When Forbes released its most recent rankings of the world’s most valuable esports organizations in November, FaZe Clan came in at No. 4 with $240 million, leading co-owner and CEO Lee Trink to proclaim, “I wouldn’t trade businesses with anyone on this list.”
For the reasoning behind that opinion, look no further than last week.
Canadian investment banking and financial services company Canaccord Genuity announced last week it has financed FaZe Clan with a convertible loan of $22.7 million.
In a convertible loan, upon agreement the lender secures the option to convert the loan into equity in the borrower’s asset at an agreed-upon time at an agreed-upon value. Per Canaccord’s news release, the convertible loan is convertible at an equity valuation of $220 million. Canaccord stated in the release that the loan “will be used for working capital and general corporate purposes.”
Canaccord also received a seat on FaZe Clan’s board of directors.
FaZe Clan fields six competitive teams in numerous games, and also specializes in content creation.
According to Esports Observer, convertible loans typically bridge the time between a company’s immediate need for funding and a round of larger of investment. Upon conclusion of that bigger round, the loan could convert into equity.
—Field Level Media