Stockholm, Sweden-based esports and gaming company Stryda (a subsidiary of G-Loot Global Esports AB) filed for insolvency (bankruptcy) with the Swedish Companies Registration Office on Dec. 15.
The bankruptcy—at least on its face and not looking into the company’s financials since its launch—seems surprising given how much money it has raised since 2016 and according to its interim Q3 2023 financial report, which noted that it had approximately SEK 23.03M ($2.3M USD) in cash on hand at the end of September; SEK 43.5M ($4.37M USD) including holdings at the Swedish Tax Agency.
Nearly $100M in Investments Since 2016
So just how much has the company raised since 2016? Here’s a quick rundown:
- In September of 2016, Swedish real-money esports gaming company Gumbler (which was later renamed to G-Loot) raised €5M in funding from Inbox Capital and international tennis star Robin Söderling, Sweden national football team captain Andreas Granqvist, and former Sweden football international Martin Dahlin (roughly $5.268M USD at an average exchange rate of €1 = $1.0536 USD, according to historical exchange rate data of Exchange Rates UK).
- In January 2018, it raised $12.1M from a group of investors, including Scandinavian asset manager Swedbank Robur and Norron, an asset management fund owned by Norwegian industrial investment firm Aker ASA. The investment round valued G-Loot at approximately $50M post-money.
- In March 2019, G-Loot secured $25M in funding, which included participation from Swedbank Robur, Norron, Patrik Nybladh, Inbox Capital, and Transferator Ventures. The 2019 investment, valued the company at approximately $105M post-money.
- In October 2020, the company secured $56M in a financing round that included Club Network Investment (CNI), Inbox Capital, and Swedbank Robur. G-Loot’s largest financing round pushed its post-money valuation to its all-time high of approximately $178M.
Unsustainable Growth Triggered G-Loot’s Collapse
Following its largest financing round in October 2020, its then-CEO and founder Patrik Nybladh, announced plans to go public within a year. However, a public offering was never executed and Nybladh left the CEO position in February 2021, initially, serving as chairman of the board before also stepping down from that position in May 2021.
During its heyday in 2020, the G-Loot group – with its wholly-owned subsidiaries iModules AB (now Stryda AB and the only subsidiary with significant business activity), Gumbler Ltd., Strandstrosaren 45 AB, and G-Loot AB – generated roughly $6M in revenues, a 155% increase compared to the previous year. However, the growth came at a hefty price tag as the G-Loot group recorded a net loss of just over $25M that year.
The five largest shareholders in G-Loot Global Esports following its largest and last investment in October 2020, were Swedbank Robur (8.8%), Norron (6.9%), KKCG (5.1%), Patrik Nybladh (4.9%), and CNI (4.8%).
The following year, G-Loot started to reduce its workforce to an annual average of 92 and divested all shares of its subsidiary Strandstrosaren 45 AB as the company’s annual revenues plummeted to just over $1M for 2021, an 82% decrease year-over-year. G-Loot Global Esports’ net loss for the year was approximately $14M. According to the company’s annual report, the sudden decrease in revenues was induced by a shift in business strategy. With unsustainably high customer acquisition costs, G-Loot redirected its focus on taking steps toward profitability by reducing prize pools and phasing out high-cost products. Also in 2021, G-Loot improved its cash positions as a result of the sale of its shares in Overwolf Ltd.
Despite improved user metrics such as a 100% increase in rounds played per user, a 40% increase in monthly user retention, and improved margins, G-Loot Global Esports’ revenues continued to decline in 2022. With just under $0.5M in revenues, the company’s sales were cut in half compared to the previous year, while its net loss only dropped by roughly 20% to $11.3M. As a result, G-Loot initiated another savings program, including workforce reduction (down to 62 on an annual average), contract negotiations, and a move to a cheaper office space. In its 2022 annual report, G-Loot shared that it did not have sufficient working capital to survive 2023. Consequently, the company’s board identified various opportunities to secure investments as the failure to do so would result in bankruptcy.
While the now-renamed Stryda AB was able to increase revenues during the first quarter of 2023 – generating roughly $0.5M in the three-month period – its revenues flat-lined in Q2 and Q3 of 2023 with just $22K and $38K in revenues, respectively. Meanwhile, G-Loot Global Esports piled up another net loss of approximately $6.2M over the first nine months of the year. The continued accumulation of losses and the company’s inability to secure additional investment were the harbingers of its insolvency process initiated at the end of the year.
Company Wide Layoffs
Sources tell The Esports Advocate—that in tandem with this decision to file for bankruptcy—the company informed its nearly 50 or so employees that they were made redundant (laid off) last week. At its height in late 2019, Stryda employed more than 120 employees.
Sources also tell TEA that the decision to file for bankruptcy was driven by the company’s board of directors’ diminished confidence in the executive team’s ability to generate profits, secure additional funding, or find an acquisition partner—this allegedly followed recent rejections from prospective companies. A plan was put forward in June to either find a buyer or raise additional capital. That plan led to a lot of talks, according to public statements by Stryda CEO Johan Persson. On Dec. 14, he told Swedish paper IT-Branschen the following:
“We have presented the case to over 100 financial and strategic investors and buyers. We got very far with some, and we have always felt that it was close. But this week we received a no in a lengthy process, which led to the board making this decision.”
While sources we spoke to were reluctant to speak about specifics of why the company had stumbled in recent years, they did say that the bulk of the money raised in multiple funding rounds was used for product development, staffing, marketing, and event production. The costs associated with overstaffing (as we mentioned earlier the company had more than 120 employees at its height) were certainly an area of concern for sources we spoke to, as well as fairly high executive pay—a point that was highlighted in this recent BREAKIT report.
The End of Stryda
Sources we spoke to tell us that Stryda will probably not continue following the insolvency, but pointed to rumors that a small group of now-former employees may be working on preserving their work on AI match highlights – a feature that was supposed to be the cornerstone of the new platform, which was to be launched at the end of January. TEA could not independently verify these rumors. The parent company G-Loot will continue on, according to sources, though it is a holding company with no operations.
Stryda VALORANT Nordic Clash Prize Money Still Owed
Finally, sources familiar with the situation noted that company executives expressed a commitment to deal with financial obligations related to the VCT EMEA OFF//SEASON event—the Stryda VALORANT Nordic Clash—which concluded on Dec. 10. But teams that won the event, which had a total prize pool of $6K, have not received any updates as of this writing. One team representative told us that they are waiting to see because Stryda has 30 days after invoicing to pay prize winners, per the contract/rules.