Though Supercell only entered the gaming market a couple of years ago and only has two titles in the Apple app store, its overnight success is garnering some serious cash. Forbes recently confirmed the young Finnish gaming startup raised $130 million at a $770 million valuation as investors bet on its multi-billion dollar potential. The financial publication described Supercell “as the fastest-growing gaming company ever” that is likely on track to earn a billion dollars in revenue this year.
IVP and Index Ventures co-led the round with equal investments and were joined by Atomico.
Perhaps even more impressive than the valuation and the size of the check is the company’s accelerating revenues. Supercell earned $179 million last quarter, including $104 million in pure profit. It earned $100 million last year, and is on track to earn at least $800 million this year, and perhaps even a billion dollars. The company earns $2.4 million per day.
It’s a far cry from Zynga, a once golden jewel of the gaming industry that currently trades for a third of its opening day IPO price due to declining revenues. The company had approached a billion dollars in revenue four years after its 2007 founding, but saw earnings continually plummet since mid-2012 as public interest in its games wanes.
As Supercell’s CEO Ilkka Paananen explains to Forbes, Supercell focuses more on the fun of the game than the revenue it will earn. “It really is that simple–just design something great, something that users love,” Paananen told the publication. It is known for celebrating failure, or more exactly, “the learning that comes from failure,” Paananen told Forbes. Whenever a game fails to make it to market, the entire company celebrates with a champagne toast, discusses what went wrong and what they can do better.
Another unique approach the company takes is the cellular game design model. Each game is built by a cellular team that reportedly has no autocratic leader by design.
Though the Finnish company currently has only two titles, Clash of Clans and Hay Day, they’re immensely popular at 8.5 million daily players who each play an average of 10 minutes every day. Supercell’s usage numbers are actually lower than Zynga’s, proving the company has more effective monetization of its base.
With the kind of profitable revenue Supercell has been raking in, it doesn’t really need the cash. It took the money and ran in order to pay off early investors, reward its employees, and avoid going public, at least for a while.
All shareholders, including Accel Partners who invested $12 million at a $52.3 million valuation, as well as employees sold 16.7 percent of their holdings to the new investors. Everyone walked away with some cash in their pockets, not just the executives and early investors.
Supercell plans to live up to its $770 million valuation. It strives to become the Pixar of mobile games, and plans to expand into Asia in the next three years to give billion-dollar Japanese companies GREE and DeNA a run for their money.
Supercell’s investors are certainly confident they can do it.
“…Staggering customer traction, revenue growth and profitability were not the main reasons we invested in Supercell,” explained Index Ventures Neil Rimer on his blog. “We have seen impressive numbers before– granted none quite as impressive as these — but what we found uniquely compelling was the way in which Ilkka Paananen and his team had managed to deliver two incredibly popular games which were showing no telltale signs of declining engagement, with such limited resources. … From our point of view, the Supercell rocket still has a long way to go. We believe it will be one of the companies that will leave a lasting mark on its industry….”
Supercell is proving that the Finnish market still has some impressive startups to deliver, despite the tumble of Nokia that has created a vacuum in the region. Rovio, another Finnish company, was a popular gaming entity with its popular title Angry Birds, and continues to offer a great degree of relevance in the market. Supercell is just another example of the region’s vitality. VCs are betting that its fast growth trajectory is only the beginning of a long journey to come.