Esports funding guide: How to find sponsors and generate revenues

One of the most common queries we receive at the British Esports Association is from grassroots organisations who want to know the best ways to seek funding or get sponsors on board.

With the UK esports industry becoming increasingly competitive, how should an org go about doing this? Here’s our extensive guide, produced in collaboration with Claire Arnott Consulting, who gave an interesting talk on this topic at a Sport and Recreation Alliance event.

Figure out what you need

“I think to start with, in terms of how you want to look at what type of funding you want, where you’re going to get it from and how much you want, there’s some key questions,” Claire Arnott says.

Ask yourself:

1.Where are you now, where do you want to go? What are your long-term and short-term plans?

2.What are your financial needs and how will these differ in three-to-five years’ time?

3.Look at what your income sources might be. Are they sustainable and scalable? Will you be offering additional services? Do you want commercial or social investment, or are you looking for grant funding?

4.What additional resources do you need to bring in more or alternative income?

What are your plans and which funding sources are right for you?

Ask yourself:

1. Who would our work appeal to and who is our audience?

2. How much capacity and resource do we have to dedicate to fundraising?

3. How many different avenues could we fundraise from?

4. What do we need the money for? For example, what will be our capital costs (items or services we need to buy in order to set our service or product up), overheads (recurring costs needed to actually run the business, it could be rent, salaries, communications etc), programme costs, additional or freelance staff costs, travel/accommodation for tournaments etc.

5. How much money do we need? (is it five or six figures for a longer plan, or something to cover a one-off project or tournament, for example)

6. When do we need the money?

7. What evidence of our impact do we have? This is key – ask yourself what problem are you trying to solve?

These important questions can help construct a funding plan and identify what your main goals are.

You can also use the following to build a plan:

You’ll also want to focus on your strengths and identify your USP (unique selling point). This can be challenging in an industry full of grassroots esports teams and organisations, but having some unique branding, well thought through and innovative plans or goals can help set you apart.

1.Identify your unique selling point

• What differentiates us from our competitors?

• How do we fit into the marketplace and add value to other programmes?

• How can we highlight our value to our target funders?

2.Demonstrate your impact

• How do we demonstrate that our intervention is the most effective use of their money?

• Can we show the positive short-term and long-term impact of our programme?

3.Use your contacts

• How can we engage our network of supporters as influencers?

• How can we use our trustee or advisory board to build our networks?

Types of funding

(Ignore the red highlight above)

“There’s anything from charitable grants which are very low-risk, to commercial loans and venture capital funding,” Claire explains.

It’s worth researching and looking into the different types of funding available, as some may be suitable for your business and others not so.

In esports at the top level, private investor/venture capital funding is common, as is brands outright buying or purchasing a large stake in a business, for example sports brands like Miami Heat taking a stake in esports org Misfits. Or Harris Blitzer Sports & Entertainment, which owns the Philadelphia 76ers, Crystal Palace and others, including esports org Team Dignitas.

There’s also charitable funding, though that is not likely an option for an esports org.

“You also need to have access to these people,” Claire says. “There isn’t a club you can go to and say ‘hello’ and get funding, it requires networking and time. So it’s probably not a good starting point unless you already have those links to begin with.

“Of course there’s the private sector, and they tend to want something that’s tried and tested.”

Government funding

Bear in mind the Government doesn’t provide funding to traditional esports teams/organisations (yet), but this may change in the future.

Sport England, the public body under the Government’s Department for Digital, Culture, Media and Sport, only provides funding to physical sports at the moment and doesn’t include esports. You can see the full list of sports that Sport England recognises here.

However, sporting body British Universities & Colleges Sport is supporting the National Student Esports (NSE) initiative, funded by Benchmark, so this shows there is growing interest from the traditional sports sector.

Crowdfunding

Don’t forget about crowdfunding. This is often a popular model used in the games industry to bypass traditional investment routes or having to find a large partner or two to invest in you.

Established global donation and funding platforms like Kickstarter and Indiegogo allow businesses like game developers to acquire funding from fans or potential customers, while sites like Patreon are designed to help individuals or small content creation teams get paid by fans, usually in exchange for special backer-only rewards.

Of course, organising a Twitch livestream then asking for donations or subscriptions can be another way of generating revenues, but this can be a method usually adopted by individual streamers rather than entire esports organisations. And you will need to give viewers a very good reason to donate.

So it’s not a usual way for an esports organisation to acquire funding, but an option to consider nonetheless. Perhaps you could get a streamer team on board and agree to split a share of any on-stream donations made with them.

Other sources

Investors and sponsors aren’t the only ways of generating revenues of course.

Things like selling merchandise, content services or hosting events can also be revenue-drivers, but for this guide we’re solely focusing on funding and sponsors. And don’t forget any monetisation of assets requires investment into those assets and marketing of those assets, so money and time is required first

Social investments

Some investors will want to see some kind of social as well as financial returns. For example, you can look at the work of Intel and AnyKey, the diversity initiative. Intel has put a lot of investment into growing esports, funding female-only tournaments to establish role models to try and make it as open and inclusive as possible.

Yes, Intel is a company at the end of the day and sales will no doubt be important to it, but for many big firms like Intel, there are other important things outside of sales, such as corporate social responsibility and supporting charities.

Some brands might not be willing to pay to be a shirt sponsor on your team (yet), but they may be interested in some other kind of social activity you have planned, which could help you get your foot in the door, with them or others, build trust and build a fruitful commercial relationship.

The different types of social investments available tend to be the following:

Debt

Debt finance usually takes the form of loans, both secured and unsecured, as well as overdrafts and standby facilities. Generally these require a borrower to repay the amount borrowed along with some form of interest, and sometimes an arrangement fee.

Equity

Equity investment usually takes the form of shares issued to an investor in exchange for capital. Unlike debt, equity finance is permanently invested in the organisation and the investor will gain return either through dividends or via a final sale of the company,or both.

Quasi-equity

A quasi-equity investment allows an investor to benefit from the future revenues of an organisation through a royalty payment or revenue share which is a fixed percentage of income. However, the investor may gain nothing if the organisation does not perform. This is similar to a conventional equity investment, but does not require an organisation to issue shares.

The funding cycle

Claire explains: “Identify your sector and demographics, you want to start to build out a pipeline of who is interested in your work. And you want to work on that, educate them about what you’re doing. Are they coming to events, are you sending them articles, or is it via webinars or something else? How do you get them to experience what you’re doing on a first-hand basis so they buy into what you’re doing?

“How do you solicit them for money? Is it a fundraising application, is it a presentation, is it a business plan? You might say you’ve got a funding gap of £50,000 and you look to fill it, you include all the plans you’ll be delivering around that.

“Then it’s about stewardship, reporting, discussing your success and challenges. They will want to know what’s going on and what you’re learning. You want to cultivate those relationships and provide recognition – do not forget to say thank you!

“ will want to know what went wrong, what can be improved, how things can be improved and offer advice.”

How to get sponsors on board

Ask yourself questions

Some of the most common questions we get asked by grassroots UK esports organisations include: how can we get sponsors on board? How can we get funding? What’s the best way for us to go about this?

There is no quick win or one-size-fits-all solution. Every brand is different and what’s interesting to one may not be the case for another.

However, you can employ good practice and follow a few steps which could help you progress.

First of all, you’ll want to have a clear plan, as outlined earlier in this guide, and know what it is you want from sponsors and what kind of sponsors you’re looking for. Do you want to go after a big endemic games brand that already sponsors some of the world’s top esports teams? Or could your time be better spent on smaller brands or non-endemic companies? (endemic brands are those specialist brands within gaming, non-endemic ones are general, outside of gaming)

Also, it’s fair to say this market is saturated and that’s something to bear in mind when seeking funding. There are hundreds of other grassroots or semi-pro esports organisations in the UK all competing for a slice of sponsorship right now. Most of them are going after the same sponsors and that can make for a fiercely competitive environment.

Because of this, it’s important to set yourself apart, find your unique selling point (USP) and try to think outside the box. Why not go after local businesses in your area looking to reach a new market? Could you try to launch something which is fresh or different to what everyone else is doing? Think about what your branding says about you. Why will companies want to buy into it?

Also, look at your competition, look at what they’re doing well and what could be improved on. Is there a gap in the market you could identify and focus on?

Think about what you can offer sponsors too. Is it a shirt sponsorship, a content partnership, an event with their name in it? How much will you be charging for this and why?

These are all questions that are worth asking yourself, because your answers could be very different to other org’s answers, and that could set you apart and help you formulate your funding plan.

Another important thing to consider is whether you’re set up as a registered business yet. If you don’t know what you’re doing in this area, make sure you look into it and research carefully and thoroughly. There is plenty of information available online, and many advantages to setting up as a registered business, but with that comes legal responsibilities which you should be aware of.

Getting your info together

Once you’ve got some answers and plans, you need to think about what you’ll be saying to sponsors to get them on board.

It’s a good idea to create a PDF deck or showreel that you can send to prospective sponsors, containing all the key info about your organisation. Sponsors probably won’t have time to look at every page on your website, or read up on your history or all your player rosters. So having a single handy point of reference can help them and provide a snapshot overview.

Think about including things like your org’s branding, background, ethos, achievements, goals and reach (social media/website stats/engagement at events etc). Mention any interesting activations you’ve done in the past or successful activities with other sponsors and what they got out of it. You may also want to include a slide on what esports is and why it’s a good activity for brands to get involved with – don’t assume because you have a good knowledge of competitive gaming that every company out there will.

Generally, you want to find out what a sponsor wants, then offer them a solution that helps them reach their goals and get a good return on investment (ROI). It sounds simple but is much easier said than done, as every company is different. Saying that, as your organisation grows and more sponsors come on board, your knowledge and experience will grow with it, and so it should become easier in time. Remember always to have a call to action for sponsors. You must ask that question and it will involve money! Too many pitches are not clear about their actual ask, and fail because of that.

On the topic of reach, paying for things like Twitter followers or retweets or video views is not a good idea. It might seem like it makes you appear to have a larger following, but if 99% of your 10,000 followers don’t engage with your organisation or your tweets, or have no interest in esports, what’s the point? Numbers and reach might be important to sponsors, but so is engagement and value. There are tools like Twitter Audit which allow brands to check the quality of your followers too. Be prepared to answer in-depth questions from sponsors about your followers, fans and reach.

It’s worth remembering the UK esports scene is still largely in its infancy. Many esports fans are interested in top level tournaments such as world championships and so it can be a challenge to get them interested in the grassroots or smaller, newer teams. But it’s growing all the time, and is worth throwing some interesting stats into your deck.

Pitching to potential partners

Once you know what you’re selling, have a deck and a plan, and all the materials ready for prospective sponsors, the next step is to reach out to them. And this is perhaps the most important part that can be a challenge if you’re new to it.

Does anyone at your org have experience in sales and/or marketing? Are they a ‘people person’ with good communication skills? If so, this could be a task for them.

Reaching out to sponsors can be done in a number of ways. You could attend esports networking events or conferences to get to know them, perhaps you know someone who works at a brand who could intro you, or you might even have them approach you.

Think about how you reach out to them. Talking to someone in person or over the phone is always recommended as it’s more personal – an email on the other hand is very easy to ignore. Bear in mind there are established brands out there who will receive tens or hundreds of emails or messages every week asking for sponsorship or affiliation. Not just from esports organisations, but from streamers, other businesses outside of gaming, event organisers, IT/web design companies, training providers… the list goes on.

You’ll also want to find the right person – usually whoever has access to the company’s marketing budget. This can be a task in itself, especially larger companies that have hundreds or thousands of members of staff.

Building a relationship or rapport with a brand can take time and patience. Pitching is a skill in itself, as is networking and building up contacts. There are whole books, courses and guides devoted to this subject so go out there and take the time to read up on this – don’t just rely on this guide as it simply acts as a starting point. Chasing up on an email you sent is fine, but there can be a fine line between being persistent and pestering, so that’s worth bearing in mind.

It may sound simple, but if a deal is agreed, don’t forget to send an invoice and make sure you understand the laws of business and taxation (again, there are other guides out there if you don’t yet have good knowledge in this area).You should have agreed the price and the payment terms and you should ensure the person you are dealing with gives you an official purchase order in writing, with a reference you can quote on your invoice.

Also, don’t forget that once an activation or sponsorship deal is over, it’s worth reviewing it, what went well and what didn’t so you can improve for next time. Ask the sponsor what they liked and what could be improved. Thank them! They may want to get involved with you again in the future or strike a longer-term partnership, so keep the dialogue going with them in a patient and polite way.

Affiliate deals

One of the most common types of partnerships in grassroots or semi-pro esports is the affiliate deal.

These typically involve a company or brand supplying the partner (i.e. you, the organisation) with some products or a discount on services, in exchange for promotion.

For example, a gaming chair brand might send you a free chair for one of your players or your team, and from that will expect a certain amount of coverage, whether it’s a series of tweets, a video or an article for example.

Unlike standard sponsorship deals, affiliate deals don’t usually involve a single sum of money being transferred from the brand to the organisation.

Some deals might involve revenue-sharing. So for every product sale that comes from your website or videos or social media, the company may give you a cut of the profit. It could be 10% for example.

This all sounds good on paper, but it’s worth planning it out properly and looking at what revenues it could realistically generate for you so that it’s worth your time and focus. Some affiliate deals will not involve any money changing hands, so bear that in mind. Ask yourself, what are you getting out of the deal, why are you doing it, and why is the brand doing it?

Make sure you understand the full terms of the deal before agreeing to anything, manage your expectations and review any deals to see how they could be improved upon in the future. And remember, all of these deals must have relevance to your audience, otherwise it could be a waste of everyone’s time.

Impact reporting

Once you’ve secured funding, sponsors or investors will want to see where their money is going and how it’s benefitting them. Often they will be promised a list of deliverables before agreeing to part with their money. They are generally looking for a good cost/benefit ratio.

“I cannot stress the importance of impact reporting,” Claire says. “You want to show your stakeholders or investors your impacts. It’s about what worked well, what didn’t work well and learning from data/sharing evidence.”

Some investors will want to see a social impact as well as a financial impact, depending on their own mission and long and short-term objectives or business goals.

Theory of Change (TOC) framework, allows you to map impact, identify outcomes and develop the indicators to track these.

Within esports, whether it’s endemic (gaming/specialist) brands or non-endemic companies (those outside of gaming, like food or car brands for example), investors or sponsors will want to see some kind of return on investment, whether that’s a rise in website referrals, sales or increased marketing reach/PR coverage for example.

But it’s not always about numbers or sales-based. Is it to do with coverage, content, people you impacted or changes you made to the industry? It can be all of those things.

Do you run workshops, training camps, tournaments? What are the deliverables and what are the outcomes?

There are many different impact measurement tools to consider. One, the Theory of Change (TOC) framework, allows you to map impact, identify outcomes and develop the indicators to track these.

The activities, outcomes and impacts are the most important things to relay back to your partners. What difference are you making? How are you helping your sponsors or investors or partners? You want to demonstrate how your investors would have got something out of partnering with you that wouldn’t have got elsewhere.

So make sure you are clear with your investor(s) to begin with and what exactly they are expecting to get in partnering with you.

Look inwards regularly

Be wary as to how your funding is affecting your organisation. It can be easy to get caught up focusing on generating revenues and in the process lose sight of your core ethos or beliefs.

Other UK organisations in the past have used their funding to pay for good players, have won some tournaments, then disbanded or fell apart soon after. This might have been because they either didn’t have a long-term plan or didn’t think properly about how to make their business sustainable in the long-term, or look at what the next steps were after winning that tournament they wanted to win.

So be mindful of how funding affects the sustainability of your organisation. Do you have enough? What do other people think of you now that you have funding? Will any of your paid staff now expect a pay rise? These are all things to regularly consider when seeking funding or acquiring new funding. Try to have internal discussions and continually plan your next steps.

Other useful links

Check out these external links which may be of use to you:

Esports Start Up Podcast on how to raise VC funding: https://anchor.fm/esportsone/episodes/Episode-1-From-Idea-to-Seed-e3adbj

Team sponsorship, opening the door (a guide by British Esports advisory board member Darren Newnham) https://www.linkedin.com/pulse/team-sponsorship-opening-door-darren-newnham/

Institute of Fundraising: https://www.institute-of-fundraising.org.uk/guidance/

London Sport funding database: https://funding.londonsport.org/

How to attract corporate sponsors: https://www.entrepreneur.com/article/217913

Grantnav – http://grantnav.threesixtygiving.org/

Grant Finder: https://www.idoxgrantfinder.co.uk/

Grants Online: https://www.grantsonline.org.uk/search/grants?f=1

Questions & contact

Do you have any questions for the British Esports Association? Please email us at info@britishesports.org or send us a DM on Twitter.

Thanks to British Esports chair Andy Payne OBE and Claire Arnott Consulting for helping with this guide

Email: Claire@clairearnottconsulting.com

Website: www.clairearnottconsulting.com

Image source: Christopher Bill / Unsplash.com