Digital entertainment and esports brand FaZe Clan is being listed on the Nasdaq on Wednesday after completing the SPAC merger in a $725 million deal, a major move for producer economy companies to become publicly traded.
FaZe Klan is an online media company made up of 93 members, mainly esports contestants and content creators, as well as some celebrities such as Snoop Dogg. The social creators of the FaZe Klan combined have over 500 million followers on multiple platforms such as YouTube, TikTok and Twitch. Faiz clan was also Ranked 4th Most Valuable Export Company by Forbes,
The company will start trading on Nasdaq under the ticker Phase,
A SPAC, or special purpose acquisition company, buys an existing private business and takes it to the public markets. SPACs gained popularity during the pandemic as an alternative to the traditional initial public offering. However, the SPAC market has dried up, many planned deals have been halted or cancelled, and many companies that went public using the SPAC merger have performed extremely poorly over the years, Lose more than half of their value in 2022 through the first half of the year.
Despite current market conditions and the threat of new SPAC regulation, FaZe Clan CEO Lee Trink said he was confident going public through SPAC was the right decision for his company.
“I understand why other companies have been criticized for going public through the SPAC vehicle. But for us, it really fits,” Trink said.
FaZe Clan was founded in 2010 by a group that began posting gameplay videos on YouTube. The company then grew membership and engagement, branching out into new vehicles such as esports, where players participate in video game competitions. Trink, formerly the president of Capitol Records, joined the company in 2018 seeing an opportunity in a brand focused on a younger audience.
“We think we’re the first Gen Z native brand to go public; we’re certainly the first manufacturer-based brand to go public,” Trink said.
FaZe Klan plan announced For the SPAC merger last October, that marked the deal at $1 billion. Nine months later, the deal is now worth $725 million.
“The initial plan was to go public in the first quarter of this year. Obviously that didn’t happen,” said Tobias Seck, business analyst at The Esports Observer.
in March, FaZe Klan receives $20 million bridge loan from B Riley Principal Commercial Capital, the special purpose acquisition company with which it is merging.
“This appears to be their best attempt at securing capital, especially in the difficult economic times we are currently in,” Seck said. “It is obviously still nascent, and most organizations are still trying to figure out how to actually make money,” he said.
In an amended June filing related to the deal, the company projected expected 2021 revenues of approximately $50 million and 2022 revenues of $90 million, but a broadly adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) comparison. It had previously forecast $19 million in damages.
FaZe Clan plans to bring in more creators and help them grow their community, an alternative to relying on ad revenue from existing social media brands.
“The FaZe Klan will fund the investment and we will make the product and we will have a bigger share. This is the future of the maker economy,” Trink said.
Trink projects that the esports business will be a small portion of FaZe Klan’s revenue in the future. Upcoming projects may include expansion A Gambling Business With DraftKingsA delivery-only dining option similar to fellow influencer Misterbeast’s burgers, and play-to-earn gaming that allows streamers to pay.
According to market sources familiar with the deal, FaZe Klan expects to raise about $60 million in proceeds from the SPAC deal, with current stockholders still holding 77% of the company after it goes public.
The producer economy is a growing force in the markets. The global market size is estimated to exceed $13 billion, according to statistaand focuses primarily on a younger generation.
FaZe Klan prides itself on capturing a younger audience, reporting that 80% is made up of 13 to 34 year olds.
“Gen-Z isn’t about your parent’s brands. Gen-Z wants connectivity and proximity,” Trink said. “We are translators and we know how to reach this audience,” he said.