3 Reasons Why This VC Firm Invested in Twitch

In 2012, Bessemer Ventures invested $13 million in Twitch’s Series B round.

Within 2 years, it was acquired by Amazon for a $970M cash exit. This was one of the biggest acquisitions at the time. Today, Twitch is the market leader in video game streaming.

Here are 3 reasons why Bessemer Ventures Partners (BVP) placed that bet.

They had impressive strategic partners

At the time of the due diligence, Twitch made some impressive strategic partners like Tencent, EA, Activision, and Take Two. 

By partnering with these large game publishers, Twitch opened the doors for easier SDK integrations that benefitted the publishers, Twitch, and the streamers. It also made them even more reputable within the gaming community.

A large user base was imminent. 

They were creating a new market

The absence of a market size for the American game streaming was listed as one of Twitch’s key risks. However, that risk was eliminated.

To identify market size and growth, BVP reached out to game publishers and other industry leaders and received positive endorsements and reviews about Twitch’s team and strategy. Twitch’s product was comparable to watching poker on television, which is a massive franchise. BVP also looked into the size of the eSports market in other countries such as South Korea and saw cable channels devoted to watching the games.

The new market for American game streaming was promising and provides benefits for the entire gaming industry.

They had high user month-over-month growth and user retention

Twitch’s growth averaged 9.6% unique visits and 16% of minutes watched since 2011. On average, daily user unique visitors watch over 75 minutes of content while on the site.

This was great for streamers as they were incentivized to stay on the platform made for them. Twitch’s team made it their goal to make it easy as possible to engage new streamers as well. At the time of the investment, Twitch did between $635k and $670k in net revenue in February, March, and April 2012. 

Twitch shaped the gaming industry forever

If you're a gamer and/or streamer, how did your life change with Twitch?