Six months or so ago I wrote about a company that was, then, about to go public in the e-sports world. The Gaming Stadium, now TGS E-Sports (TGS.V), would be a permanent home to Vancouver e-sports, housing dozens of networked PCs for in-house tournaments, after-school coaching, parties, and more, added to a small-sized ‘stadium’ main room, with huge screens, seating risers, and a big stage for events.
My kid loved it. No really, he was there every week.
Until COVID came.
With the pandemic came a shift away from in-person gatherings, and one would assume TGS would shrivel and die out of the gate. The timing couldn’t have been worse. Riding a wave of sector interest, TGS had no trouble attracting pre-market-debut investors in early 2020, but by the time it crawled out the gate in August, the world was very different..
It got savaged in its opening few weeks, sliding from $0.32 to $0.13 in around ten days.
But hey, what do you know.. TGS kicked on.
The difference maker over the last month has been the closing of an acquisition of Pepper E-Sports, an online tournament tool that allows gamers to build out their own tournaments, enjoy stat overlays and matchmaking, and even earn prize pools.
Pepper had long been threatening to go public, and was a regular at investor conferences for a solid year before COVID landed, but didn’t exactly pull a massive alpha-stage audience before going offline to re-tool its offerings. By itself, Pepper may have struggled to get to a level that would justify a public vehicle, but combined with TGS, the company has a ready-made audience and much extended reach.
The deal didn’t cost a lot – paid for in TGS shares, with a deemed consideration of a little over $6 million – and the upward movement of the stock in the time since, from $0.14 on the day of the deal to $0.225 now, should make it easy for the Pepper crew to happily keep showing up for work.
For TGS’ part in things, that deal didn’t just bring IP, it brought a team that expanded management in several strong directions, and that has a history of good exits with previous startups in the cryptocurrency space.
For TGS to truly shift from in-person Fortnite events to online global Fortnite events, it can’t just be another group yelling, “Tourney over here!” to anyone who’ll listen. To that end, the company has begun acquiring content creators, doing inexpensive deals that incentivize the creators to post a ton of content going forward. It also grabbed Volcanic Media, which had built the National Esports Scholastic League, drawing high school students to school-level events, and formed an e-sports management team to work with content creators looking to build careers.
To be sure, TGS isn’t a profitable outfit just yet. Last quarterlies showed a $1.9m loss, with around half of that coming from go-public expenses. Those financials also dropped before the company really figured out its new direction which, while likely still a loss-maker, adds post-COVID potential to the pre-COVID business model that will one day return when we’ve all had our vaccines.
Fire helps the forest thrive by burning away the old crap and promoting new growth. TGS has been through the fire, and what we’re seeing right now – credit to them – is that new growth, bigger and better than we thought was possible a year ago, out of what could just as easily have been a slow death.
TGS is raising $1m currently at $0.18, a discount to the daily $0.225 share price.
Not a client, but watching closely because with the right execution, that Pepper deal will be meaningful.
— Chris Parry
