Nerd Street founder on what’s next after near bankruptcy: ‘It’d be naive to say we’re out of the woods’

Most founders face their fair share of financial turmoil over the years — and John Fazio has seen nearly all of it.

The CEO and founder of Nerd Street, a Philadelphia esports hub, he has dealt with the struggle to raise capital, the abrupt end of a high-profile partnership and the financial risk of putting his own money into the business. 

Now, Fazio is taking the lessons learned in stride as he looks ahead to the startup’s future. 

“We’re still paying off the debt that we accrued through this process,” Fazio said on the Founding Philly podcast. “But the difference is … we have cash in the bank that came from a great investor, and we’ve got some room to navigate, which we haven’t had in a long time.” 

Fazio, a lifelong gamer and technologist, merged his passion for video games, sports and technology into the startup that began as N3rd Street Gamers. From reverse engineering video games in his early days to competing on Drexel University’s D1 soccer team, his interests laid the foundation for his career.

Nerd Street initially boomed after it was founded in 2016. Early investors like SeventySix Capital and Comcast helped the company expand its footprint. It inked a deal with Five Below, opening three more locations after a $12 million Series A round. 

That partnership abruptly ended, leaving Nerd Street in a lurch. After years of building a reputation as a hot, budding startup, it suddenly lacked a path forward. 

“Everything starts crashing down on us,” Fazio said. “All existing investors walk away. They’re out of the equation because we’re no longer skyrocketing.”

On the verge of bankruptcy and fighting lawsuits, the startup stayed afloat thanks to support from the Founders Fund, a Silicon Valley VC firm, according to Fazio, which continued writing the checks that got the company through that period.

Nerd Street appears to be bouncing back according to plan. In September, it announced a pivotal $6 million funding round led by $5 million from Konvoy Ventures.

This funding aims to move Nerd Street toward a business model focused on developing and operating esports programs on college campuses. This model leverages existing university infrastructures to reduce costs and accelerate expansion.

Moving forward, Fazio said, requires rebuilding trust with customers and business partners alike.

“It’d be naive or misleading to say we’re out of the woods,” Fazio said. “It’s going to be a really hard process from here, and the whole team knows that. The big lesson learned, I’d say, is that I counted the chickens before they were there.”

Listen to the full podcast to hear about Fazio’s journey building Nerd Street, overcoming financial hardship and what’s next for the esports startup.