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What we can learn from edtech startups’ expansion efforts in Europe
It’s a story common to all sectors today: investors only want to see ‘uppy-righty’ charts in a pitch. However, edtech growth in the past 18 months has ramped up to such an extent that companies need to be presenting 3x+ growth in annual recurring revenue to even get noticed by their favored funds.
Some companies are able to blast this out of the park — like GoStudent, Ornikar and YouSchool — but others, arguably less suited to the conditions presented by the pandemic, have found it more difficult to present this kind of growth.
One of the most common themes Brighteye sees in young companies is an emphasis on international expansion for growth. To get some additional insight into this trend, we surveyed edtech firms on their expansion plans, priorities and pitfalls. We received 57 responses and supplemented it with interviews of leading companies and investors. Europe is home 49 of the surveyed companies, six are based in the U.S., and three in Asia.
Going international later in the journey or when more funding is available, possibly due to a VC round, seems to make facets of expansion more feasible. Higher budgets also enable entry to several markets nearly simultaneously.
The survey revealed a roughly even split of target customers across companies, institutions and consumers, as well as a good spread of home markets. The largest contingents were from the U.K. and France, with 13 and nine respondents respectively, followed by the U.S. with seven, Norway with five, and Spain, Finland, and Switzerland with four each. About 40% of these firms were yet to foray beyond their home country and the rest had gone international.
International expansion is an interesting and nuanced part of the growth path of an edtech firm. Unlike their neighbors in fintech, it’s assumed that edtech companies need to expand to a number of big markets in order to reach a scale that makes them attractive to VCs. This is less true than it was in early 2020, as digital education and work is now so commonplace that it’s possible to build a billion-dollar edtech in a single, larger European market.
But naturally, nearly every ambitious edtech founder realizes they need to expand overseas to grow at a pace that is attractive to investors. They have good reason to believe that, too: The complexities of selling to schools and universities, for example, are widely documented, so it might seem logical to take your chances and build market share internationally. It follows that some view expansion as a way of diversifying risk — e.g. we are growing nicely in market X, but what if the opportunity in Y is larger and our business begins to decline for some reason in market X?
International expansion sounds good, but what does it mean? We asked a number of organizations this question as part of the survey analysis. The responses were quite broad, and their breadth to an extent reflected their target customer groups and how those customers are reached. If the product is web-based and accessible anywhere, then it’s relatively easy for a company with a good product to reach customers in a large number of markets (50+). The firm can then build teams and wider infrastructure around that traction.
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European refurbished electronics marketplace Refurbed raises $54M Series B
Refurbed, a European marketplace for refurbished electronics which raised a $17 million Series A round of funding last year, has now raised a $54 million Series B funding led by Evli Growth Partners and Almaz Capital.
They are joined by existing investors such as Speedinvest, Bonsai Partners and All Iron Ventures, as well as a group of new backers — Hermes GPE, C4 Ventures, SevenVentures, Alpha Associates, Monkfish Equity (Trivago Founders), Kreos, Expon Capital, Isomer Capital and Creas Impact Fund.
Refurbed is an online marketplace for refurbished electronics that are tested and renewed. These then tend to be 40% cheaper than new, and come with a 12-month warranty. The company claims that in 2020, it grew by 3x and reached more than €100 million in GMV.
Operating in Germany, Austria, Ireland, France, Italy and Poland, the startup plans to expand to three other countries by the end of 2021.
Riku Asikainen at Evli Growth Partners said: “We see the huge potential behind the way Refurbed contributes to a sustainable, circular economy.”
Peter Windischhofer, co-founder of refurbed, told me: “We are cheaper and have a wider product range, with an emphasis on quality. We focus on selling products that look new, so we end up with happy customers who then recommend us to others. It makes people proud to buy refurbished products.”
The startup has 130 refurbishers selling through its marketplace.
Other players in this space include Back Market (raised €48 million), Swappa (U.S.) and Amazon Renew. Refurbed also competes with Rebuy in Germany and Swapbee in Finland.
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Why I make everyone in my company be the CEO for a day
Leaders become great not because of their power, but because of their ability to empower others.
It’s no secret that most tech companies tout their culture as “unique” or “open,” but when you take a closer look, it’s often merely surface level. Yes, you may be dog-friendly or offer unlimited beer on tap, but how are you helping your employees become the best versions of themselves? We’re at our best when our employees are at their best, so we do everything in our power to make that a reality.
We’re at our best when our employees are at their best, so we do everything in our power to make that a reality.
After successfully running Vincit in Finland and Switzerland, in 2016 we made the jump to the United States, setting up an office in California. Although we had moved over 5,000 miles to a new country, it was important that our two main KPIs remain the same: Employee happiness and customer satisfaction. We believe that happy employees make clients happy, and happy clients refer you to others. Therefore, it was essential that this positive and prosperous workplace environment followed us to the United States.
So beyond traditional benefits, like full medical coverage, 401k matching and standard office amenities, we tapped into our Finnish roots to build and provide our employees with an uninhibited, supportive workplace. We keep our company culture as transparent as possible and fully believe in the power of empowering our employees. We have no managers and no real role hierarchy. Employees do not have to go through an approval process on anything they are working on.
We encourage our employees to make a trip to Finland to visit our headquarters. Instead of “Lunch & Learn” meetings, we host “Fail & Learn” meetings where employees get to share something that didn’t work and what they learned from it. And once a month, we let an employee become the CEO for a day.
Unsurprisingly, the “CEO of the Day” program is one of our most popular initiatives. The program gives our employee the reins for 24 hours with an unlimited budget. The only requirement? The CEO must make one lasting decision that will help improve the working experience of Vincit employees. Whatever the CEO of the Day decides, the company sticks with. They can purchase something for the company, change a policy, update a tool we use … Really, anything that they come up with can be done.
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Financing for students startup StudentFinance raises $5.3M seed from Giant and Armilar
Fintech startup StudentFinance — which allows educational institutions to offer success-based financing for students — has raised a $5.3 million (€4.5 million) seed round co-led by Giant Ventures and Armilar Venture Partners. It’s now raised $6.6 million total, to date.
StudentFinance launched in Spain first, followed by Germany and Finland, with the U.K. planned this year. Existing investors Mustard Seed Maze and Seedcamp, along with Sabadell Venture Capital, also participated.
The startup, which launched at the beginning of 2020, provides the tech back end for institutions to offer flexible payment plans in the form of ISAs (income-share agreements). It also provides data intelligence on the employment market to predict job demand.
It now has 35 education providers signed up, managing over €5 million worth of ISAs. It also works with upskilling platforms including Ironhack and Le Wagon. StudentFinance’s competitors include (in the USA) Blair, Leif, Vemo Education, Chancen (Germany-based) and EdAid (U.K.-based).
As for why StudentFinance stands out from those companies, Mariano Kostelec, co-founder and CEO of StudentFinance, said: “StudentFinance is the only platform in this space providing the full end-to-end, cross-border infrastructure to deliver ISAs for students whilst helping to plug the growing skills gap. Not only do we provide the infrastructure to support the ISA financing model, but we also provide data intelligence on the employment market and a career-as-a-service platform that focuses on placing students in the right job. We are creating an equilibrium between supply and demand.”
With an ISA, students only start paying back tuition once they are employed and earning above a minimum income threshold, with payments structured as a percentage of their earnings. This makes it a “success-based model”, says StudentFinance, which shifts the risk away from the students. They are likely to be popular as workers need to reskill with the onset of digitization and the pandemic’s effects.
The startup was founded in 2019 by Kostelec, Marta Palmeiro, Sergio Pereira and Miguel Santo Amaro. Kostelec and Santo Amaro previously built Uniplaces, which raised $30 million as a student housing platform in Europe.
Cameron Mclain, managing partner of Giant Ventures, commented: “What StudentFinance has built empowers any educational institution to offer ISAs as an alternative to upfront tuition or student loans, broadening access to education and opportunity.”
Duarte Mineiro, partner at Armilar Venture Partners, commented: “StudentFinance is a great opportunity to invest in because aside from its very compelling core purpose, this is a sound business where its economics are backed by a solid proprietary software technology.”
Sia Houchangnia, partner at Seedcamp, commented: “The need for reskilling the workforce has never been as acute as it is today and we believe StudentFinance has an important role to play in tackling this societal challenge.”
Angel backers include investors, which includes: Victoria van Lennep (founder of Lendable); Martin Villig (founder of Bolt); Ed Vaizey (the U.K.’s longest-serving Culture & Digital Economy Minister); Firestartr (U.K.-based early-stage VC); Serge Chiaramonte (U.K. fintech investor); and more.
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Supercell’s CEO talks about its majority owner Tencent, finding its next hit and more
Mobile games maker Supercell has been one of the great, understated breakthroughs of the European startup world. The Helsinki-based mobile games maker built an empire out of Clash of Clans, raking in tons of money and catching the eye of world-class investors and eventually a new strategic majority shareholder in the form of Tencent at a $10.2 billion valuation.
That was in 2016. So how does a hot startup keep its edge?
As part of this year’s virtual Disrupt, we sat down to talk with the company’s founder and CEO, Ilkka Paananen, about that and the other challenges and opportunities facing the company, and asked for his tips and opinion on spinning up and running startups in Europe today.
Times are definitely not easy right now: all of us are living through a global health pandemic, and economies as a result of that are teetering; and there is an interesting sea change happening as gaming companies (along with other content makers) face off against big tech, where there’s a question of whether platforms or the games themselves have the upper hand. (The most visible and recent example of that: the counter-lawsuits between Epic and Apple over in-app payments.)
For Supercell specifically, its majority owner, Tencent, is in hot water in the U.S. (a major market for Supercell); and it’s sitting on a still-popular but now-ageing game franchise that you could argue is in the middle of its own Battle Royale against the many other big games that are vying for people’s attention (and spending power to keep playing and levelling up). In short, the company itself, now 10 years old, may itself be facing more existential questions of who are we now, and what comes next?
As you’ll see in the video below, Paananen is very sanguine and calm, which is to say quite Finnish, about a lot of this.
Even without the experience thus far of Supercell under his belt, he has been in the industry for years. Supercell is his second big hit company: before that he founded Sumea, which was acquired by Digital Chocolate, where he became president in the now-defunct bigger studio’s heyday. And, he has been and is an investor, too: most recently Paananen backed Zwift, the gamefied home fitness startup, in its most recent, $450 million round, which included him joining the company’s board. All of this is to say that he can see the bigger picture.
The Tencent issues in the U.S., he said, are something that the company is watching. But not only are they unresolved — indeed just this week, ahead of any proposed bans on Tencent properties and WeChat in particular, the U.S. government issued more clarification on how people are liable for using WeChat. In any case, Paananen said in the interview that he believes that Supercell doesn’t fall under the U.S. executive order to be shut down, because Tencent is only a shareholder, not a full owner. He’s still waiting to see how it all plays out.
“Our current understanding [is that] it’s about WeChat not Tencent as a whole,” he said, “and that it doesn’t apply to Tencent-invested companies like Supercell.” (Also: one of the good things to have come out of not getting fully acquired, it seems.)
Similarly, Paananen is not overly concerned about the fact that its big hit, while still one of the highest-grossing apps globally, is getting on and slowly bringing in fewer revenues.
Judging by the fact that Supercell has yet to follow up with another successful franchise, and has killed quite a few attempts in the meantime, the process to produce a hit, in fact, still seems to be as elusive to a company that has produced a hit already as it is to those that have not.
“It would be nice to be always on this kind of a growth curve, but the reality is… it’s very much about hits or misses,” he said.
“Sometimes figures go up, and sometimes they go down [so] what’s your time horizon? We never ever think about the next quarter, and very, very rarely think about it and maybe next year, I think that’s a target in itself, you know. We try to think in decades. Our dream is to build a game so as many people as possible will play for a very long time. We are inspired by companies like, say, Nintendo. And if you’re going to take that… then that changes your perspective.”
The company has been building out its options, though, making about three investments a year in other gaming startups, and some full acquisitions of studios, to diversify the team and bring in more options for new games in the future. Later in the Q&A with viewers, Paananen said Supercell has no plans yet for anything in AR or VR, with a firm belief that mobile, and the mechanics of a touch screen, are the best for what it’s building.
It seems the most valuable lesson Paananen has learned, it turns out, is the thing that continues to be his top priority: building the right team for the long haul.
Making sure you have a group that can work together, inspire each other and be productive has been the constant, one that perhaps means even more as the company grows bigger and we continue to work under very decentralised circumstances.
“We are currently on the look-out for people from all around the world to join Supercell to build the best teams and then of course the best games,” he said.
Hear about all this, plus Paananen’s opinion on raising money, and more, below.
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Swappie bags $40.6M to sell more secondhand iPhones across Europe
Finland-based Swappie has closed a €35.8 million ($40.6M) Series B to expand into new markets in Europe. The ecommerce business refurbishes and resells used iPhones, taking care of the entire process from testing and repairing used handsets, to selling the refurbished devices via its own marketplace, with a 12-month warranty.
Local VC and private equity firm TESI is a new investor in the Series B, along with Lifeline Ventures, Reaktor Ventures and Inventure Investors, all of whom participated in Swappie’s 2019 Series A. The total raised to date since the business was founded in 2016 is $48M.
Right now Swappie operates in Finland, Sweden, Denmark and Italy. The new financing will be used to expand across Europe, beginning with launches in Germany, Ireland, Portugal and the Netherlands this summer.
It’s also eyeing expansion beyond Europe — so will be speccing out a broader roadmap for the future.
“The main focus of this round is to become the number one player in Europe. But also to explore opportunities outside Europe as well,” says CEO and co-founder Sami Marttinen. “That’s something we will be looking into but no concrete plans to announce at this point.
“There are still opportunities for our business model everywhere in the world. So it’s a matter of just building the roadmap — where to go next.”
Swappie’s Jiri Heinonen (CMO) and Sami Marttinen (CEO) (Photo credit: Swappie)
Swappie touts growing consumer demand in the region to buy refurbished phones, saying that from 2018 to 2019 revenues grew 4x, hitting $35M+ in net revenue in 2019. It’s also seeing demand continuing to grow this year — recording a 5x increase in net revenue growth in April and May 2020 vs the same period last year, despite the ongoing COVID-19 pandemic. Indeed, the trend of consumers shifting to buying more online looks to be a help for its online marketplace.
Commenting on Swappie’s Series B in a statement, Tony Nysten, Investment Manager at TESI, said: “We believe there is a huge growth opportunity for Swappie. The smartphone market in Europe is worth over €100BN but used or refurbished phones currently make up just over 10% of that and only one in four pre-owned phones are currently re-sold. Through its rapid growth to date, Swappie has proven its ability to not just grow market share within the refurbished market, but to expand the size of the category overall. The business has enormous potential.”
Swappie’s early choice of market focus included not only familiar turf in the Nordics — but Italy, in Southern Europe. The latter was chosen deliberately on account of it being a tough market for ecommerce, per Marttinen.
“In the really early days the reason why we went to Italy was because it was one of the toughest ecommerce markets in Europe — they have a really low ecommerce maturity index. It’s very different in terms of shopping behavior. You need to build another level of trust in that market. There are lots of unique traits like cash on delivery, things like that. So we knew that in order to really conquer the market globally — and to be able to deliver on our global ambitions we would need to enter as difficult markets as early in our journey as possible.
“These days we have a much more advanced playbook and market studies across Europe.”
Swappie describes itself as a ‘scale-up’ tech business on account of addressing the whole value chain, per Marttinen.
“We’ve done a lot there on the hardware side — when it comes to actually refurbishing the devices we can make them even stronger then the original devices in many cases. So that means we can go as deep as onto the motherboard level in the repairs. Then on the software side, of course, we’re making selling and distribution and everything else scalable. Making sure that the checking processes and all the processes in the factory are according to the latest standards,” he says.
“Because of being so focused in also building the processes and focusing on the quality so much, so actually we have been able to truly change the way people consume electronics,” he adds. “If you think about it from a local player perspective they are typically mostly competing for the people who are already buying used devices — whereas we are able to deliver on this market by having full control of the entire value chain, from buying to refurbishing, to selling the phones to consumers.
“Most of our customers are buying used or refurbished devices for the first time — so actually our biggest competitors are new smartphone retailers.”
The most popular iPhone model sold on Swappie’s marketplace last year was the iPhone 8, per Marttinen.
He won’t disclosed the exact number of iPhones Swappie has refurbished and sold at this point but he says it’s a six-figure number — aka ‘hundreds of thousands’.
The team chose to focus on iPhones to ensure they can deliver the highest quality device refurbishment, he says, while also benefiting from the relatively higher cost of Apple’s smartphone hardware vs Android devices. Though he doesn’t rule out expanding to offer another type of refurbished smartphone in future.
“The business is now growing really rapidly but what we noticed in the early days is that the new device prices had started to rise before we started this business so we have been very lucky with the timing,” he tells TechCrunch, noting that Swappie also benefitted from the plateauing into advancements between handset models in recent years, as the technology matured.
“If you can build trust into this business, and make sure that the phones function as well as new devices — and that you’re actually making the buying process as well as safe as buying a new phone — that way you can actually accelerate the growth of the market. So that’s what we have been really successful in. It’s kind of the key to being able to grow so quickly.”
“One main point there has been that because we refurbish every device ourselves in our own factory in Finland we can deliver to customers the highest quality devices under warranty for much less than the cost of a new phone and also be more environmentally friendly,” he adds.
While, in years past, there have been instances of iPhone users’ devices bricked after a repair by an unauthorized repair shop Marttinen says Swappie is using only original iPhone parts so has avoided such problems.
He also points to recent European Commission proposals for a pan-EU ‘right to repair’ for electronics which suggests device makers selling in the region will be required to respect repairability, rather than using software updates as a way to penalize consumers who seek to extend the lifespan of their current device.
Photo credit: Swappie
Swappie’s business also slots into a wider Commission mission to transition the EU to a circular economy, as part of the green deal announced by current president, Ursula von der Leyen — so it’s skating to where the puck is headed, if you like.
“It’s really good for the environment that the right to repair legislation has come forward in the past few years. That’s one very important point for us as well which was one of the reasons why we wanted to built microscope level repairs in our factories — so we wouldn’t have to scrap as many phones as you normally would,” Marttinen adds.
What can’t it repair? The proportion of iPhones which turn out to be truly unsalvageable via its processes is “extremely small“, he says. “We can actually do any repairs that are possible to do the phones so, basically, water damaged phones which have been at the bottom of the ocean — those are of course unrepairable. Or if the phone is bent too much or if the motherboard is completely ruined. But basically all the other faults we can repair.”
On the competitive front, he says Swappie’s main rival are retailers selling new iPhones — given it’s trying to woo iOS users away from buying a brand new iPhone. On the secondhand marketplace front Marttinen mentions reBuy as one of the main rival players in refurbishing and reselling electronics, though it does not focus on iPhones — offering a full range of devices, from wearables to smartphones and tablets, laptops, consoles and cameras.
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In conversation with Icebreaker, Finland’s most active pre-seed VC
Icebreaker claims to be Finland’s most active pre-seed VC. The firm, which also invests in Estonia and Sweden, has backed 38 companies in the last three years out of its first fund, with a 65% success rate so far for companies that have been able to raise follow-on funding.
Two weeks ago, Icebreaker announced the launch of Fund II, with an initial close of €50 million. That’s more than twice the size of its first fund, which topped out at €20 million.
Its remit remains largely the same, however. The company typically invests between €150k and €800k in teams that have “deep domain expertise” and are building globally competitive tech companies according to Icebreaker co-founder and partner Riku Seppälä.
Noteworthy, this goes right to the top of the funnel and includes backing and helping to connect “pre-founders,” defined as individuals with over 5 years of work experience in their domain who are aiming to start or join a tech company. As part of this effort, Icebreaker operates an online and offline community to act as a catalyst for new companies to be founded.
Meanwhile, I’m told that Fund II was signed just as the coronavirus crisis began to take hold and includes the majority of LPs from Fund I in addition to new investors. Lead LPs are Tesi, KRR III, Varma Mutual Pension Insurance Company and Elo Mutual Pension Insurance Company, together with 41 other entities consisting of institutional investors, family offices and founders.
To find out more about Fund II and what’s it’s like to launch a new pre-seed fund at a time of such uncertainty, and to understand how Icebreaker thinks about startup life during and after lockdown, I put questions to Icebreaker co-founder and Partner Riku Seppälä.
TechCrunch: What does it feel like to close a new fund right at the start of a pandemic?
Riku Seppälä: Of course, we have been distracted by the mounting health crisis and how the world economy will recover, so the feelings are mixed.
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Oura partners with UCSF to determine if its smart ring can help detect COVID-19 early
Startups continue to find new ways to contribute to ongoing efforts to fight the global spread of COVID-19 during the current global coronavirus pandemic, and personal health hardware-maker Oura is no exception. The smart ring startup is working with the University of California, San Francisco (UCSF) on a new study to see if its device can help detect early physiological signs that might indicate the onset of COVID-19.
This study will include two parts: Around 2,000 frontline healthcare professionals will get Oura rings to wear during the study. The rings track a user’s body temperature continuously, as well as their sleep patterns, heart rate and activity levels. Fever is a common and early symptom that could indicate COVID-19, and a continuously updated body temperature reading could detect fever very early. That’s not enough to confirm a case of COVID-19, of course, but the purpose of the study is to determine whether the range of readings Oura’s ring tracks might, taken together and with other signals, be useful in some kind of early detection effort.
There’s good reason why researches believe that Oura could be used in early detection: An Oura user in Finland claims the ring alerted him to the fact that he was ill before he was displaying any overt symptoms of the virus, prompting him to get tested (relatively easy in that country). Test results confirmed that while asymptomatic, he had indeed contracted COVID-19. As a result, UCSF researcher Dr. Ashley Mason hypothesizes that the Oura ring could anticipate COVID-19 onset by as many as two to three days before the onset of more obvious symptoms, like coughing.
Being able to detect the presence of the virus in an individual early is key to global containment efforts, but even more important when it comes to frontline healthcare workers. The earlier a frontline responder is diagnosed, the less chance that they expose their colleagues or others they’re working around in close quarters.
In addition to the Oura rings being provided to study participants, the plan is to expand it to include Oura’s general user population, meaning its more than 150,000 global users can opt in to participate and add to the overall pool of available information with their ring’s readings and daily symptom surveys. For existing Oura users, it’s a relatively low-lift way to contribute to the global effort to combat the pandemic — without even leaving the house.
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Tencent to grow gaming empire with $148M acquisition of Conan publisher Funcom in Norway
Tencent, one of the world’s biggest video and online gaming companies by revenue, today made another move to help cement that position. The Chinese firm has made an offer to fully acquire Funcom, the games developer behind Conan Exiles (and others in the Conan franchise), Dune and some 28 other titles. The deal, when approved, would value the Oslo-based company at $148 million (NOK 1.33 billion) and give the company a much-needed cash injection to follow through on its longer-term strategy around its next generation of games.
Funcom is traded publicly on the Oslo Stock Exchange, and the board has already recommended the offer, which is being made at NOK 17 per share, or around 27% higher than its closing share price the day before (Tuesday).
The news is being made with some interesting timing. Today, Tencent competes against the likes of Sony, Microsoft and Nintendo in terms of mass-market, gaming revenues. But just earlier this week, it was reported that ByteDance — the publisher behind breakout social media app TikTok — was readying its own foray into the world of gaming.
If it goes ahead, that would set up another level of rivalry between the two companies. Tencent also has a massive interest in the social media space, specifically by way of its messaging app WeChat . While many consumers will have multiple apps, when it comes down to it, spending money in one represents a constraint on spending money in another. ByteDance currently profits from having content on its social apps related to Tencent gameplay, so building its own content could be one way of moving away from that. The two have (naturally) also been battling it out in court in China over unfair competition claims, in part related to that gaming content.
Today, Tencent is one of the world’s biggest video game companies: in its last reported quarter (Q3 in November), Tencent said that it make RMB28.6 billion ($4.1 billion) in online gaming revenue, with smartphone games accounting for RMB24.3 billion of that.
Acquisitions and controlling stakes form a key part of the company’s growth strategy in gaming. Among its very biggest deals, Tencent paid $8.6 billion for a majority stake in Finland’s Supercell back in 2016. It also has a range of controlling stakes in Riot Games, Epic, Ubisoft, Paradox, Frontier and Miniclip. These companies, in turn, also are making deals: just earlier this month it was reported (and sources have also told us) that Miniclip acquired Israel’s Ilyon Games (of Bubble Shooter fame) for $100 million.
Turning back to Funcom, Tencent was already an investor in the company: it took a 29% stake in it in September 2019 in a secondary deal, buying out KGJ Capital (which had previously been the biggest shareholder).
“Tencent has a reputation for being a responsible long-term investor, and for its renowned operational capabilities in online games,” said Funcom CEO Rui Casais at the time. “The insight, experience, and knowledge that Tencent will bring is of great value to us and we look forward to working closely with them as we continue to develop great games and build a successful future for Funcom.”
In retrospect, this was laying the groundwork and relationships for a bigger deal just months down the line.
“We have a great relationship with Tencent as our largest shareholder and we are very excited to be part of the Tencent team,” Casais said in a statement today. “We will continue to develop great games that people all over the world will play, and believe that the support of Tencent will take Funcom to the next level. Tencent will provide Funcom with operational leverage and insights from its vast knowledge as the leading company in the game space.”
The rationale for Funcom is that the company had already determined that it needed further investment in order to follow through on its longer-term strategy.
According to a statement issued before it recommended the offer, the company is continuing to build out the “Open World Survival segment” using the Games-as-a-Service business model (where you pay to fuel up with more credits); and is building an ambitious Dune project set to launch in two years.
“Such increased focus would require a redirection of resources from other initiatives, the most significant being the co-op shooter game, initially scheduled for release during 2020 that has been impacted by scope changes due to external/market pressures with increasingly strong competition and internal delays,” the board writes, and if it goes ahead with its strategy, “It is likely that the Company will need additional financing to supplement the revenue generated from current operations.”
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This game uses troll tactics to teach critical thinking
The best medicine against online disinformation is an informed society that’s thinking critically. The problem is there are no shortcuts to universal education.
Enter Finnish Public Broadcasting Company, Yle, which is hoping to harness the engagement power of gamification to accelerate awareness and understanding of troll tactics and help more people spot malicious internet fakes. It has put together an online game, called Troll Factory, that lets you play at being, well, a hateful troll. Literally.
The game begins with a trigger warning that it uses “authentic social media content” that viewers may find disturbing. If you continue to play you’ll see examples of Islamophobic slogans and memes that have actually been spread on social media. So the trigger warning is definitely merited.
The game itself takes the form of a messaging app style conversation on a virtual smartphone in which you are tasked by the troll factory boss to whip up anti-immigrant sentiment. You do this by making choices about which messages to post online and the methods used to amplify distribution.
Online disinformation tactics intended to polarize public discourse which are depicted in the game include the seeding of conspiracy theory memes on social media; the exploitation of real news events to spread fake claims; microtargeting of hateful content at different demographics and platforms; and the use of paid bots to amplify propaganda so that hateful views appear more widely held than they really are.
After completing an inaugural week’s work in the troll factory, the game displays a rating and shows how many shares and follows your dis-ops garnered. This is followed by contextual information on the influencing methods demonstrated — putting the activity you’ve just participated in into wider context.
Yle, which is a not-for-profit public service broadcaster with a remit to educate and inform, released a Finnish version of the troll factory game back in May but decided to follow up with this international version (in English) after the game got such a strong local reception, including being picked up by people in natsec and education to use as an educational resource, according to Jarno Koponen, head of AI & personalization, at Yle Uutiset News Lab.
“The initial response in Finland was so encouraging: Something like this is needed,” he told us. “Something that makes information operations tangible and visible. We believe that it’s our duty as a public broadcasting company to promote methods, in Finland and abroad, that help citizen’s to better understand our everyday digital environments from their own standing point.
“We want simultaneously to collect more feedback on what’s working in the game-like storytelling, in order to use those findings to develop better products in the future, and to share those finding with for example with other public broadcasting companies in the world.”
Koponen said the team also wanted to test a specific hypotheses about the power of games to debunk junk — after a recent Cambridge University study showed gamified methods work in fighting fake news.
“Based on our data, news articles or more traditional social media analysis doesn’t reach and thus have effect on people en masse,” he said, when asked why Yle chose a game wrapper for its anti-disinformation message, rather than a more traditional educational format such as a documentary film.
“Social media is in your pocket and goes wherever you go. The means to educate you about social media need to be in your pocket too. Especially young people are a hard audience to reach. Thus we need to actively develop new storytelling methods to provide for them nonpartisan information and insight about the world around us. We experimented with different forms from data visualisations to interactive simulations and found game-like experience being the most effectual and engaging.”
“We’ve so far collected direct feedback from our users in social media (from Twitter to Reddit) and on our website,” he added. “Some of the descriptive comments were: ‘This is horrible, but thanks for making us aware of this’ or ‘Scary but illuminating’. It was picked up in social media especially by people and organisations working with younger people from teachers to public libraries, as well as information security and national security professionals.”
Asked whether he thinks social media platforms should be doing more to clear bots and inauthentic content off their platforms, Koponen called for increased transparency from platforms but added that media literacy remains key to influencing how tech giants behave too.
“We believe that more transparency is needed on behalf of the social media platforms. However, the more aware the citizen is, the better equipped she’s to decide on her own behalf what works and what doesn’t. We believe that promoting media literacy is key in having meaningful impact on the practices and policies of social media platforms.”
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