GZV #7: Are Esport Startups Scalable?
Startups. Trends. News. All From a Gen Z view.
themes of the week
Let's make entrepreneurship easier
Niche markets may not be scalable
Esports is growing month by month with new games coming out every quarter
the flow
Where's money been flowing?
Myvintro
(Disclosure: I am friends with the SVP of University Engagement)
Last round was a pre-seed, unaware of current fundraising status.
One liner: Our global network is now yours. We provide access to inaccessible people for the first time.
Score: 8.3
Vintro is solving a problem that is close to my heart. During my last social media startup, my co-founder and I wanted to reach out to someone with experience in the social media industry. We couldn’t get in touch with anyone and it was pretty infuriating. Vintro allows startups to pitch industry experts for a fee set by the expert (referred to as the reviewer).
A few newsletters ago, I predicted that Gen Z would be a big part of the next wave of founders. As a generation, we pay attention to people who have credibility and a following. Let’s say we have an idea about a new revolutionary protein bar, well on vintro you can pay $300 to pitch the Co-founder of RXbar (acquired for $600 mil).
Access to inaccessible people is the name of the game for Vintro, and I believe they can have a great impact on the future of entrepreneurship. Soon people will be raising pre-seed rounds with allocations going toward a Vintro pitch.
If you’re interested in becoming a reviewer yourself (Vintro has a couple VC and angel investors!) feel free to reach out to jw@myvintro.com, he will be able to help you set up.
Kippo
May 28th
Seed round of $2 mil
One liner: Kippo is a dating and social app for gamers.
Score: 4.5
I think dating apps are a hit with generation z, we are used to being behind a screen, so why not try to find a relationship there? My problem occurs when dating apps target a niche audience.
Kippo is going after the niche audience of dedicated gamers. Although I believe this app could work in this market, the scalability is what worries me. Dedicated gamers love their craft and love talking about their passion with people who share the same passion.
Unfortunately, this market is very limited, I personally only know 1-2 people who may use this app. Once they capture a majority of the market, there won’t be much more to expand into, which will end up plateauing revenue and customers. If they can find a strategy to become scalable beyond gamers, the rating could go much higher.
Statespace
May 22nd
Series A round of $15 mil
One liner: Statespace provides performance analytics and a suite of tools for casual gamers and eSport athletes to maximize their potential.
Score: 6.7
While we are on the topic of esports, let’s explore Statespace, think of them as like personal trainers, but for Esports. This concept to me, just makes sense. Professional athletes have trainers through their entire career in order to become the best at what they do.
So with the legitimacy of esports increasing, it makes sense that players would need training to become the best. In Esports though, there is not much physical training that needs to happen, all the expertise comes from your mind and your play. Statespace realized that and is building products that help you become the best player you can be. By using analytics and AI, this company will allow gamers to improve their strategy and become better esports players.
The gaming community is at large nowadays with popular games like Fortnite and Call of Duty Warzone, yet only a handful of players will pursue an Esports career. This is why they did not receive a higher rating, for the same reason as Kippo, I am worried about the scalability of this small market. Although I do think in this small market, Statespace will do very well.
Analyzing Business Insider's Gen Z comments
Tom Lombardozzi
I read a teaser to a report the other day on business insider called, "Banking & Payments for Gen Z Report: The winning strategies for attracting the next big opportunity — Generation Z". I saw they included a few key takeaway from the report and I wanted to give gen z's comment on them.
"Gen Z's lack of financial services product adoption offers providers a long runway for growth. While two-thirds of Gen Zers have a bank account, many don't yet use debit cards, haven't aged into credit cards or loans, and aren't responsible for the bulk of their own spending. As they navigate life transitions, like going to college or getting a first job, there's ripe opportunity for providers to engage these customers."
First off, it’s true that we aren’t responsible for a bulk of our spending, if a company's brand influences us, then we will convince our parents to buy it for us. On the other hand though, Gen Z does spend some of our own money through debit cards. Most of us work jobs and make money resulting in a little bit of disposable income. We usually don’t spend this income on massive purchases, but instead spend it on things like food and other cheap services and products. One other life transition that companies should get involved in is when we start driving. Once we start going to get food and shop with friends, our spending increases dramatically.
"Gen Z is more interested in digital payments products and services than any other generation. While adoption of mobile wallets has been tepid among the general population and P2P apps, like Venmo and Zelle, are just now gaining traction among older users, Gen Zers are diving in head first: Over half use digital wallets monthly, and over three-quarters use other digital payment apps or P2P apps in the same time frame."
Those who do not use their digital wallet for debit cards or plane tickets are missing out. It makes life so much easier just to double-click the power button on your phone to display all your cards. Some schools even allow for students to put their student ID card virtually in their apple wallet. This is where opportunity lies, if you can create a product that uses a card or ID of some sort, try to link it with the apple wallet. The wallet improves the customer experience by removing the friction of remembering all your cards and taking out your wallet. Use the wallet to your advantage and gen z will appreciate it.
"To attract, engage, and retain Gen Zers, financial services firms must develop products that are social, authentic, digital-native, and educational, offer value, and evolve over time. This combination, which emphasizes key attributes that Gen Zers value, serve as a roadmap for developing offerings with features that appeal to these users in both the short and long run."
BI research says that “firms must develop products that are social, authentic, digital-native, and educational, offer value, and evolve over time”. I see three key pieces that are important overall else, Authenticity, offer value, and evolve over time (adaptability). Authenticity because as a generation, we want to see a product be true to itself, no scams or anything like that, offer what you say you’re going to offer and stay on that path. Second of all, this service needs to have good value to us or we simply won’t use it. That’s pretty simple. Most importantly the product needs to adapt and continue to change and offer new services. We will get bored of a product that stays the same for more than a few months, so add new features or change the UI/UX. Look at Robinhood for example, they introduced cryptocurrencies on their platforms and recently tried to change the UI around.
the lookout
The Esports sector is growing fast...
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-GZV