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Equity Monday: China boosts pressure on its tech sector as Duolingo’s IPO looks to raise a few more bucks
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and me here.
Ever wake up to just a massive wall of news? That was us this morning, so we had to pick and choose. But since this show is about getting you caught up, we decided to focus on the largest, broadest new information that we could:
- Asian stocks were down, European shares are lower and U.S. equities are set to open underwater. Bitcoin had a great weekend, however.
- China’s edtech crackdown continued over the weekend, with the country’s ruling party setting new rules for online tutoring companies; they can no longer go public and will be forced to become nonprofit entities. Chinese edtech stocks around the world fell.
- China’s larger tech crackdown continued, with new moves against the present-day business models of both food delivery companies and Tencent Music. The former must ensure minimum incomes, while the latter must give up exclusive rights deals. Shares fell.
- The Jam City SPAC is kaput. It will not be the last similar deal to fall apart.
- And we chatted about this bit of Rivian news because it stood out to us.
All that, and we had a good time! Hugs and love from the Equity crew — chat Wednesday!
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 a.m. PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!
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As Zynga impresses, rival mobile-gaming shop Jam City looks to list via SPAC
While it would be nice to write about something other than yet another tech company looking to list via a SPAC, the deals keep dropping, so our more traditional fare of covering startup trends will remain on hold for at least one day more.
This morning, we’re looking at the Jam City deal to merge with DPCM Capital. Jam City is a bit like Zynga, but unless you are a mobile-gaming aficionado, you might not have heard of it.
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You likely have not heard of DPCM Capital, either, but you know more about it than you’d think.
As Jam City notes in a release, the SPAC is “led by Emil Michael.” Michael is most famous for his time at Uber, where he served as chief business officer. He left the firm, as The New York Times wrote in 2014, after a board-called “investigation into [the company’s] culture and business practices” led to a “recommendation for Mr. Michael to exit Uber.”
He’s the gentleman who floated the idea of funding a team to “dig up dirt” on Uber’s “critics in the media,” as BuzzFeed News reported in late 2014.
Regardless, we’re not here to go back through Uber and its various cultural messes. We’re here to dig into the Jam City SPAC deck to see if the company is similar to Zynga. Why do we want to know that? Because Zynga has done great in recent quarters, including posting record revenue and bookings in the first three months of 2021.
With lots of folks stuck at home in the last year, gaming has done well in aggregate. And mobile gaming is a huge chunk of the larger gaming world.
More broadly, why do we care about Jam City’s SPAC transaction? Because the mobile gaming concern has raised more than $300 million, including a $145 million round in 2019 that TechCrunch covered here.
The company attracted capital from Austin Ventures, Netmarble, Bank of America Merrill Lynch and JP Morgan Chase while private, per Crunchbase, so we’re very curious if Jam City has enjoyed a Zynga-like last few years and how it’s being valued as part of the SPAC deal. Let’s find out.
Jam City’s SPAC transaction
When Jam City raised that huge 2019 round, co-founder and CEO Chris DeWolfe said that the “global mobile games market [is] consolidating.” At the time, the company intended to use some of its new funding to acquire other mobile gaming companies.
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Consolidation is coming to gaming, and Jam City raises $145 million to capitalize on it
A slew of banks are coming together to back a new roll-up strategy for the Los Angeles-based mobile gaming studio Jam City and giving the company $145 million in new funding to carry that out.
There’s no word on whether the new money is in equity or debt, but what is certain is that JPMorgan Chase Bank, Bank of America Merrill Lynch and syndicate partners, including Silicon Valley Bank, SunTrust Bank and CIT Bank, are all involved in the deal.
“In a global mobile games market that is consolidating, Jam City could not be more proud to be working with JPMorgan, Bank of America Merrill Lynch, Silicon Valley Bank, SunTrust Bank and CIT Group to strategically support the financing of our acquisition and growth plans,” said Chris DeWolfe, co-founder and CEO of Jam City. “This $145 million in new financing empowers Jam City to further our position as a global industry consolidator. As we grow our global business, we are honored to be working alongside such prestigious advisers who share Jam City’s mission of delivering joy to people everywhere through unique and deeply engaging mobile games.”
The new money comes after a few years of speculation on whether Jam City would be the next big Los Angeles-based startup company to file for an initial public offering. It also follows a new agreement with Disney to develop mobile games based on intellectual property coming from all corners of the mouse house — a sweet cache of intellectual property ranging from Pixar, to Marvel, to traditional Disney characters.
Jam City is coming off a strong year of company growth. The Harry Potter: Hogwarts Mystery game, which launched last year, became the company’s fastest title to hit $100 million in revenue.
Add that to the company’s expansion into new markets with strategic acquisitions to fuel development and growth in Toronto and Bogota and it’s clear that the company is looking to make more moves in 2019.
Jam City already holds intellectual property for a new game built on Disney’s “Frozen 2,” the company’s newly acquired Fox Studio assets like “Family Guy” and the Harry Potter property. Add that to its own Cookie Jam and Panda Pop properties and it seems like the company is ready to make moves.
Meanwhile, games are quickly becoming the go-to revenue driver for the entertainment industry. According to data collected by Newzoo, mobile games revenue reached a record $63.2 billion worldwide in 2018, representing roughly 47 percent of the total revenue for the gaming industry in the year. That number could reach $81.3 billion by 2020, the Newzoo data suggests.
Roughly half of the U.S. plays mobile games, and they’re spending significant dollars on those games in app stores. App Annie suggests that roughly 75 percent of the money spent in app stores over the past decade has been spent on mobile games. And consumers are expected to spend roughly $129 billion in app stores over the next year. The data and analytics firm suggests that mobile gaming will capture some 60 percent of the overall gaming market in 2019, as well.
All of that bodes well for the industry as a whole, and points to why Jam City is looking to consolidate. And the company isn’t the only mobile games studio making moves.
The publicly traded games studio Zynga, which rose to fame initially on the back of Facebook’s gaming platform, recently expanded its European footprint with the late-December acquisition of the Helsinki-based gaming studio Small Giant Games.
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Jam City is setting up a Toronto shop by buying Bingo Pop from Uken Games
The Los Angeles game development studio Jam City is setting up a shop in Toronto with the acquisition of Bingo Pop from Uken Games.
Terms of the deal weren’t disclosed.
The deal is part of a broader effort to expand the Jam City portfolio of games and geographic footprint. In recent months the company has inked agreements with Disney — taking over development duties on some of the company’s games like Disney Emoji Blitz and signing on to develop new ones — and launching new games in conjunction with other famous franchises like Harry Potter.
The Bingo Pop acquisition will bring a gambling game into the casual game developer’s stable of titles that pulled in roughly $700,000 in revenue through October, according to data from SensorTower.
“We are so proud to be continuing Jam City’s rapid global expansion with the acquisition of one of the most popular bingo titles, and its highly talented team,” said Chris DeWolfe, co-founder and CEO of Jam City, in a statement. “This acquisition provides Jam City with access to leading creative talent in one of the fastest growing and most exciting tech markets in the world. We look forward to working with the talented Jam City team in Toronto as we supercharge the live operations of Bingo Pop and develop innovative new titles and mobile entertainment experiences.”
Founded in Los Angeles in 2009 by DeWolfe, who previously helped create and launch Myspace, and 20th Century Fox exec Josh Yguado, Jam City rose to prominence on the back of its Cookie Jam and Panda Pop games. Now, the company has expanded through licensing deals with Harry Potter, Family Guy, Marvel and now Disney. Jam City has offices in Los Angeles, San Francisco, San Diego, Bogota and Buenos Aires.
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Jam City signs mobile game development deal with Disney
Mobile gaming company Jam City is announcing a multi-year deal to create mobile games based on Pixar and Walt Disney Animation characters and films.
As part of the agreement, Jam City is taking over development of the match-three puzzle game Disney Emoji Blitz, which launched in 2016. Jam City says that everyone at Disney’s Glendale game studio who’s affected by this will be offered new jobs at the company to continue working on the title.
The first new game, meanwhile, will be based on the upcoming sequel to “Frozen” (that’s right, there’s going to be a “Frozen 2”), though the companies aren’t revealing any details, like the type of gameplay or the release date.
“While our licensing business for Disney Animation and Pixar games has grown over the last year and we have several top developers creating Disney games, this deal with Jam City represents a significant long-term opportunity for our games business and for the future slate of Disney and Pixar games,” said Kyle Laughlin, Disney’s senior vice president of games and interactive experiences, in a statement.
Jam City was founded in 2009 by Chris DeWolfe (who previously cofounded and served as CEO of MySpace) and former Fox executive Josh Ygaudo. It was initially focused on social games and was known as MindJolt before becoming the Social Gaming Network (named after a company it acquired) and then rebranding again two years ago as Jam City.
While Jam City has created its own games like Cookie Jam and Panda Pop, it’s also been releasing titles based on well-known franchises and intellectual property, such as “Snoopy Pop” and “Marvel Avengers Academy.” Earlier this year, it launched “Harry Potter: Hogwarts Mystery,” a game that allows players to enroll in J.K. Rowling’s famous school for wizards and features the voices of several actors from the films.
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Alohomora! Harry Potter game hits your phone next year with Jam City
Niantic’s much-anticipated Harry Potter follow-up to Pokémon GO is coming next year, but Harry Potter fans who want their first taste of Hogwarts on mobile don’t have to wait, because Harry Potter is coming to the Los Angeles-based mobile gaming studio, Jam City. Panda Pop passes 100 million users as Jam City readies for an IPO
The flagship game from Los Angeles-based mobile game developer Jam City, Panda Pop, has reached over 9.3 million monthly active users and climbed above its 100 millionth download. The tentpole game for Myspace founder Chris DeWolfe’s latest LA-based juggernaut of a company has certainly had its moment. Read More
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SGN becomes Jam City and announces a new Peanuts game
Mobile gaming company SGN announced today that it has a new name, Jam City.
This isn’t the first time the company has rebranded — it was called MindJolt before acquiring SGN and then taking on the name in 2012.
The change may be an inevitable reflection of the company’s — and the industry’s — transition from social to mobile games. CEO Chris DeWolfe (who… Read More
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