Why a Downturn in Esports Investments Isn’t Something To Fear

Samson Amore

Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.

Why a Downturn in Esports Investments Isn’t Something To Fear
Samson Amore

Last year, global venture capital investment in esports dropped by more than 40%. Investors have been rapidly selling off teams and franchises, and the industry has witnessed a consistent decline in ad spend. This has prompted many critics to coin the term “esports winter,” referring to a fall-off in the industry, an indication that VCs believe their investments didn’t achieve success as expected.


A recent article in The New York Times highlighted two major esports leagues that recently divested from their teams: Madison Square Garden sold its team CounterLogic Gaming to NRG in April, while Team SoloMid sold its League of Legends Championship Series team in late May.

Arguing that the industry still has potential for growth, several gaming executives at a LA Tech Week panel said that instead of an “esports winter,” the industry was experiencing a period of “normalization.” The panel at SoHo House in West Hollywood featured Brian Anderson, CEO of Culver City-based esports outfit FlyQuest Sport, Gene Chorba, head of developer relations at Roku and Felix LaHaye, founder of United Esports.

“I'm actually very skeptical of the claim of an esports winter,” Anderson said. “I think that what I'm seeing in the market right now, ultimately, is just a lot of venture capital firms that deployed capital into the eSports space that are not generating the returns that they were looking for, and have now done the press junket and are labeling it an esports winter.”

“In reality,” Anderson said, “esports, in my view, is alive and well.”

Anderson said there were a lot of “unrealistic expectations” around esports since it became popular in 2016, and the current decline was a sign that the market was correcting itself. “This is a necessary pain point that any nascent industry is going to go through as it matures and develops, and I think that in, let's say, 24 months, 36 months, esports will be in a much better financially sustainable place,” he said.

“I think we're having a little bit of a normalization,” Chorba said. “We saw the entire economy was being shot to the moon, with nothing behind it… we were seeing valuations of companies, public and private, that just didn't make sense for what they were building.”

Other tech industries have experienced a similar “normalization” in recent years. Cryptocurrencies, NFTs and big tech have all seen a downturn in recent months after being flooded with VC interest for many years.

According to the panelists, the existing viewer base for esports was a clear sign that the industry still had potential for growth. “There's still a ton of attention on professional video games. There's still so much grassroots fan support,” Anderson said. “As long as organizations and developers are able to figure out how to actually monetize that fan base, I think esports is still alive and well and here to stay for a long time.”

According to Insider Intelligence in 2022, there were 532 million esports viewers globally, with nearly 30 million viewers in the U.S.; this is expected to increase to 34.8 million by 2026.

Chorba explained that the reduction in ad spend and brand deals in esports shouldn’t worry investors because these crucial revenue streams have slowed down for other industries as well. “Ad-supported is hemorrhaging money and really just trying to wait out what's really a bad economy right now,” he said. As more people stop paying for cable, Chorba said, eyeballs will move onto streaming sites like YouTube or Twitch to watch gaming content.

LaHaye and Chorba said that one of the reasons for the decline in esports investments could be that executives and VCs are running esports companies like tech or SaaS companies. “As a matter of fact, they are not tech companies. They are ad-supported entertainment products,” LaHaye said.

By taking their companies to IPOs too early, certain esports companies ruined their chances in the market, LaHaye added. “There's also a downswing that's done by a rush to [go] public,” he said. “There are some fairly poor business models in esports that are going through a rougher time.”

“[Game publishing] is a hit-making business,” LaHaye said. “I think there tends to be confusion between what is a fundamental issue for the esports industry itself and some business models within the esports industry being bad business.”

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Standing Together Through the Flames

🔦 Spotlight

To our Los Angeles family,

This week’s wildfires have brought immense pain and hardship to our beloved city. Many of our friends, neighbors, and colleagues have faced evacuations, power outages, and the devastating loss of homes and livelihoods. Our hearts go out to everyone affected by this tragedy.

At dot.LA, we want to express our deepest sympathy to those suffering in this moment. We see your resilience and stand with you during this challenging time. This community has always been defined by its strength and compassion, and now is the time to come together in support.

If You or Someone You Know Has Been Impacted, Resources Are Available:

Evacuation Shelters:

  • Calvary Community Church: 5495 Via Rocas, Westlake Village, CA 91362
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Mental Health Support:

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Staying Informed:

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Safety Precautions:

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To those in our community who are volunteering, donating, or offering aid in any form—thank you. Your efforts embody the spirit of LA: strong, compassionate, and unstoppable.

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In the days ahead, let’s hold tight to the bonds that unite us and remember that we are stronger together. The fires may scar the land, but they cannot dim the collective spirit of Los Angeles.

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    A Strong Finish to 2024 for LA Tech: Crosscut Ventures Leads the Way

    🔦 Spotlight

    Happy Friday LA!

    As we close the book on 2024, Los Angeles has had a remarkable year in tech and venture capital. From groundbreaking funding rounds to industry-defining innovations, the city’s tech ecosystem has showcased its ability to adapt and thrive. Among the year’s final highlights was the announcement that Crosscut Ventures, one of LA’s premier early-stage venture capital firms, has added Jon Ylvisaker as its newest Partner.

    Crosscut Ventures’ Bold New Direction

    Announced in late December, Jon Ylvisaker’s appointment reflects Crosscut Ventures’ commitment to advancing its focus on the energy transition. Ylvisaker brings decades of experience in driving investments in energy technologies and digital infrastructure. As the founding partner and managing director of Yield Capital Partners, he led investments in startups and established companies shaping the future of sustainability. At Wolfacre Global Management, a Tiger Management hedge fund, he further honed his expertise in supporting impactful climate-focused solutions.

    Brian Garrett, Managing Director and Co-Founder of Crosscut Ventures, said, “Jon's extensive experience in climate and digital infrastructure investments, coupled with his impressive track record of bringing groundbreaking technologies to market, makes him the ideal partner to help lead our focus.”

    Since its founding in 2008, Crosscut has played a key role in shaping LA’s tech landscape. Ylvisaker’s addition reinforces the firm’s commitment to addressing global challenges like energy transition and sustainability, further solidifying its leadership in venture capital innovation.

    What’s Next for LA Tech in 2025

    The momentum from 2024 has set the stage for an even bigger year ahead. Entrepreneurs, investors, and innovators in LA are poised to take on new challenges and create meaningful change across industries.

    As we step into 2025, we want to thank everyone who helped make 2024 such a standout year. Here’s to another year of progress, innovation, and success. From all of us at dot.LA, Happy New Year!

    🤝 Venture Deals

    LA Companies

    • First Resonance, a company specializing in digital manufacturing software through its ION Factory OS, has raised a $20M funding round led by Third Prime with participation from Blue Bear Capital and others. This brings its total funding to $36M and will be used to accelerate product development, grow its customer base, and enhance support for advanced manufacturing sectors like aerospace, robotics, and clean energy. - learn more
    LA Venture Funds
    • Finality Capital Partners led a $17M Seed funding round for ChainOpera AI, a California-based company developing blockchain networks for AI-powered agents and applications, to accelerate product development, expand its team and enhance its blockchain and AI integration capabilities. - learn more

    LA Exits

    • Thirteen Lune, an inclusive beauty e-commerce platform, has been acquired by SNR Capital, marking a significant milestone in the platform's mission to amplify underrepresented beauty brands while fueling its next stage of growth. - learn more
    • Ergobaby, a leading brand in juvenile products known for its high-quality baby carriers, has been acquired by Highlander Partners. The acquisition aims to bolster Ergobaby’s growth, expand its product offerings, and strengthen its position in the parenting solutions market. - learn more

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    Salt AI’s $3M Bet, Snapchat’s Creator Cash, Rivian’s EV Tech, and ŌURA’s $200M Win

    🔦 Spotlight

    Happy Friday, LA - let’s dive right in to this week’s highlights:

    Salt AI, a forward-thinking AI startup based in Los Angeles, has secured a $3 million seed funding round led by Morpheus Ventures with participation from Struck Capital, among others, to tackle the complexity of managing workflows.Salt AI's blog details how its platform centralizes tools like CRM systems, project management software, and data trackers into one interface, eliminating inefficiencies and freeing up teams to focus on meaningful work. With new funding in hand, Salt plans to scale its platform and expand its reach, a move that underscores how AI can solve everyday business challenges.

    Image Source: Salt AI - Aber Whitcomb

    While Salt AI focuses on the workplace, Snapchat is doubling down on creators, with its latest updates introducing revenue-sharing opportunities and direct monetization features. The company’snewsroom update outlines how enhanced analytics will help creators better understand their audiences and sustain their work. The platform's latest updates introduce revenue-sharing opportunities and direct monetization features, along with analytics that give creators deeper insights into their audience. By making it easier for creators to grow and sustain their work, Snapchat positions itself as a key player in the creator economy, offering features that rival platforms like YouTube and TikTok.

    Image Source: Snap

    On the roads, Rivian is redefining what it means to drive an electric vehicle. The company’s latest software update includes advanced route planning, energy management tools, and customization options that make every trip more intuitive and efficient. Additionally, Rivian has introduced new entertainment features, including Google Cast, YouTube, and SiriusXM, as featured in Rivian’ssoftware spotlight, enhancing the in-cabin experience for drivers and passengers alike. This isn’t just about convenience; Rivian is showing how thoughtful software design can elevate the entire EV experience, blending practicality with sophistication.

    Image Source: Rivian

    ŌURA is making headlines with a fresh $200 million Series D funding round, with participation from Fidelity Management & Research Company and Dexcom, which now values the company at $2.55 billion. This investment, as reported byBusiness Wire, highlights the growing demand for wearable health technology and positions ŌURA as a leader in the space. With its sleek design and emphasis on actionable health insights, the funding will enable ŌURA to expand its reach and further integrate wearables into daily health management, strengthening its position in the competitive health tech market. With this funding, ŌURA aims to reach more users and expand its capabilities, further embedding wearables into daily health management.

    Image Source: ŌURA

    Stay tuned as Salt AI, Snapchat, Rivian, and ŌURA continue to evolve, offering us new ways to work, connect, and live better.

    🤝 Venture Deals

      LA Venture Funds
        • Undeterred Capital participated in a $7M Seed funding round for Portal, a Watertown, Mass.-based biotech company specializing in advanced intracellular delivery technology to drive innovations in biological research and cellular therapeutics. - learn more
        • Vamos Ventures participated in a $7.9M Series A funding round for Culina Health, a Hoboken, NJ-based company that provides personalized, science-based virtual nutrition care by connecting patients with registered dietitians, with plans to use the funds to expand its offerings for dietitians and patients, implement AI-driven tools to enhance care efficiency, and strengthen its leadership team through key hires. - learn more
        • Humans Ventures participated in a $3.8M Seed funding round for Hamming.ai, a San Francisco-based company specializing in automated tools for testing and optimizing voice agents, with plans to expand its platform, enhance reliability and perform, and accelerate product development. - learn more
        • Fifth Wall led, with participation from Starshot Capital and others, in a $9.5M Series A funding round for Mojave, a Sunnyvale, CA-based company developing energy-efficient commercial air conditioning technology. The funds will be used to accelerate the adoption of its innovative systems and reduce energy consumption in the cooling industry. - learn more
        • ReMY Investors participated in a $17M Series B funding round for Scripta Insights, a company that leverages data analytics to help employers and healthy plans reduce prescription drug costs, with the funds aimed at expanding its platform and scaling operations. - learn more
        • Mantis VC participated in a $16.5M funding round for Nuon, a company specializing in Bring Your Own Cloud (BYOC) solutions that streamline AI, data, and infrastructure software deployment. The funds will support product development, readiness for general availability in 2025, and efforts to expand customer acquisition. - learn more
        • B Capital participated in a $102M Series C funding round for Precision, a company developing minimally invasive brain-computer interfaces to treat neurological disorders, with plans to use the funds to expand its team, advance clinical research, and refine its AI-powered brain implant for helping users with severe paralysis operate digital devices using their thoughts. - learn more
        • The Games Fund led a $3M Seed funding round for Dark Passenger, a Poland-based game studio founded by veterans of The Witcher 3 and Cyberpunk 2077, to create an unannounced, innovative, first-person multiplayer PvPvE stealth-action game set in a distinctive universe inspired by feudal Japan and martial arts cinema. - learn more

            LA Exits

            • Calliope Networks, a generative AI company providing licensed media content like movies, TV shows, and news, has been acquired by Protege to strengthen its platform’s capabilities in advancing AI development. - learn more

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