China's FunPlus pursues global ambition
Venture Capitalists have bet big on China's gaming industry. According to AVCJ Research, investment reached a record high of $1.6 billion last year, a massive jump on the $127 million committed in 2012. Barely three months into 2014 and gaming deals have notched up $644 million, so the record may well be broken again.
FunPlus Game is the latest beneficiary of this trend, receiving a relatively large $74 million round of funding last week, led by Orchid Asia. Steamboat Ventures and existing investor GSR Ventures also participated.
The company was founded in 2010 by Andy Zhong and Yitao Guan. Zhong's CV includes a stint at a leading app provider and a period spent working on new games for Facebook. Richard Lim, managing director of GSR Ventures, identified the company as a potential star in the fourth quarter of 2011. A Series A round worth $13 million soon followed.
"When we met the founders, they wanted to integrate games and mobile platforms. Because they have right experience and knowledge in the gaming sector that could potentially work," Lim says. "But there were still a lot of things to be done to grow the business. It's not an easy task to operate in mobile - many Chinese game developers have lost out because of that."
FunPlus has launched three games for mobile and social media platforms: Family Farm, Royal Story, Fantasy Slots are available via Facebook while Family Farm Seaside was devised for smart phones. All are free-to-play and supported by in-game purchases.
The company turned profitable in 2011 and is now consistently generating monthly revenue of $6 million and income of $4 million.
Although FunPlus is headquartered in Beijing and employs more than 200 people there, the vast majority of its revenues come from gamers in Europe and North America. The firm claims to have an average of 4 million active users each day.
The fresh capital will be used to expand the business into new markets, launch new games and enlarge the Beijing headquarters, as well as the company's satellite offices in San Francisco and Vancouver. FunPlus plans to launch three additional games this year operating across multiple platforms. Japan and South Korea are among its target markets.
Lim declined to disclose the company's valuation for the Series B round, but unsurprisingly it is higher than when GSR first invested.
Despite the massive growth in investor interest, mobile gaming continues to be a popular choice simply due to the continued rise of smart phone penetration globally.
According Transparency Market Research, the global mobile content market was worth $6.5 billion in 2011 and is expected to see compound annual growth of 19% through 2017, by which point it will be worth $18.6 billion. Mobile games are projected to be the largest single market segment at $11.4 billion.
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