Recent $12M Investment Accelerates Nerd Street Gamers’ Rapid Growth

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  • The latest success story in 2019 for Nerd Street Gamers is raising $12 million.
  • Nerd Street Gamers CEO and co-founder John Fazio hopes to see upwards of 70 esports facilities developed in the near future.
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Photo Credit: Harrisburg University

When Nerd Street Gamers was founded in 2011, CEO and co-founder John Fazio said the goal was simple: “to bring competitive gaming to everybody and increase the number of opportunities in life that they get from gaming.”

Now, as esports and gaming has exploded over the last eight years, NSG has grown by leaps and bounds alongside it.

In 2018, the company had 277% revenue growth year over year.

Topping that this year is the news that it has raised $12 million from numerous companies such as Five Below, Comcast, Elevate Capital, SeventySix Capital, and angel investor George Miller. The money will go towards constructing new esports training centers nationwide – and also on university campuses – for amateur and professional esports players and teams.

Fazio says that its expansion interest came courtesy of seed-funding investors Comcast and SeventySix Capital. After investing himself into building the company’s Philadelphia prototype, Comcast and SeventySix Capital provided the capital for developing facilities – known as “Localhost” spaces – in Huntington Beach, Calif., and Denver.

From there, an abundance of other companies began working with NSG. Kellogg’s – the company behind Corn Flakes, Eggo waffles and Pringles – signed a deal becoming an official sponsor of a series of NSG’s Overwatch tournaments. Mike and Ike – another food company – then signed on as a partner for the 2020 National Championship Series.

“We had proven that once we were in Huntington Beach, Denver, and Philly, there was more of a demand for national scale offering than a single store location,” Fazio said. “That proof point was enough for our next round of investors to come in and say let’s put the pedal to the metal here and expand and grow this to a scale that reaches practically every city.”

While some saw NSG’s subsequent partnership with retail chain Five Below as peculiar, Fazio saw it as a notable opportunity to flourish. With over 800 retail stores across the United States, Five Below took on rental space bigger than it needed with the hopes of using it for new verticals, said Fazio.

That additional space is what Fazio says will enable NSG to build 3,000-square foot Localhost spaces connected to select Five Below stores beginning with a multi-store pilot as soon as Q1 2020. Future years will see upwards of 70 Localhost facilities built alongside Five Below, with the hope of reaching 100 within five years.

“I thought it might take a little longer for the industry to accept what we were doing and to see the value,” Fazio said. “The movement and growth have just been so much faster than we predicted. We thought it might take years of competitions, building up ecosystems for people to really understand why you want to game in person – and that’s just the opposite.”

The recent financial investment NSG benefitting from is the latest in what’s already been a successful summer. In September, it announced that it’s working with Comcast Spectacor to bring a pro-level Localhost facility to the Wells Fargo Center in Philadelphia. On days where there are no other events at the arena, it will host year-round competitive gaming tournaments.

Since its involvement with the Wells Fargo Center, Fazio says that more pro sports stadiums have reached out to work with NSG – and that at least a handful of similar deals will be made public in the coming months.

It’s the same effect that occurred when NSG entered into relationships with American universities. Its first college partnership came in August when New Jersey-based Fairleigh Dickinson University agreed to let NSG build an esports team room on FDU’s Florham campus.

On September 12, NSG then partnered with Rowan University to invest over $1 million in the construction of a 7,500-square-foot gaming facility on Rowan Boulevard in Glassboro, N.J., that will also include a broadcast studio. It will then help Rowan build a curriculum based around the esports industry, establish internship opportunities and create club- and varsity-level esports teams.

“There are other companies out there that are that are bigger and are doing the same things as far as growth in their plans,” said Joe Cardona, Rowan University’s vice president for university relations. “But what spoke to us was [NSG’s] understanding of our big picture and they jumped right in and understood it. We want to partner with someone that says to us: this is what we’re looking for. This is what should be in these pro academic programs, and this is what we’re teaching people so that they are prepared to be the leaders in this industry.”

READ MORE: Magic Gaming’s Growth Tied to Basketball, Esports Crossover Strategy

Another key element to NSG’s rising popularity is its reputation in running esports tournaments. Since 2018, it has hosted the HUE Invitational – a collegiate esports competition – with Harrisburg University. The inaugural event was open to any college – and opened with 32 teams said Chad Smeltz, Harrisburg University’s director of esports. NSG was there to assist Smeltz and his staff through the administrative and tournament setup often associated with collegiate esports.

This year, participation doubled to 64 universities and so many more tried to sign up that Smeltz made the HUE Invitational invite-only.

“Working with them personally every step of the way – from tournament rules to event hosting – has been incredibly helpful,” Smeltz said. “We’ve been able to use and work with Nerd Street on a ton of other things because of the way the HUE Invitational has gone and it’s very clear that it’s going to be a partnership that’s going to last for a while.”

READ MORE: Overtime Expanding Esports Strategy From Team Ownership to Content

As executive director of the National Associate of Collegiate Esports, Michael Brooks has helped NACE membership balloon from six schools in 2016 to 178 in 2019 – and 95% of all varsity programs are members. Through partnering with colleges and universities, NSG has been able to carve out a unique role in collegiate esports.

“They saw that they can provide a positive influence on the industry,” Brooks said. “It does serve an excellent niche where it [works with] schools that want to be in the space but don’t necessarily have the facilities already on campus or something they can build and certainly may not have the expertise as well. Then Nerd Street comes in and makes that vision a reality.”

Similar to Brooks’ ability to have NACE membership increase by roughly 2866% since 2016, Fazio and NSG are experiencing new heights since its inception. More people are being exposed to esports – regardless of experience – through NSG, and that’s something that Fazio wants to keep in mind when it grows beyond 2019.

“The growth has been faster than we could have imagined – it’s been like living a dream,” Fazio said. “We’re just really trying to keep our eye on the prize here and make sure that no matter how fast we grow or how much capital we raise, we’re always focused on that one mission.”