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VC-backed Astralis to make history as the first public esports team

Denmark's Astralis Group is set to become the first esports team franchise to go public. The IPO comprised the group's three brands: Astralis, Origen and Future FC. The offering closed on November 29 and was oversubscribed with orders in excess of 222 million Danish kroner (around $33 million). Astralis offered 16.76 million shares priced at 8.95 kroner apiece, resulting in gross proceeds of 150 million kroner. It will start trading on the Nasdaq First North Growth Market Denmark on December 9.

Astralis launched in 2016, and in the same year was backed by Copenhagen-based Heartcore Capital (fka Sunstone Technology). The company's eponymous team is recognized as a leading esports team, winning millions of dollars in prize money playing multiplayer first-person shooter game "Counter Strike: Global Offensive." The group has sponsorship deals with the likes of Audi and Logitech.

The listing represents a watershed moment for a vertical that is still nascent but growing fast. For its part, Astralis estimates the number of esports viewers around the globe will reach 443 million by the end of this year and 595 million in 2022. Astralis also expects the billion-dollar esports market to grow 20% per annum.

The IPO comes at the end of a busy year of VC activity for the sector. So far in 2019, esports companies in Europe have raised around $102 million across 35 VC deals, according to the PitchBook Platform. While the total thus far falls short of the nearly $119 million raised in 2018, it's a record year for number of deals on the continent. Deal count has also hit a record high globally, with roughly $757 million funneled into 130 deals so far this year, also per PitchBook data.

"I think it's great to see more sports companies finding their way on the public markets," said Jens Hilgers, Berlin-based founding partner of Bitkraft Esports Ventures and one of the first investors to focus exclusively on the vertical. "It helps us to find additional validation for the business model. For the industry to see such an asset class being traded on a daily basis on the public markets is certainly very helpful for the esports industry." Sport parallels Hilgers, whose firm has made over 35 esports investments, notes that while parallels can be drawn between investment in traditional sports teams and esports teams, there are also some fundamental differences.

Esports games, unlike traditional sports, are owned by companies. Furthermore, the vertical spans more diverse areas such as game development, making it more akin to a tech investment—and potentially creating opportunities for increased revenue.

Like traditional sports, Astralis' ongoing success will likely be tied to team performance, meaning, if a team has a bad season, so could the company. This risk is arguably greater in esports where the teams are smaller.

"I think we all are curious to see whether sports, and to that extent also esports teams, should fundamentally be searching for public listings," added Hilgers. "Is that company type specifically good to be on the stock markets? That's an entirely different question. I don't have the answer to that today. The history of traditional sports has not necessarily proven that it is."
 

Featured image via Andrew Gardecki/CC BY-NC-ND 2.0