'Little League' Of Esports Is Going Public

Esports fans will soon have an avenue for making a pure-play bet on the biggest trend in gaming, with Super League Gaming, Inc. announcing the terms of its upcoming IPO on the Nasdaq under the ticker SLGG.

Super League Gaming, which operates a cloud-based esports platform, said it plans to sell 2.3 million shares of stock at a price of between $10 and $12 to raise $25 million in funding. The IPO terms suggest a $97-million full valuation for the company.

Retail investors will be watching to see how Super League Gaming’s underwriting process plays out. The company expects the IPO to price during the week of Feb. 25.

Why It’s Important

CEO Ann Hand has referred to Super League Gaming as a “Little League for esports.” The platform allows gamers of all ages and skill levels to compete in leagues, tournaments and competitions around the country, culminating in its nationwide City Champs league tournaments.

At this point, Super League Gaming is a far cry from the professional esports events that can pack giant stadiums, but professional esports leagues do not have a structured farm system for identifying and developing young talent like most professional sports leagues.

While Super League Gaming will be the only public company of its kind, it was founded just five years ago, and investors should be prepared to endure some growing pains. According to filings, Super League Gaming generated $1 million in sales in 2018. The company reported negative $10.6 million in free cash flow for the year ending Sept. 30, 2018.

The Competiton

In addition, the barrier to entry for potential competitors is extremely low. Massive tech companies such as Amazon.com, Inc. AMZN and Alphabet, Inc. GOOGL GOOG have already invested huge sums of money in esports contracts and streaming platforms, and could seemingly easily create rival amateur leagues at some point in the future.

For investors looking to bet on esports, Super League Gaming will be the one and only public pure play for now.

The number of global esports viewers could surpass 550 million by 2021, according to NJ Games. In 2018, esports generated $906 million in total revenue, including $360 million in team sponsorship deals.

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Photo by Dustin Blitchok.