Matcherino

Growth Stage

Software platform for sponsors, game publishers, and tournament organizers to run scalable esports events

Analytics

Raised to Date:
$808,783 - RegCF
$5,068,715 - Total

Aggregate Commitments $

Platform

SeedInvest

Start Date

08/05/2021

Close Date

10/15/2021

Min. Goal

$25,000

Max. Goal

$1,070,000

Min. Investment

$1,000

Security Type

Equity - Preferred

Funding Type

RegCF / RegD 506(c)

Series

Seed

Pre-Money Valuation

$13,090,848

Rolling Commitments $

Status
Funded
Reporting Date

10/27/2021

Days Remaining
Funded
% of Min. Goal

3,235%

% of Max. Goal

76%

Likelihood of Max
Funded
Avg. Daily Raise

$11,391

Momentum
Funded
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Location

Bellevue, Washington

Industry

Media, Entertainment & Publishing

Tech Sector

EnterpriseTech

Distribution Model

B2B

Margin

Medium

Capital Intensity

Low

Business Type

High Growth

Matcherino, with a pre-money valuation of $13.09 million, is raising funds on SeedInvest. The company provides a software platform for tournament organizers, sponsors, and game publishers to run esports events. The platform aims to make esports events bigger, better, and more financially viable. Grant Farwell founded Matcherino in June 2015. The current crowdfunding campaign has a minimum raise of $25,000 and a maximum raise of $1,070,000, and the proceeds will be used towards development resources, sales and marketing, and G&A expenses. Matcherino has powered more than 26,000 events with prize pools and distributed over $8 million in tournament winnings. The platform also has long-standing relationships with brands and publishers, including GameStop, Corsair, and Wizards of the Coast.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$203,605

$364,384

COGS

$194,257

$187,806

Tax

$0

$0

 

 

Net Income

$-1,731,687

$-1,417,188

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$1,806,502

$2,792,857

Accounts Receivable

$35,787

$39,532

Total Assets

$1,863,516

$2,849,643

Short-Term Debt

$879,548

$330,875

Long-Term Debt

$200,080

$0

Total Liabilities

$1,079,628

$330,875

Financials as of: 08/05/2021
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Analyst Report

Synopsis

ESports — short for “electronic sports” — involve video game players competing alone or in teams in a multiplayer setting, often for a prize. As eSports have grown in popularity, the value of these prizes has also risen. In recent years, cash prizes have reached up to $34.3 million for a single competition. These events are still growing in popularity, with some expected to attract as much as 474 million viewers in 2021. Despite this popularity, eSports events often struggle with monetization and organization. Currently, the sponsors and hosts of an event have to deal with a decentralized environment. Ticketing, registrations, marketplaces, endorsements all come from and through different systems. This fragmented setup serves as both a barrier to entry and to profits. 

Matcherino wants to help eSports become more successful and centralized. Its event platform provides a series of valuable features for tournament participants, organizers, and advertisers. It provides tournament prize pool management, team and player registration, event ticketing services, tax compliance, and sponsorship and marketplace sales all through a single service. Matcherino also offers management for sponsors’ fan engagement advertising campaigns, and it facilitates the purchase of in-game content and physical merchandise from publishers with the end goal of adding such proceeds to a tournament prize pool. In short, the company likens itself to Live Nation, but with an emphasis on the eSports market.

In order to generate revenue, Matcherino charges 8% of the prize pools that are paid out. It also licenses its platform to publishers, such as the company Wizards of the Coast, and runs leagues and tournament series for its partners. Specific pricing structures have not been provided by management. But it is clear that the company’s services have proven to be valuable to some major players in this space.

Matcherino’s current SeedInvest raise has been rated a Deal to Watch by the KingsCrowd investment team.

Price

Matcherino is currently raising at a pre-money valuation of $13.09 million. When comparing this valuation to the company’s recent revenue, the price looks unjustified. With just $200,000 in revenue in 2020, the revenue-to-valuation multiple for this round is 64x. That figure is far above average for the industry. However, Matcherino is a growth stage startup. In comparison to other growth stage startups current raising capital online, a $13.09 million valuation is rather low. This factor makes Matcherino’s valuation more attractive and gives the company a strong price score.

Market

ESports is an emerging market. According to one source, the global eSports market was worth $1.1 billion in 2019 and will grow 24.4% each year, reaching $6.3 billion by 2027. A less optimistic source estimated the global market to be worth only $691.6 million in 2019. However, it forecasts the industry to grow at an annual rate of 15.1%, taking it to $1.86 billion by 2026. It’s important to note that based on Matcherino’s commission-based business model, it will only capture a percentage of the market’s total size. However, the company will benefit from the high growth rate of the market. Balancing the market’s current small size against its appealing growth rate, Matcherino receives a middle-of-the-road market score.

Team

Matcherino founder and chairman Grant Farwell previously served as the CEO of Barc, Inc, a business focused on rehabilitating Bernese mountain dogs. Prior to that, he worked as an intern at PINT, a web development and technical consulting agency located in San Diego. Farwell studied economics at Roger Williams University. Given his limited professional experience, it’s not clear that Farwell has the necessary skills to lead Matcherino to success.

President and CEO John Maffei was previously employed as a strategic business consultant for INRIX, where he helped identify new market opportunities for the company. However, it is not his most recent positions which are the most relevant to Matcherino. From 2009 to 2021, Maffei was the CEO of Titan Gaming, a company which specialized in mobile and social games. He also spent a year at Xfire after its acquisition from Viacom. Xfire is a game communication tool for PC gamers. These experiences give Maffei crucial experience in the gaming industry. He also has ample managerial skills gained from years spent in high level positions at various companies.  

Matcherino CFO Mark Wasowicz also serves as an engagement director for CLA Cast, a consulting and accounting solutions company. He has more than 18 years of financial experience at various companies, including serving as CFO at Protingent, Blue Rooster Inc, and Allyis. This deep breadth of experience makes him highly qualified to be Matcherino’s CFO.

From a purely founder-based assessment, Matcherino does not impress. Farwell has no background in gaming or digital event management. His professional background is very limited. However, this factor is somewhat balanced by the impressive resumes of CEO Maffei and CFO Wasowicz. As a result, the overall team score for Matcherino is moderate.

Differentiators

Although the market that Matcherino operates in is small, there are a number of competitors that it has to contend with. Prize Payments facilitates payments in the gaming space and handles issues of tax and compliance. Another competitor seems to be Tipalti, which provides a significant platform involving payments, compliance, and integration. However, neither of these seem to focus on other core features like advertising and facilitating campaigns, nor do they focus on enabling the types of content purchases for viewers. In this sense, Matcherino does have some degree of differentiation. Furthermore, Matcherino benefits from being a high growth business. However, the business has no patents for its platform, and the barriers to creating such a digital product are low. Thus, Matcherino scores decently — but not particularly strongly — in the differentiators metric.

Performance

Since inception, Matcherino has hosted more than 30,000 tournaments that included prize pools. It currently hosts more than 1,000 tournaments per month, with 1.5 million viewers on average. The company has distributed more than $8 million in winnings so far. It also managed to strike a number of deals with major players in the space. It has run leagues and tournament series for partners like GameStop and Corsair. It has also hosted in-store eSports tournaments at no fewer than 20 Walmart locations. Through these, it has hosted an estimated 3,800 tournaments with more than 27,000 participants in all. This strong traction bodes well for Matcherino’s ability to grow and scale in the future.

Though the company has done well from a non-financial perspective, the financial side is a bit trickier. In 2019, Matcherino generated revenue of $364,384. However, this figure decreased to $203,605 in 2020, likely due to the pandemic. The company also lost contracts with GameStop, 24 Hour Fitness, and a major unnamed PC maker. Despite these difficulties, the company’s exposure is growing. It has also brought in more than $23 million in prior funding, an extremely impressive number. The strong indicators of future success result in Matcherino receiving a strong performance score.

Risks

The overall risk profile of Matcherino is fairly low. Financial risk is the main area of concern. Declining revenue is not an encouraging sign, and Matcherino holds more than $1 million in debt. Additionally, the company is operating on very slim margins. Software companies are often known for having strong margins, but Matcherino has not yet accomplished this. Simply put, this is not sustainable. Unless the company can outgrow this issue and start generating significant revenue, it could face a difficult financial situation in the near term.

Bearish Outlook

Matcherino’s decline in revenue is disconcerting and could become a significant risk in the future if the trend continues. On top of this, the market in which the company operates is currently quite small, which could limit its opportunities. Matcherino claims to be differentiated from the competition because it serves as a comprehensive platform for the industry. However, there are competitors who provide similar services, so Matcherino may need to go the extra mile to distinguish itself and make its value proposition clear.

Bullish Outlook

Given the traction the company has achieved, Matcherino’s current valuation seems favorable for investors. Though it lost contracts during the pandemic, Matcherino’s ability to land them in the first place proves that it’s of value to the right companies. The performance, excluding the financial side, is definitely impressive. The company has been regularly hosting tournaments that attract a significant number of both fans and participants. The eSports market is growing at a rapid pace, and Matcherino could be entering at the right time to secure a significant share for itself. Finally, President and CEO John Maffei and CFO Mark Wasowizc are definitely qualified to guide Matcherino to success.

Executive Summary

Matcherino is providing a complete eSports platform that will allow organizers to optimally scale and monetize their events. The company’s financial struggles could become a problem unless they are managed soon, and its services are somewhat comparable to those of existing competitors. It is also concerning that Matcherino has lost the contracts it had secured previously, though much of this can be blamed on the pandemic.

Although Matcherino’s founder lacks industry experience, President and CEO John Maffei’s and CFO Mark Wasowicz’s rich resumes can arguably make up for this. The eSports industry is quite small at the moment, but its rapid growth is very promising. In addition, Matcherino already hosts events regularly and draws in many viewers and participants. The company has taken the initial steps to prove its product-market fit. All that’s left is for it to scale and achieve revenue growth. With an attractive valuation on this round, Matcherino is a Deal to Watch at this point in time.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com

Analysis written by Daniel Jones.

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Matcherino on SeedInvest 2021
$
Platform: SeedInvest
Security Type: Equity - Preferred
Valuation: $13,090,848

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