Skillz Going Public at $3.5B

3 New Investments at Konvoy

Over the last few months, we have been actively investing in the video gaming industry. Since January, 2020, we have made 8 new investments and now have 17 companies in the portfolio.  

Below are 3 recent investments that just had press releases on their capital raises. We are thrilled to be partnered with these founders and management teams alongside other great investors:

> Dorian - Dorian is a no-code platform for the interactive storytelling community, allowing users to create, share, and monetize their original stories. You can read more about the company and their $3.25M capital raise in their press release on TechCrunch.  

> HiberWorld - HiberWorld is a web-based user-generated content platform where players can create 3D games without the need to learn how to code. You can read more about the company and their $2.25M capital raise in their press release on VentureBeat.  

> Lootcakes - Lootcakes is a rewards platform for mobile gamers who opt-in to share data about their spending habits in a privacy-safe way. You can read more about the company and their $2M capital raise in their press release on VentureBeat.  

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Skillz is Going Public Via a SPAC: $849M at $3.5B Valuation

This week it was announced that mobile games platform, Skillz, would be going public through a SPAC. A SPAC is a Special Purpose Acquisition Company that is strictly formed to raise capital through an IPO with the intention of acquiring a private entity. In this case, Flying Eagle Acquisition Corp, is the SPAC entity that will take Skillz public. Skillz will be valued at a $3.5B valuation and expects to raise $849M. The valuation is 15.5x 2020 projected revenue.  

The leadership of this SPAC are Harry Sloan, Jeff Sagansky, and Eli Baker. Harry Sloan was a founding investor and board member of ZeniMax Media, the parent company of Bethesda Softworks. Jeff Sagansky and Eli Baker, together, took DraftKings public in April through another SPAC, Diamond Eagle Acquisition.  

If you’re unfamiliar with Skillz, it is a software company that builds mobile gaming tools to enable social competition in any game. Skillz was founded in 2012 and has been very successful in mobile gaming. In 2020 they are projecting $225M in revenue, have hosted over a billion casual esports tournaments, and currently distribute millions of dollars in prize money each month to consumers.  

SPACs, similar to direct listings, are becoming more popular right now due to a variety of factors: IPO costs, companies staying private for longer, a thriving public markets environment, and more.  

In response, many startups and VCs alike have decided to pursue innovation around liquidity options, which currently means lots of attention on SPACs. Bill Gurley of Benchmark has shared his views about the inefficiencies of the current IPO process, claiming that some investment banks are purposefully underpricing the shares giving the investment banks’ customers massive initial gains at the expense of early investors.

SPACs continue to gain traction in 2020 (Virgin Galactic, Repay Holdings, DraftKings, Nikola) and we don’t think Skillz will be the last gaming company to go public through one. Just recently, Mark Pincus (Zynga) joined forces with Reid Hoffman (LinkedIn) and Michael Thompson (BHR Capital) to form the Reinvent Technology Partners SPAC ($600M).