Rivalry chief executive and co-founder Steven Salz added that he hoped the investment would set the business on a path where it could pursue both profitability and growth at the same time.
Rivalry raises investment in new debt offering
The CA$14m investment is the first tranche of a new debt offering. This is part of a wider scheme to issue convertible debenture to prospective investors.
A convertible debenture is a kind of long-term debt issued by a company that can be converted to stock.
In the case of Rivalry, these are CA$1,000 securities with a 10% interest rate that mature on 14 November 2027. Interest is to be paid in cash on a quarterly basis.
Prior to the maturity date, the holder has an option of converting the product into company stock at a price of CA$1.40 per share. As of market close on 14 November 2023, Rivalry was trading at CA$1.00.
Future tranches of the debt offering can raise up to CA$27.5m per round.Salz said he was “very pleased” to receive the new investment.
“Rivalry’s unique product mix and position in the marketplace has brought the business to the inflection point it’s reached today.
“We’re deeply confident in the underlying trends the business is showing and maintain our expectation to achieve profitability in H1 2024.
“Strengthening our balance sheet positions the company to maximise the opportunity in front of us,” he added.
While esports operators have historically struggled in the wake of a Covid-era growth period, Rivalry has largely proved the exception, albeit while expanding into verticals such as casino and sports betting.
In its Q2 financial report, the business reported 60% revenue growth to CA$8.5m and a 192% rise in betting handle. The company anticipates achieving profitability in H1 2024.
