FaZe Clan going public next year in $1 billion SPAC deal

As the esports business matures, the list of publicly traded companies, which includes OverActive Media, Enthusiast Gaming, and Guild Esports, to name a few, will soon be joined by esports lifestyle brand FaZe Clan, which Forbes ranked as one of the most valuable esports firms in 2020.

The company recently announced that it would merge with B. Riley Principal 150 Merger Corp., a special purpose acquisition company (SPAC), and trade on the Nasdaq with the ticker symbol FAZE in 2022. The deal values the combined entities at $1 billion and FaZe Clan believes it can get up to $291 million in transaction proceeds to help fund its growth.

FaZe notes that it’s “at the forefront of the global creator economy… fueled by social media influencers, creators and businesses who monetize their content online,” but to further grow as a business, the company will likely diversify even more. That could mean acquisitions of hardware or accessories companies, software, or other tech firms.

As a brand, aside from a hiccup involving a cryptocurrency scandal that led to the firings of three of its members, FaZe Clan has had incredible momentum with about 350 million followers across social media, a recently opened content production division, FaZe Studios, partnerships with hip-hop artist Offset, NBA star Ben Simmons, and Twitch streamer Nickmercs, and robust fashion/apparel merchandizing.

The $1 billion valuation, and the fact that FaZe is going the SPAC route (which means it’s dealing with a “blank-check” company that specifically exists for the purpose of a merger), has raised eyebrows among some in the business. Importantly, SPACs do not require the same levels of disclosure as an IPO, which amplifies the risk to investors.

FaZe CEO Lee Trink explained the SPAC choice to The Washington Post: “A lot of the criticism on SPACs is that there are so many companies that are pre-revenue that are using SPACs as a vehicle, which is not us… For us, the reason why this vehicle works was not only was it a faster way to get to market, but it allows us to tell our story and educate the market.”

Investors will be following this deal for some time, but for FaZe Clan the infusion of cash will allow it to capitalize on a fan base that’s already far more engaged than the average esports fan. According to Interpret’s New Media Measure®, FaZe Clan fans are much more likely to consider products or services from companies that sponsor its favorite team, and they are more willing to directly support their favorite team with purchases.