankees (6.9 million) combined. It recently held a charity gaming event, Fight2Fund, to raise money for coronavirus relief initiatives. Professional athletes including NBA stars Ben Simmons, Andre Drummond and Josh Hart and NFL player JuJu Smith-Schuster and retiree Chad “Ochocinco” Johnson have joined gamer Dr Disrespect and Faze Clan member Nickmercs in fighting it out in Call of Duty: Warzone. The initiative has raised nearly $125,000 over the past four weeks.
Iovine most notably partnered with Dr. Dre to create Beats Electronics, which they sold to Apple
NTWRK, founded by his son Jamie Iovine and two partners in 2018, counts LeBron James as an investor and most recently closed a Series A round of $10 million last September led by Foot Locker
Trink clarified that while the deal with NTWRK is an exclusive and that FaZe will be the only esports company it forms such a partnership with, NTWRK can continue to do one-offs with other esports organizations or their personalities. “We want them to be successful,” he added.
FaZe will continue to lead all merchandise branding efforts and partnerships, like the one it has with Champion for colored hoodies, while NTWRK will power the back-end operations and be able to ship around the world. Trink said it will help save FaZe the capital required for merchandise fulfillment but declined to comment what cut of the merchandise sales NTWRK would receive. FaZe’s pricing strategy will remain the same, though. Of the $35 million in revenue the company generated last year, Forbes conservatively estimates 35% was in merchandise sales.
As to whether the coronavirus pandemic and its effects on the economy will negatively impact his business, Trink is optimistic.
“As soon as schools closed and sports and live events shut down, we came out of the gate and reacted to the moment with all the assets we had,” he said, referring to the increased content his team of influencers produced. FaZe is currently generating over 500 million page views per month, which Forbes estimates helps the company generate another 35% of revenue in advertising.
While he expects an overall shrink in advertising, Trink remains bullish because the money spent in esports is still such a small part of a marketing budget.
“If I were a CMO, I would be studying us like it was the finals or the SAT,” quipped Trink. “Sports and entertainment are dark, canceled for the foreseeable future, even postponed another year. CMOs still need to spend their money, and here we are, far less expensive but providing a much higher rate of return. Here’s the moment where smart CMOs can beat out their competition.”
