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Rovio secures $42 million funding

Thu 10 Mar 2011 1:32pm GMT / 8:32am EST / 5:32am PST
MobileDevelopment

Accel Partners and Atomico Ventures lead investment

Angry Birds Creator Rovio has secured $42 million in a surprise funding round, lead by Accel Partners.

Fortune.com senior editor Dan Primack tweeted a message announcing the funding shortly before entering an interview with an unnamed Rovio executive, sparking a wave of stories on business and gaming sites.

Since then, Rovio has confirmed the rumour, and also announced that it has named Skype co-founder Niklas Zennstroem to its board. Atomico Ventures, Zennstroem's investment company, co-lead the funding.

"This investment will give Rovio wings," Zennstroem said. "Angry Birds is one of the fastest-growing online products I've seen, growing even faster than Skype, and the company has done a brilliant job of extending it across different platforms and merchandise."

"Angry Birds will continue to grow and we aim to create more similar success stories," said Rovio CEO Mikael Hed.

Just yesterday Rovio revealed that Angry Birds had cost just $140,000 to make, but had generated $70 million from various revenue streams, including over $2 million from the sale of plush toys.

A film deal with Fox is also currently in the works, which funded the Angry Birds advertisement during the recent Super Bowl.

22 Comments

Andrew Goodchild Studying development, Train2Game

1,255 421 0.3
I'm probably being nieve, but if the cost of developing and updating the game was $140k, and has generated $70M, why did they need to raise $42M. They can presumably afford to make hundreds of games slightly bigger than Angry Birds, unless they want to move into AAA space, (Super Angry Birds 3D?) which I'm guessing isn't the case. I know that of that $70M some probably went to other sources, including Chillingo, the Appstore, and the taxman, plus as profits paid to owners, but isn't one of the benifits of success like theirs that they can self fund?

Like I say, I'm not an expert on these things, I really would like to here what the benifits are.

Posted:3 years ago

#1

Nick McCrea Gentleman, Pocket Starship

224 462 2.1
It's the approximate cost of building a rocket, flying to the moon and painting a picture of a giant, angry bird on it.


Edited 2 times. Last edit by Nick McCrea on 10th March 2011 2:25pm

Posted:3 years ago

#2

David Spender Lead Programmer

129 54 0.4
@Andrew - that is also the first thing that crossed my mind. Apparently the benefits are 'wings'. Whatever that means.

Posted:3 years ago

#3

Andrew Goodchild Studying development, Train2Game

1,255 421 0.3
@Nick, ok, I admit, that would be pretty awesome;)

Posted:3 years ago

#4

Erlend Grefsrud Creative Director, Strongman Games Ltd.

22 0 0.0
The founders wanted to get rich, I guess. What's the best way to inflate the value of your company?

Take investment!

The investors are, after all, primarily interested in inflating the value of the company and make it look more attractive for multinational conglomerate acquisition, where they stand to make a killing.

This is business as usual.

Edited 1 times. Last edit by Erlend Grefsrud on 10th March 2011 2:48pm

Posted:3 years ago

#5

Tim Wright Managing Director, Tantrumedia Limited

29 0 0.0
AFAIK Rovio have one big hit. They are basically a Chesney Hawkes.
Who amongst you has ever heard of the rest of their catalogue; Bounce Tales, Bounce Touch, Bounce Boing Voyage, Burger Rush, Collapse Chaos, Cyber Blood, Darkest Fear 2, Darkest Fear 3, Dragon & Jade, Formula GP Racing, Gem Drop, Marine Sniper, Mole War, Paid to Kill, Paper Planes, Patron Angel, Playman Winter Games, Shopping madness, Star Marine, Sumea Ski Jump, Swat Elite Troops, Totomi, War Diary Burma, War Diary Torpedo or Wolfmoon? I haven't.
So, percentage wise Angry Birds is roughly a 1 in 25(ish) hit ratio. MASSIVE hit, granted - who wouldn't love to spend $140k and make $70m?
This smells like dot.com boom all over again, unless the investors are in for a quick gravy train buck from the film/books/lunch box rights?
I'm sure they've all done the math - so good luck to 'em I say. It's nice hearing about successes like this when on the flip side there are so many redundancies and liquidations.

Posted:3 years ago

#6

Private Industry

1,176 182 0.2
Now don`t get me wrong I like angry birds, but it generated 70 million in revenue and now they need 42 million in funding? I don`t expect them to move to making big games for PC and consoles so what are doing with all that money?

Posted:3 years ago

#7

Terry Hunter Freelance Writer

1 0 0.0
I'm with Tim on this one

I have been plugging away as a freelance writer looking for my 'break' its soul destroying and makes you question your ability and indeed if you have any business doing what you do. So what if they have a 1 in 25 hit rate? Good for them I say! With the likes of Blizzard going to the wall its great to see a success story. They got their break, all I need now is to get mine!

Posted:3 years ago

#8

Richard Westmoreland Game Desginer, Exient Ltd

138 90 0.7
It seems everyone is thinking the same as me. What exactly do they need $42 million for?

Posted:3 years ago

#9

Andy Tait Partner, Pembridge Asia

1 0 0.0
My guess is with that much cash they can develop for the console market and be in a strong negotiating position with publishers. Note also it's more than money which is always essential.

Posted:3 years ago

#10

Private Industry

1,176 182 0.2
With 42 million they can develop some big big game for consoles. They already made angry birds for the PS3 and no funding required for that.

Posted:3 years ago

#11

Andrew Goodchild Studying development, Train2Game

1,255 421 0.3
Like you said, with that money they could aim for a major AAA budget, but I can't see they have they infrastructure. At $140k we are taking what, 6-10 full time staff over 6-12 months? I haven't heard that they've been increasing their headcount to 100+ people, which I'm guessing would have been worth mentioning.

Edited 1 times. Last edit by Andrew Goodchild on 10th March 2011 4:45pm

Posted:3 years ago

#12

Raf Keustermans CEO, co-founder Plumbee

28 2 0.1
I don't think they 'need' to raise $42M (as in: they need cash to pay the bills), but they had the opportunity to raise $$ at a good valuation, so probably made sense to take the money so they can grow faster.
I'm thinking about stuff like a war chest for acquisitions of other studios to scale faster + they want to become more than just a mobile game dev, in an interview with Wired the founders said they wanted to become the 'new Disney' - so I'm thinking logical next step is to become a real publisher -> a chunk of that will be for aggressively marketing new titles or spin-offs on a global level + they will need to staff up if they want to become a leading publisher: think VP of licensing, a top Legal dude, more marketing folk, a good Finance Director, ... + they are pushing Angry Birds on Facebook, so can imagine they would like to spend some $$ on that game + marketing as well.

Posted:3 years ago

#13

Matt Hackett Game Developer, Lost Decade Games

49 2 0.0
From my understanding, the reason to accept investment when you don't need cash is to obtain partnerships. So now Rovio has Accel on their side with an invested interest in their growth. It's less about the money and more about the partnership.

Posted:3 years ago

#14

Erlend Grefsrud Creative Director, Strongman Games Ltd.

22 0 0.0
You're assuming they're aiming for AAA. Why would they do that? It's high-risk, a flagging market and no place for an independent developer.

Thinking that AAA is "where studios want to end up" is a complete fallacy.

Posted:3 years ago

#15

Andrew Goodchild Studying development, Train2Game

1,255 421 0.3
@Erland. We are not assuming they are aiming for AAA, as I said I doubted that. We are questioning why they need to raise $42million on top of their tens of millions of profit when they arn't likely to go triple A.

Posted:3 years ago

#16

Greg Wilcox Creator, Destroy All Fanboys!

2,196 1,176 0.5
Oh look... it's Angry Birds Bubble Pop!

How long can this go on until it's realized for the amazing fad it is? Yeah, yeah, great game, fun, smart developers and all (OK, it's basically Jenga with a slingshot, mad, mad birds and pigs)and for that, they get respect until the end of time. But yeesh, WHY the hell a feature film for Pete's sake???

Name ONE good game to film translation that didn't require forgetting the source material existed. In the case of AB, you're pretty much asking a LOT of a viewer unless you're expecting people with low expecations to show up because they LOOOOOOOOVE the game so much they'll spend 12 bucks on a ticket to see what they could play for less. AND it won't have half a dozen or more "writers" mucking things up to boot. Don't tell me there's going to be an IMAX 3D version or I'll have to contemplate buying a steamroller and plane ticket.

Yeah, I think the film will tank, as the game isn't about siting on your ass for two hours and watching stuff happen. Maybe Rovio will make Angry Birds: Spectator as a tie in app. You don't play the game at all - it's a rolling demo based entirely on the movie plot and locations - whee. Just ring up Uwe Boll and let him have at it - it'll then at least be a weirdly entertaining two hours (or 1:47 once edited down a bit). Of course, if I'm wrong, hell, I can laugh at /with it when it hits cable and I'm really bored.

Fox is in it for the loot and of course, it's helping line Rovio's pockets for as long as they can shift out new versions and updates to the 1 in 25 hit they've got. One one hand, MORE Angry will please those who can't get enough and don't mind buying the game across multiple platforms. On the other hand, what happens when the next big cheap (cheep?) thing comes out and there's a mass shift over to Sheep Boomers or Octopi Wizards and Rovio's only response is to throw a party, wave flags and throw confetti as they unveil... Angry Birds XIII: The Final Struggle!"

Cue the collective yawn of a casual crowd that's moved on to that next fad game. Personally, I'd like to see a new IP or hell, they could at least compile all 24 of those non-AB games and sell them on a disc at retail to those folks who haven't yet played ANY of their titles (or maybe have but think AB is the only game they ever made).

In the end, I'm not saying anything here other than enjoy the ride, guys... but put some of that loot away for when the bottom finally drops out.

Posted:3 years ago

#17

Levin Tull Service Associate -Learning, Twist Education LLC

3 0 0.0
@ Andrew: Really? What are staff paid? 6 staff for 6 months being paid 140k = 280 k for a year, which is $46,700 per person per year, including all benefits...if it is 10 staff, then even less per person, $28 k per year incl. benefits. That assumes all the cost went to salaries - presumably there was some infrastructure cost as well - rent/lease, electricity, computers, etc. I dunno, doesn't seem too exorbitant. And make one of those a manager at 75k, everything else shifts down even more...

Posted:3 years ago

#18

Andrew Goodchild Studying development, Train2Game

1,255 421 0.3
@Leven I'm confused, I didn't suggest it was exorbitant, it was my rough estimate about how far their money would have gone (possibly low side) and was meant to emphasise the scale up they would need to make use of that investment, going from 6ish people to 100 people+ with noone reporting on a massive recruitment drive

Posted:3 years ago

#19

Private Industry

1,176 182 0.2
@Greg Silent Hill and fun fact the best thing with Silent Hill in the title since Silent Hill 3 :)

Posted:3 years ago

#20

Tamir Ibrahim Programmer, Rodeo Games

76 56 0.7
A few people here have commented about staff numbers:

"Rovio, which now boasts 40 employees..."
http://www.gamesindustry.biz/articles/20...

Posted:3 years ago

#21
Maybe that $70m has been blown on too many parties, and they want to keep the Gravy-bird-train rolling for longer...

I was surprised to read about how many other games they had released - guess that is the industry.

Posted:3 years ago

#22

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