Esports, video games and the innovations that enable them are now central to the cultural and commercial fabric of the technology world.
For the investment firm Bitkraft Esports Ventures, the surge in interest represents a tremendous opportunity to invest in companies that continue to transform entertainment and develop technologies that have implications far beyond consoles and controllers.
Investors are increasingly willing to take part. The company, which launched its first $ 40 million fund in 2017, is about to complete fundraising for a new $ 140 million investment vehicle, according to one person, who said the company's plans knows.
Through a spokesman, Bitkraft confirmed that $ 50 million was invested in 25 esport and digital entertainment investments over the course of 2019, 21 of which were managed by the company.
The new, much larger fund for Bitkraft comes as the company's thesis begins to encompass technologies and services that go far beyond games and sports – although they come from a similar location.
In addition to the new capital pool, the company has also gained a new partner in Moritz Baier-Lentz, a former vice president of investment banking at Goldman Sachs and number one among the escort players of Blizzard's Diablo II PC game in 2003.
While at Goldman, Baier-Lentz worked on the $ 67 billion Dell Acquisition of EMC and IBM’s $ 34 billion acquisition of RedHat.
Venture capital – and especially gambling – numbers aren't quite that large, but bigger and bigger bets are being made in and around the gaming industry as investors recognize their potential. The 2019 esports industry invested around $ 2 billion, less than half of the $ 4.5 billion invested last year, the Esports Observer said.
As Ethan Kurzweil from Bessemer Venture Partners said theinformationsuperhighway last year:
“Gaming is one of the largest forms of entertainment in the United States today. More than $ 100 billion is spent annually, surpassing other major media like television. Gaming is a new form of social network in which you can also spend time with friends / family, even outside of the “win a game” constructs. "
Over $ 100 billion in a growing category is nothing to make fun of – especially as the definition of what qualifies as an esports investment is expanded to include secondary industries and a broader thesis.
For Bitkraft, this means investments “that were born on the Internet and in gaming, but that also have applications,” says Baier-Lentz. "What we really see on a broader level and what we think as a team is this genesis of synthetic reality. (Here we see the future and the growth and returns for our investors. "
Baier-Lentz calls this synthetic reality an almost seamless fusion of the physical and digital world. It includes technologies that enable virtual reality and augmented reality, as well as games and immersive or interactive stories that are created around them.
"Moritz shares our culture, our passion and our ambition – and has extensive investment experience from one of the world's best investment firms," said Jens Hilgers, founding general partner of BITKRAFT Esports Ventures, in a statement. "He is also a true core gamer with a strong competitive character, which fits him perfectly into our diverse global BITKRAFT team. With its presence in New York, we are also expanding our geographic coverage in one of the most exciting and emerging cities for games and sports. "
It helps that Baier-Lentz at Goldman helped develop the company's global esports and gaming practices. Every other day, he made calls from private customers and large companies to invest in the esports phenomenon, he said.
Interestingly, for an Esport-focused investment firm, Bitkraft is the only area in which Bitkraft does not invest, in Esports teams. Instead, the focus is on everything that can make gaming possible. "We take a broader approach and invest in things that thrive on the backbone of a healthy esports industry," said Baier-Lentz.
In addition to a number of investments in various game development studios, the company has also supported Spatial, which creates interactive audio environments. Network Next, a developer of privately optimized high-speed gaming networks; and Lofelt, a haptic technology developer.
"Games are the driver of technological innovations and games have prepared us for the interaction between humans and machines," says Baier-Lentz. “We see games and game content as drivers of a broader wave of synthetic reality. That would include games, sports, and interactive media. (But) we don't just see it as entertainment … There are economic and social benefits that open up when we switch between the physical and the digital. I almost see it as the development of the internet. "