LegionFarm has raised $11 million in additional funding to enable pro gamers to team up with amateurs in hardcore fighting and shooting games. But the war in Ukraine has brought a lot of disruption to the business.
LegionFarm is based in San Francisco and it has a Russian-born founder, but it also has an employee and player base with ties to both Ukraine and Russia. Its current struggles shows how interconnected the world of gaming has become.
Alexey Beliankin, CEO of LegionFarm, explained the disruption to me in an interview. LegionFarm is an esports company in that it finds professional gamers and hires them to play with amateurs so that the amateurs can both get better and have companions to play with. LegionFarm calls this a game companionship and coaching service.
The company has more than 60,000 regular users who pay money to be paired up with 5,000 different pro gamers, many of whom are in Eastern Europe, Beliankin said. Revenue reached $3.2 million a month, up from $1 million a month the last time we talked in May 2021.
That regular audience has enabled the company to raise $17 million in two rounds. The first $6 million was raised in May 2021 from Y Combinator, TMT Investments, SVB, Scrum VC, Altair Capital, Kevin Lin (Twitch), Ankur Nagpal (Teachable).
The further $11 million extension round came from Winter Capital and Alex Summers of Activision, and others. With that start, the platform is now making a step towards transforming into a Play & Earn engine, and a Web 3.0 gaming guild with the following creation of a decentralized autonomous organization.
The disruption from war
But Beliankin noted that in the two weeks since the Russian invasion of Ukraine, the play has been disrupted because about 20% of the professional players were in Ukraine and Russia, and about half of the 120-member staff was also in those countries.
Beliankin, who was born in Russia but has moved to San Francisco, said it has been a difficult challenge making sure that all of the Ukrainians, who were centered in Kyiv, are safe.
“Our priority was to get people out of the danger zone,” Beliankin said.
Some of the male Ukrainians can’t leave the country, as the government has asked all men of military age to stay and help fight the war. If the company hires people, it will have to hire them in the safer parts of the world.
“It’s a sad situation that no one wanted to happen,” Beliankin said. “And now there are so many things to handle, so many challenges. We are doing reolcations and supporting each other.”
In the meantime, growth has been good.
“We have been growing 20% to 50% month over month. And I think one of the biggest reasons why we started to grow that fast” is through the training the company has done with its pro players, Beliankin said.
“We spoke to our customers over the last year and we were trying to understand what was the main reason for churn among them,” Beliankin said.
Beliankin said he is encouraged by the fact that players are coming back more often. That is because LegionFarm has done a better job of training pro gamers how to be good companions in games like Call of Duty: Warzone. Warzone has up to four players in a squad who fight in a battle royale match to be the lone surviving squad. Early on, LegionFarm found the pros would ignore their amateur teammates and go off on their own in search of kills.
LegionFarm shared this with the pros and helped them understand how they could play better with amateurs. That helped shoot the retention upward, Beliankin said.
“Our customers are 27-year-old to 40-year-old gamers who have only two hours a day to play. They just want to spend some quality time playing games,” Beliankin said.
LegionFarm found ways to monitor the pros so they didn’t stray as far from their teammates and instead helped them survive the battle and get more victories. The amateur players are usually older players who don’t have time to level up and just want to spend quality time improving their skills and having fun. Many of those players are in the U.S., while many pro players are in countries where pay levels are lower and so the overall fees are lower.
“This is challenging. For example, it’s almost impossible to pay money to the Russian pros anymore,” Beliankin said.
It is possible to pay people in cryptocurrency, but Beliankin isn’t sure how long that will last and if that might be shut down as well. He noted that the Russian pros have not been towing the Russian party line and so he feels bad that they’re currently not making any money now. The whole region might have to be shut off soon, he said.
Taking care of employees
And while he is Russian by birth, Beliankin said his sympathies lie with the Ukrainians. He was careful to note that the Ukraine pros and players are having a much more difficult time as their country comes under attack and they have to scramble to survive. For a period, LegionFarm made double payments to the Ukrainian pros.
“We are doing everything to support them,” he said. “Everybody is alive.”
Fortunately, the company has funding to enable it to take care of its employees now. But eventually the company needs to get back on its plan for expansion and move into new markets. The company hopes to hire pros from places like Mexico and the rest of Latin America.
But Beliankin said that the average pay per month for the pro players is $1,800. While that doesn’t sound like much in the U.S., it is a lot in places like Ukraine and it becomes a living wage. Plus, those pro players get to play games for a living.
Beliankin said the company found those pros by going after gamers with high kill-death ratios, like four kills per death, in games like Warzone. That was perhaps the top 1% of players. Beliankin said now LegionFarm draws players from a larger pool of elite players and then trains them for a few months to become better companions and coaches. They also become better pro players. And that has turned the pros into a better revenue stream for LegionFarm.
The pattern in many other games is similar, like Apex Legends and other titles, Beliankin said.
The company recently had an online battle between two MMA fighters in Creed: Rise to Glory, a virtual reality game. To attend the party via a browser or VR headset, users had to purchase a nonfungible token (NFT) that served as a membership card to enter the club.
The company has other things going for it. Daniel Cormier, Max Holloway, and Islam Makhachev have each signed a long-term partnership contract with LegionFarm, while Khabib Nurmagomedov partnered with the company. In the long run, LegionFarm would like to take advantage of web3 and blockchain technologies.
“I believe we have a lot of potential to scale,” Beliankin said.
What Beliankin likes doing with LegionFarm is creating new jobs that didn’t exist before, and creating opportunities for people who didn’t realize that they could making a living playing games thanks to their skillful play. I call that the Leisure Economy, and I hope it will save us.
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