When SoftBank bought an additional 22 percent of Finnish game maker Supercell this week, it didn’t disclose the valuation. But GamesBeat has learned from a reliable source that the value of Supercell in the transaction is an eye-popping $5.5 billion.
We’ll talk more about what that means in a moment, but we’ll take a guess that it makes Supercell the most valuable mobile game company in the world. But the size of the deal tells you just how big the stakes are in the $30 billion mobile game industry. Supercell has just three published games — Clash of Clans, Hay Day, and Boom Beach. These generated $1.7 billion in sales and half a billion dollars in profit in 2014. For the venture capital firms involved in the deal, this latest transaction resulted in a very big payday.
Back in October 2013, SoftBank saw the growth of Clash of Clans, which was No. 1 on the top-grossing list of mobile games even back then (it still is now). So it bought 51 percent of Supercell for $1.5 billion, valuing the whole company at $3 billion. The venture capital investors sold half their stakes back then, and they’ve now for the most part exited the investment. Most of the rest of the 28 percent or so ownership that SoftBank doesn’t own is held in the hands of Supercell’s management and employees.
The above figures mean that SoftBank paid an additional $1.2 billion to purchase the 22 percent stake from investors including Accel Partners, Index Ventures, Atomico, Institutional Venture Partners, London Venture Partners, and Initial Capital. Accel had the biggest stake, as it was the primary investor back during the Series A investment, when Supercell was valued at $40 million.
At $5.5 billion, Supercell is now worth more than publicly traded Zynga, the FarmVille maker which is valued at $2.7 billion (a company with 2,000 employees), and Candy Crush Saga maker King at $4.5 billion (with around 1,200 employees).
SoftBank is now the sole external shareholder in Supercell. If you think about it in the value of the company per employee, it is an astounding $36 million. Supercell has around 150 employees, and it creates games with small teams of around five people.
Should the company really deserve this value? Clash of Clans has dominated since 2012, and it shows no signs of losing its No. 1 position on the top of the charts in terms of top-grossing apps. And it has a seasoned management team. Revenues are snowballing upwards, thanks in no small part to its Super Bowl ad starring Liam Neeson. The $9 million TV ad has generated more than 54 million views on YouTube alone. The company maintains Clash of Clans with a relatively tiny team of about 15 people, the last we heard.
The company’s leader is Ilkka Paananen, who headed-up mobile game development teams for years before starting Supercell with the help of loans from the Finnish government in 2009. Supercell had a seasoned team of mobile game creators, and it made some big decisions, like deciding in November 2011 to invest solely in mobile games. It creates a lot of prototypes each year and then tests them. It’s ruthless about discarding ideas that don’t work, celebrating what it learns from them, and then moving on to something new. Supercell is testing a new game called Smash Land.
Accel, SoftBank, Supercell, and others in the deal declined comment.
“We believed that well-capitalizing Supercell at an early stage would empower it to control its own destiny and take risks,” wrote Kevin Commoli, a partner at Accel, in a blog post. “Accel became the first and sole institutional venture investor, financing the company in May 2011 with an $11 million Series A. I became a board member and I am very proud to have been part of the company’s history.”