An esports platform sold for £3 million to one of their investors – before they had revenue

It pays to have investors who are aligned with your purpose.

For the co-founders of U.K.-based Grid Finder, a community esports platform for simulated car racing across Nintendo, Playstation, Xbox and PCs, that alignment led to an unexpected 7-figure sale — before the company had even generated revenue.

When founder Tom Bunten first met representatives from RAFA Racing Club at a raceway near Austin, Texas, the team’s founder Rafael Martinez was just starting to build luxury motorsports-enthusiast clubs around the world. There were obvious synergies.

“We spoke the same language, we had the same passions,” Bunten said, adding that the RAFA team planned to put sim racing setups into their clubs. “It was like a physical incarnation of what we were building online.”

RAFA’s venture arm, Maximo Capital, invested £320,000 ($400,000 USD) in Grid Finder in 2022, and when Martinez started talking about acquisition about a year later, things fell into place. “We had a bit of a fairy tale acquisition,” Bunten said.

RAFA Racing Club acquired Grid Finder in December 2023 for £3 million ($4 million USD).

How this business grew from hobby to startup

What started as a COVID-19 shutdown hobby wound up raising £620,000 ($832,000 USD) in venture capital.

Bunten, a former British Royal Navy officer, was captaining a merchant ship at sea during the pandemic when he came up with the idea for Grid Finder. He wanted to help sim racers find online game races and track their statistics. “Grid” refers to the lineup of cars at the start of a race.

He met co-founder Nikhil Patel in line for drinks at a 2022 networking event in Newcastle, UK. “We bonded over how we hated networking events,” Bunten said.

As the two discussed Grid Finder, a third person joined their chat — Kevin Beales, an investor attending under the radar to hear about potential opportunities. He became their first angel.

They brought in third co-founder Chris Honniball, an Ohio-based gamer and software developer, after a successful round of fundraising. Honniball was an early fan of Bunten’s initial Wix-built version of Grid Finder and connected with the founder to help build a custom website in 2021.

To grow, the team leveraged users’ natural interest in sharing races online, building into the site shareable social-media-ready thumbnail images, and gamifying “filling the grid,” or making sure all the spaces at the start of a race are booked.

“We essentially incentivized our community owners to grow their communities, which obviously, in turn, grew our user base,” he said.

By 2023, Grid Finder grew to 50,000 registered gamers and was hosting over 4,000 online racing events per year.

An unexpected sale for Grid Finder

With their third-round fundraising deadline approaching, the team debated whether to close at £1.2 million ($1.6 million USD) rather than the targeted £1.5 million ($2 million USD). They decided to run it by their current investors, including RAFA Racing Club.

“We were kind of hinting, if you’d like to put in £300,000 to close, then it’s here,” Bunten said.

But RAFA owner Rafael Martinez instead delivered a shock.

“His words were actually, ‘Tom, I’m not so excited about investing anymore,’” Bunten recalled. “Which obviously made me think, oh my god, this is really bad.”

For a current investor who knows the inside details of a startup, backing out of an investment is a sign they’ve lost faith.

“Luckily, that wasn’t the end of the sentence,” Tom said. “It was, comma, ‘We actually think this aligns more strategically with our vision and wanted to have a conversation about acquisition.’”

“After I picked myself off the floor,” Tom continued, “we started having brief conversations about what that might look like.”

This was way earlier than the team had dreamed of selling — the company was still pre-revenue.

“It was like arriving at a teleporter and deciding whether or not to step in,” he said, adding that even this fairy-tale acquisition was an “incredibly stressful” process.

“Every text, email, phone call — every single one — you read it and go, ‘Oh, that’s it. Deal’s done, deal’s dead,” he said. “Which obviously wasn’t the case, but you just overthink everything.”

Thankfully, Beales, Grid Finder’s initial angel investor who also served on the board, stepped in to advise the co-founders. He had previously sold two businesses, so his experience and leadership was “absolutely invaluable,” according to Bunten. “Next time I do a startup, I would definitely be looking for an investor-board member who is a proven exit founder.”

Grid Finder’s investors were also key in the company’s sale price. They had put money into a high-risk startup and were looking for a larger return than the initial $1.25 million valuation would provide.

“The angel investors quite usefully said, ‘Well, look, we could get excited and behind this deal if we could achieve a 3x from our pre-seed investment,’” Tom said.

The buyer, whose vision for its clubs was in the multi-millions, did not push back, Tom said.

RAFA Racing Club acquired Grid Finder for £3 million in December 2023. The deal was mostly cash with some options, to be paid out over 3 years. The sale price was public because RAFA paired the acquisition with their own hard launch in early 2024, leveraging the sale to increase press coverage, including in the online gaming world.

But even the fairy-tale ending was not without some drama.

The parties agreed to the deal in October, so Grid Finder didn’t close their £1.2 million fundraising round. Without those funds, the company needed the sale sorted out before Christmas to pay employees.

Bunten recalls sitting in the passenger seat on December 22 as his girlfriend drove them to visit family. It was a half hour before banks would shut down for the holidays, and Bunten was thinking, “Either I can’t pay the staff for Christmas and we’re technically trading insolvent, or it’s the best Christmas in the world, ever.”

The funds came through minutes before banks closed.

Moving forward post-acquisition

All three founders initially stayed with the company after the acquisition — their salaries were negotiated separately, in addition to the sale price — though Honniball moved on after six months and Patel shifted to work for RAFA, rather than focusing specifically on Grid Finder.

Bunten, who as the original founder had over 50% equity at the time of sale, kept his role as CEO during his 3-year earn out, a move made easier by his shared vision with the buyer, something he recommends other founders look out for. “Ensure your acquirers are absolutely aligned with your vision for the company if you intend to stay on,” he advised.

He is also now an angel investor himself, even funding members of the same Newcastle startup incubator cohort that watched Grid Finder skyrocket.

The Newcastle startup crowd poured so much into him in the early days, he said. “When we had a success story, there was a huge part of me that wanted to put back into that system.”