The mobile gaming platform Skillz announced that it would be the first mobile Esports platform to go public with an IPO raising an estimated $849 million from investors with a $3.5 billion pre-money valuation.
Skillz goes public this fall through a merger with Flying Eagle Acquisition Corp (FEAC), a special public acquisition company (SPAC). SPACs are becoming the quick way to go public, especially for fast-moving companies like Skillz, getting the job of going public done without the inconvenience of a full, traditional IPO. With this method, the SPAC is set up and money raised blind, with investors not knowing where their money is going.
FEAC are headed by Bethesda owner ZeniMax Media (owner of the Skyrim and Doom franchises) and Harry Sloan, whose team took the fantasy sports betting company DraftKings public through a SPAC in April. FEAC have raised $690 million for the merger/acquisition and when the acquisition of Skillz by FEAC completes, FEAC will essentially become Skillz. Additionally, institutional investors will invest $159 million – further funding Skillz.
The end result of all of this is that Skillz will get approximately £250 and those public company investors will own approximately 25% or $849 million of the $3.6 billion post-money valuation of Skillz. The intention is for Skillz to use the money to power its domestic and international growth, fund marketing, and provide working capital. Skillz CEO and co-founder, Andrew Paradise, and Casey Chafkin, CRO and co-founder of Skillz, will continue to lead the company following the public offering.
Launched in 2012, Skillz offers gamers a platform that can turn any mobile game on Android or iOS into a multi-player, allowing gamers to play with either friends or strangers for prizes, points, or cash. Additionally, it’s capable of creating Esports tournaments for those games that utilize the Skillz platform. In 2020, Skillz is set to create more than 2 billion casual Esports tournaments from its 2.6 million monthly active users, with over $1.6 billion in paid entry fees for games hosted on the Skillz platform.
“Everyone wants to compete, right? And that was the premise of the company, the one simple belief,” Paradise said.
“We’re building out the competition layer of the Internet. Everyone everywhere wants to unleash their inner champion in competition. We’re really excited about this next milestone.”
Andrew Paradise is an entrepreneur and inventor who started Double Picture, a web media and advertising company in 2008 before selling it to MPA. Next, in 2010, he founded the virtual shopping assistant, AisleBuyer, and created a mobile self-checkout system. That was sold, in 2012, to Intuit for between £80-100 million.
Following this, he co-founded Skillz with Casey Chafkin. Paradise has said that he didn’t want to sell again and that he, “really wanted to build a long-term independent company, not something where it would be consumed again by someone else’s company and I’d see all my work go away and just be left with this pile of money.”
Skrill’s success came once mobile Esports took off, with Skillz taking a cut of all platform transactions, as well as advertising revenue. With the gaming industry growing bigger and bigger, the mobile gaming sector is the fastest-growing part of the gaming market, with expectations of growth from $68 billion in 2019 to $150 billion by 2025 (according to Newzoo and GlobalData).
“Today we’re a leader in casual Esports and are well positioned to capture the global Esports opportunity which will increasingly define the gaming market,” said Paradise, adding that, “Skillz fulfills the human desire for community and competition and is shaping the future of interactive entertainment.”
Flying Eagle chairman and CEO, Harry Sloan, said this of Skillz:
“I’ve been active in the evolution of gaming for 20 years, from ZeniMax to DraftKings, and I believe Skillz has positioned itself as the platform for the future of gaming”.
See also: Best Virtual Sports Games