So far, 2018 has seen the most highest cumulative disclosed investment amount in the history of the esports industry. In the second quarter of the year, the esports industry saw a $180M IPO, a new Unicorn, and a small startup leaping to the forefront of an emerging trend in the industry.

Huya



Chinese live streaming platform Huya completed its initial public offering on the New York Stock Exchange in May. The company sought $200M, partly to grow its esports offerings, and was ultimately able to raise $180M. Huya’s first trade was executed on May 11 for $15.50 and the stock price continued to grow, reaching $31.57 per share as of August 6th 2018.

Huya has a reported 92.9M monthly active users. According to its unaudited Q1 2018 financial report, the company generated $134.5M in revenue during the quarter, up 111.5% year-over-year.

Part of Huya’s appeal is due to its backing from Tencent Holdings . The Chinese tech company now owns 32% of Huya and has an option to purchase additional shares of the company in the future to reach a 50.1% voting power in the company. Tencent has an interest in many developers in the esports industry, including Riot Games , Activision Blizzard , and Fortnite developer Epic Games .

The company’s connections could help Huya in its negotiations for esports tournament broadcast rights, which are often controlled by a game’s developer. Huya currently holds the rights to Tencent’s top esports competitions in China for League of Legends and Honor of Kings, the 2018 League of Legends Korea Championships in China, and recently secured an exclusive deal for the Chinese livestreaming rights to the 2018/19 World Electronic Sports Games.

Huya’s successful IPO and relationship to Tencent should also have investors monitoring its competitor Douyu TV . Douyu has similarly received significant investment from Tencent, and is reportedly planning a U.S. IPO later this year.

Splyce



Esports organization Splyce completed a $2.6M funding round, which included $1.5M from The Ledger Group, which has now rebranded to OverActive Media Group. Both Overactive Media and fellow investor First Serve Partners joined Splyce’s board as observers. First Serve Partners’ investment included traditional sports personalities Metta World Peace and Roman Harper. To Splyce, these investors also represent strategic partners in key regions Toronto and New York, where The Ledger Group and First Serve Partners are based, respectively.

Related Article: July Esports Investment Recap: $37M From The Month’s Lone Funding Round

Just this week, Ben Fischer reported for SportsBusiness Daily that Activision Blizzard was finalizing a deal to sell a Toronto franchise in the Overwatch League to a group that includes Splyce, and Pittsburgh Penguins investor Michael Kimel. Splyce is partnering with OverActive Media Group to create the new ownership entity, with additional capital coming from Kimel, a Toronto entrepreneur, and Westdale Construction part of a real estate development empire controlled by his uncle, Ron Kimel. The price is expected to be $35M.

Discord



In April, Discord raised $50M in a funding round led by its existing investors, including Benchmark Capital, Greylock Partners, IVP, Spark Capital, and Tencent Holdings. Discord had received a total funding of $129.3M prior to this latest round. This new funding doubled the popular chat app’s valuation to $1.65B, enabling it to join the so-called Unicorn Club of billion-dollar startups.

Since the early days of online gaming, gamers have looked to third-party resources such as Teamspeak or Skype for text and voice chat. Even now, when many games offer in-game systems, gamers often prefer to utilize third-party resources, as they allow groups of players to continue chatting outside of an individual match, and include people who are not currently playing in the conversation.

What sets Discord apart, particularly for the esports industry, is its robust list of server features. Servers allow players to chat with one another using both text and voice, and their customization options have enabled users to develop servers specific to teams, games, and organizations. Individual streamers use their own Discord servers to connect more directly with fans. Esports organizations create specific chat channels to host online watch parties. Players create servers focused around a specific game to recruit teammates, discuss strategies, and utilize its voice chat while playing.

The app has become popular with both esports athletes and casual gamers alike. Discord has recognized its impact on esports, partnering with a number of esports organizations including Cloud9 , Team Liquid , and many of the teams in the Overwatch League.

PlayVS



Esports startup PlayVS raised $15M to build a nationwide high school esports league. The funding round was led by New Enterprise Associates, with backers including the San Francisco 49ers and Twitch co-founder Kevin Lin. PlayVS partnered with the National Federation of State High School Associations (NFHS) in April, with the goal of developing a high school esports program that will eventually serve over 14.5M students across all 50 states.

With professional esports well-established, and collegiate esports well on its way to becoming part of the collegiate athletic ecosystem, investors and startups have begun to explore another potential avenue for student esports: high school.

Several startups are competing to be the first widely accepted service for high school esports. PlayVS is particularly interesting due to its relationship with the NFHS. The organization has member associations in all 50 states and the District of Columbia. It can potentially replicate its sports program in esports, creating an easier path for schools to jump in on what is potentially a confusing undertaking for many school boards.

The so-called “kids sports” market is now valued at $15.3B, having grown 55% since 2010. PlayVS has the potential to be a leader at the forefront of a major new trend in a rapidly growing industry.

The esports industry raised over $427M in investment capital during Q2 of 2018. For more information and analysis related to esports investment activity, buy The Esports Observer’s Esports Business Digest Q2 2018 report.