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.

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.

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.

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.

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.

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.

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.

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.

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.

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Analysis written by Daniel Jones.