Esports is a nascent industry and one that will continue to evolve as more investors begin to realise the sector’s full potential. That was according to Clayton Larcombe, Chief Investment Officer of PAC Capital – a boutique investment manager that led the latest series A4 Financing round for Bayes Esports.
Speaking to SBC, Larcombe outlined his vision for the esports sector as he explained the reasons why PAC Capital chose to invest in Bayes Esports, before discussing the key criteria that a company must meet before being considered for investment.
SBC: Thanks for chatting with us! So can you begin by telling us about yourself and PAC Capital?
CL: I’m Clayton Larcombe, Chief Investment Officer at PAC Capital. I founded PAC a little more than three years ago, after spending more than a decade in investment banking. After years working in Sydney, Hong Kong and broader Asia at the big shops like JP Morgan and Morgan Stanley, I made the career move from advisory to wealth and investment management.
I started PAC with the vision of giving people more diverse options and access to managing their wealth. That’s why I started Australia’s first esports long/short hedge fund and later on launched the retail class of the fund for the general public.
It is about giving everyone access to alternative investment options that are filtered through strict fundamental analysis. PAC Capital now has over $500 million fund under management across our multi assets funds, hedge funds and venture fund PAC Private 1 (PP1) – an exponential growth from $100 million just three years ago.
SBC: Bayes Esports recently announced that the latest capital fundraising round, led by PAC Capital, had raised €9m in 2022. What was it about Bayes Esports that made it a company primed for investment?
CL: What I see in Bayes is clear – esports data represents a highly specialised sector within a fast-growing industry, and Bayes’ content output impacts 80% of official live esports betting turnover around the world.
The way Bayes has positioned itself shows huge growth potential; on top of that, the company has actively engaged with key industry stakeholders and formed exclusive partnerships with them. This strategy will drive strong growth for the company in the foreseeable future, and also demonstrates the leadership team’s vision and determination to set up the company to be a crucial figure in the esports industry globally.
SBC: From your point of view, what criteria does a company have to meet before you consider investing?
CL: This is what I call a “moat”, the competitive edge that a company should be able to demonstrate in a clear manner. To me, the moat is in whether the company can bring significant and sustainable impact to the sector by introducing new processes or products.
This new-ness should not be easy for others to replicate, this is especially rare in the gaming industry as bigger names are still holding monopolistic positions at the moment.
Scalability also adds into that moat. A company should have a clear vision of its growth potential, and a set of executable strategies to support the growth needs.
SBC: How will this cash injection help drive new content partnership acquisitions and expansions?
CL: Echoing my point above, strategic partnerships with key industry stakeholders are crucial for scaling up Bayes Esports to the next level. From the BLAST Premier deal that allows the Bayes partner network to access their live event data, to the most recent partnership extension announcement with ESL FACEIT Group (EFG), every step that Bayes Esports has taken leaves a solid footprint in the esports world, a trail that has witnessed strategic growth, and signifies a future where Bayes Esports will integrate into deeper aspects of the industry.
This investment will give Bayes Esports the support to continuously identify, establish and strengthen partnerships that are niche to what they do, as well as solidify and expand their technological offerings in live esports data brokerage and integrity monitoring.
SBC: How does this recent investment demonstrate PAC Capital’s commitment to the esports space?
CL: PAC’s commitment to esports has been, and will remain unwavering. The esports industry has seen rapid growth, and today is still a nascent market. PAC will continue its deep involvement with esports as the industry continues to grow and evolve.
As the Chairman of the Board, I want to steer the company to be an established name in the gaming and esports industry. I want to see Bayes Esports keep growing steadily into the company that the big players lean on for their data needs. I want to see us in every corner of the esports ecosystem.
SBC: Taking an industry-wide view, what potential do you see for the esports space in 2023? Is this the next sector where you believe we could see exponential growth?
CL: The broader gaming industry is currently experiencing a pullback, due to the pull forward of gaming demand that took place during COVID. However, we maintain our conviction in the industry’s long term growth trajectory.
The esports industry will continue to mature as an ecosystem which will be a key driver for continued growth. For example, the partnership between Bayes Esports and EFG is a collective effort to preserve the integrity of the esports industry by leveraging Bayes Esports’ integrity market monitoring and rightsholder protection capabilities. This highlights the industry’s ability to self-regulate, which will help to further legitimize esports as an industry and gain wider recognition.
