Backers: Create Esports Tournaments With Blockchain

Backers is an early-stage startup that allows for the creation of esports tournaments. The company is also in the process of raising money via an equity crowdfunding campaign on Netcapital. The minimum to invest in Backers stock is a mere $2.

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The founder and CEO of the company is Brian Tinney, who has more than 25 years’ experience in network engineering. He has consulted for large organizations like Cisco (NASDAQ:CSCO), Petco, Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC).

Interestingly enough, on his LinkedIn profile there is no mention of Backers. Rather, it says that he is currently an employee at Teradata (NYSE:TDC).

The team for Backers is small. There is a vice president, Matt Smart, who operates a computer consulting operation (since 2004). He helps with services like web hosting, custom application development and website creation.

Backers also has several advisory board members. They include Rodney Recker (the president and CFO of a business consulting firm), Colton Griffin (an expert in ERP and supply chain solutions) and Walter Karshat (an expert in areas like blockchain and fintech).

How It Works

In a relatively short period of time, esports has turned into a mega-successful industry. Just look at League of Legends, which has over 100 million unique players that participate on a monthly basis. They watch more than 1 billion hours of content.

But despite the success, esports does have some drawbacks. For the fans, the experience can be somewhat passive. And as for the esports teams, the costs can be exorbitant to compete, such as with hefty franchise expenses and escalating player salaries.

Yet Backers thinks it has a way to solve these problems – that is, by allowing for the creation of esports tournaments that are crowdfunded by fans and teams. Keep in mind that this means that the fans will have equity in a team, which will certainly help with engagement. Oh, and they also participate in the team entry fees.

To pull this off, Backers plans to use the Ethereum cryptocurrency and smart contracts for secure transactions. There is a conversion feature, which means fans can pay with dollars.

Now regarding the business model – which is certainly key for those thinking of investing in Backers stock – the plan is to charge fans 2.5% of the transaction fee.

For the most part, the platform does look unique for the esports industry. But there are other categories that have similar approaches. One example is, which is focused on poker.

Invest in Backers Stock?

So far, the company has raised only about $6,000 and the valuation is at about $8.6 million. But the company has already raised about $53,000 from five angel investors (this is according to the CPA letter) from a prior round. Most of the expenses have been for professional fees and advertising.

Note that this startup is at the proof-of-concept stage. Backers has tested its Ethereum network with a poker tournament, which involved the use of a digital contract. The fans were able to fund and receive distributions from the prize pool.

As for the next steps, the focus will be on developing an MVP (minimally viable product) and then launch with an esports partner in about 12 months.

But of course, as is the case with any early-stage private investing deal, there are considerable risks. While the technology has shown some promise, there will still need to be lots of investment in marketing and sales to get to critical mass. It’s also not clear if the concept will resonate with esports teams and fans either.

Thus, before considering an investment, it is important to do your own due diligence and analysis.

Tom Taulli (@ttaulli) is an advisor and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. As of this writing, he did not hold a position in any of the aforementioned securities.

Investing through equity and real estate crowdfunding or asset tokenization requires a high degree of risk tolerance. Despite what individual companies may promise, there’s always the chance of losing a portion, or the entirety, of your investment. These risks include:

1) Greater chance of failure
2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education

Read more: Private Investing Risks

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