Some consolidation is afoot in the world of gaming. Today, Space Ape Games — a London social and mobile games studio founded by alums from Playfish, Mind Candy and EA — announced that Supercell has acquired 62 percent of the company for $55.8 million, as part of a long-term strategic partnership. The deal gives Space Ape a total equity valuation of $90 million.
Space Ape’s co-founder and CEO John Earner says that Space Ape itself will continue to own 38 percent of the company, which has been behind the games Transformers: Earth Wars; Rival Kingdoms; and Samurai Siege. As part of the deal, Supercell is buying out stakes from previous investors, which include Accel, Northzone, Initial Capital and Sega. These and other previous investors collectively had put just over $14 million into the company up to now.
Space Ape has been profitable since the end of 2016, hitting $92 million in revenues last year, with $5 million in Q4 profit, according to this profile. Earner, in a blog post shared with TechCrunch, writes that the company has been talking with Supercell since 2016 to invest. In that time, the two have often been compared and for some might have been viewed as rivals. No sign of that today, as Earner describes the new shareholder as a “kindred company.”
“They love games as much as we do, in a mobile games industry I often feel is just not passionate enough about playing games themselves. Supercell works like we work: in small, collaborative teams. Supercell is patient, innovative, ambitious, and enormously successful. They are prepared for the ups and downs our journey will continue to bring because they’ve been there. They believe in us. They’ll let us dream bigger and think longer term.”
The deal is a sign of how Finland’s Supercell — of Clash of Clans fame and one of the most successful of the mobile gaming companies, and itself first majority acquired by Softbank, which then subsequently sold its stake to Tencent for $8.6 billion — is now in acquisition mode itself, on the hunt for new talent and titles to expand its empire.
“We’ve known John, Simon [Hade, the other co-founder] and their team for some time now,” said Ilkka Paananen, the co-founder and CEO of Supercell, which like Space Ape has continued to own a stake it its business even as it’s passed through the hands of two different majority-owners.
“We share their vision and passion to create games for the biggest possible audience. They want to innovate, take risks and aren’t afraid to make mistakes. We also know from our own experience that this vision needs a backer who thinks long-term and is patient. And, above all, who trusts the team and stays out of the way. As a bonus, we’ve been huge fans of the UK game developer scene since the days of Commodore 64 so it’s really cool to partner with a studio there.”
The investment will be used to grow Space Ape and most likely to see some strategic tie-ups between the two gaming companies, in a way that straight VCs might not have been able to offer the smaller gaming startup at this stage.
“We were excited by John’s vision when he founded Space Ape as Entrepreneur-in-Residence at Accel, and thrilled to lead the Series A investment in the company,” noted Martin Gibson, a partner at Accel, in a statement. “The partnership with Supercell is a testament to the talent of the team and its success to date.”
There’s also an interesting story here that goes beyond this specific deal. A lot of the talk about tech in London in recent times has been about how Brexit — the UK’s [not unanimously supported] plan to leave European Union — will affect the country’s and city’s tech economy, which has thrived in recent years with the general upswing in the sector.
But deals like this underscore how — for now, at least — startups continue to thrive and talent is still staying put. London has also, over the years, developed a reputation in mobile and gaming specifically. Past highlights include Playfish (acquired, but then shut down, by EA), the once-popular Moshi Monsters from Mind Candy, and Monument Valley from Ustwo Games.