A message to the community from Josh Kingett, X7 Esports Founder & CEO.
To all X7 followers and friends,
I am writing this piece today to share an important update on the status of X7 Esports as a start-up, brand, and community.
The short version is that unfortunately we no longer see a viable route forward for X7 as a business. As a result, we will be winding down the company over the coming weeks.
I would like to take this moment to reflect on everything our incredible staff and players have achieved since our foundation, and to be transparent with you all about how we got here.
Reflections on X7
Having noticed a steady demand for imported talent in both the LEC/LCS, our goal with X7 and its League of Legends project was providing a platform to foster world-class players from East Asia, and to help integrate them into Western teams. Both LCK/LPL are insanely competitive environments for professional players, and our goal has been to represent an opportunity for ambitious individuals to break into starting rosters. Our platform included the provision of English lessons to strengthen communication skills; assistance with visa applications and insurance; state-of-the-art accommodation, leisure, and training facilities; and ensuring our players had a dedicated member of the X7 coaching staff to keep them company. We achieved demonstrable success with this business model, and are proud to have worked with and transferred Kang “Haru” Min-seung and Kim “Chasy” Dong-hyeon to Team Vitality and MAD Lions respectively to the LEC.
Our intent throughout 2022 has been to raise capital and continue our growth in 2023, however X7 - like many other businesses, was hit with a series of unforeseen global circumstances this year. Our planned seed investment raise in January 2022 and again our re-attempt in April a few months later were derailed by a sweeping combination of record-high inflation and back-to-back interest rate increases; the S&P500 dropping by almost 15%; Russia declaring war on Ukraine; the cost-of-living skyrocketing; and several crashes in the crypto market including Luna in May, and more recently, FTX. Investors whom I can say we were very close to finalising a deal with, instead chose to wait until the dust had settled amidst the new economic crisis. Given the circumstances, this was perfectly reasonable on their part despite the frustration with capital now unforthcoming.
Despite this adversity, our staff and players from top to bottom managed to pull through this year with some excellent results - finishing 1st and 2nd Place in the Northern League of Legends Championship (NLC), qualifying for the Quarterfinals of the European Masters tournament in both Spring and Summer split, and securing ourselves as one of the strongest UK League of Legends teams, outside of the LEC. It is a track record of which I am incredibly proud, and that pride extends to each individual who was a part of our success. Through last week we had been in the final stages of negotiation from promising investment leads that were considering our expansion proposal for 2023. Our ambitions included business development initiatives; entering a new esports title; tripling-down on brand growth and content creation; and further diversification of our revenue streams. Some of these investment leads had already put offers on the table for us to consider.
However, due to the recent changes made by Riot Games for European Regional Leagues (ERLs) for 2023, in collaboration with our regional TO, Freaks 4U Gaming, it was announced the NLC will be downgraded to non-accredited status, which includes heavy budget cuts. The knock-on effect has a profound impact on our projected revenue moving forwards, devalues the assets we hold and puts a stop to the business model we implemented to provide sustainability for the company.
As a result our remaining investment conversations have run dry and our runway cannot extend further. Those who had previously made us an offer to consider, have justifiably decided not to proceed to signing a deal, due to a combination of contributing factors I listed previously.
Our players and staff who have been, or were, with X7 throughout this rollercoaster journey will know how appreciative I am of their unwavering support, cooperation and understanding. All remaining funds which the company holds will be proportionally distributed between its non-shareholding creditors in the coming weeks, and for all our current staff we will assist however we can in a transition to their next endeavours, be that provision of recommendations, company work portfolio, or other means.
As for me personally, I am heartbroken but don’t regret any of the time, resources, tears or effort I put into this project. X7 was fuelled by passion, and I embraced every up and down. What I’ve learnt and the relationships I’ve built during this chapter of my life will be with me forever. Ultimately I can only hold my hands up and bear the responsibility for not achieving our raise. Whilst timing may not have been ideal, a different approach or strategy might have achieved the growth that could have made X7 an easier ‘yes’ for investment partners. I will be writing a separate, more detailed thought-piece in the coming days, illustrating the X7 journey and learnings in full since inception, and a list of personal thank you’s that would be far too exhaustive for today’s statement.
If you have ever tweeted about X7, supported our posts, cheered us on in Twitch chat, or participated in the X7 community in any way, please know that you are the reason we fought for so long. You are the reason that made this journey worth it. Thank you.
Josh Kingett, Founder & CEO of X7 Esports