Pocket Gems Confirms Redpoint Funding, Doesn’t Disclose Additional Details
Last Friday, we pointed out that Pocket Gems — the maker of top grossing games like Tap Zoo and Tap Petshop — may have raised additional funding from Redpoint Ventures.
The company’s chief executive Daniel Terry confirmed the funding, but didn’t disclose additional details except to say that it happened a few months ago. Our understanding — though this is not confirmed — is that this wasn’t a classic second or late-stage round of venture funding and instead provided the founders liquidity. This is not without precedent in the mobile gaming industry as Rovio’s initial $42 million round from Accel Partners and Atomico Ventures was also secondary, according to sources familiar with the transaction.
Profit margins for many of these types of casual mobile-social games are declining as certain gaming genres have become more competitive and as developers have lost their ability to bring in new customers inexpensively through incentivized downloads on offer walls. That said, several developers may make up for tighter margins with improved monetization and the sheer number of new users that are activating iOS or Android phones each month.
While Pocket Gems had a strong first half of the year with solid and continuous hits like Tap Zoo and Tap Petshop, other competitors are better capitalized. TinyCo, which makes similar titles Tiny Zoo Friends and Tiny Pets, has $18 million in funding from Andreessen Horowitz (which is enough to pay for a $20,000-a-month hiring billboard on Highway 101). Zynga also said today that it is entering the ring with an animal care-taking title called Dream Zoo. Beeline Interactive Inc., a subsidiary of Capcom which has a market capitalization of 138.8 billion yen ($1.78 billion), has Monster Pet Shop. There are also bootstrapped players in the space like Backflip Studios, which has a solid hit in DragonVale, a free-to-play dragon care-taking game that has held onto a slot among the top three grossing apps in the U.S. since the middle of last month.
As for other larger players in the space, we haven’t seen any additional confirmed rounds of funding.
In a panel I moderated today at GDC Austin, TinyCo’s director of business development Jennifer Lu, said the company would still be open to additional financing. Perry Tam, the chief executive of Storm8, another big player in the free-to-play gaming space, had no comment on the company’s rumored $1 billion valuation round.
October 27th, 2011 at 5:16 am
[...] On top of that, profit margins on free-to-play, casual mobile games are in decline at the moment because marketing costs keep rising, especially after the loss of incentivized offer walls. Every company with a similar model across the board including Pocket Gems, TinyCo, Backflip Studios and so on, is affected by these pressures. Publicly-traded comparable companies like Glu Mobile and Gameloft have also seen their shares decline by 42 percent and 19 percent respectively over the last three months (although to be fair, that has to do with two acquisitions Glu made plus macroeconomic turmoil). So the lofty valuations that could have been demanded in April or May no longer hold weight. At a panel I moderated two weeks ago at the Game Developers’ Conference in Austin, Storm8′s chief executive Perry Tam declined to comment on the progress of financing talks. [...]
January 28th, 2012 at 8:34 am
Please help me I have been building my tap zoo for months! Now it stuck! On some thing wanting me to up grade to a better tap zoo. Nooooooo I can’t get back to.my zoo. I do not want buy or up grade from what I have! HELP!
February 22nd, 2012 at 11:39 am
[...] Pocket Gems: A more challenging quarter for Pocket Gems as it was the first time the company’s placement in the top 10 grossing apps really faced a lot of competition from all fronts (and especially from Zynga). Tap Pet Hotel seems to be holding up well and Pocket Gems has been busy releasing a slew of new titles including Zombie Takeover and Tappily Ever After. Hits: Tap Pet Hotel, Tap Zoo Funding: $5 million from Sequoia Capital, angels. An unknown amount of funding from Redpoint Ventures, which was said to be mainly founder liquidity. [...]
March 14th, 2012 at 6:00 am
[...] is unveiling the product by announcing Kiosk’s first partnership with Sequoia Capital and Redpoint Ventures-backed Pocket Gems. The Pocket Gems Kiosk program offers developers up to $50,000 in revenue, [...]