Weekly News Digest #11

G42 buys $100m stake in ByteDance

G42, an AI-focused company owned by UAE royal Sheikh Tahnoon bin Zayed Al Nahyan, has purchased a $100m+ worth stake in China-based TikTok owner ByteDance at a $220B valuation. The investment was made via 42XFund, an investment arm of G42 which also has additional financial backers. The stake was acquired from existing investors of ByteDance.

Shortly after the deal, there was another undisclosed investment, according to Bloomberg. We don’t know any details about the second deal, except for the $225B valuation set for the investment.

Both valuations are significantly lower than that of Sep’22, when ByteDance announced a $3B buyback at a $300B valuation. Such a drop in valuation may be partially influenced by the current global economic turmoil, which we continue to observe in 2023. Another possible reason are the ongoing complexities between the US government and TikTok — the conflict started back in 2020 and is still not fully resolved.

Though ByteDance is not usually identified as a gaming company, it has been actively diversifying into the games industry, especially during 2021. That year, the company bought 3 companies, as well as made 3 investments. The biggest deal was the $4B acquisition of Shanghai-based mobile games developer Moonton, best known for Mobile Legends: Bang Bang — one of the first mobile MOBA games, which is still one of the leaders in the genre.

Other ByteDance M&A targets include Chinese PC games developer C4Games and Chinese VR gaming company Pico. All of the acquisitions were made through ByteDance gaming subsidiary Nuverse.

Another thing to bear in mind is that TikTok has been one of the main marketing instruments for mobile gaming — the platform actively supports gaming companies, and they clearly are one of the major ad revenue sources for it.

That is why, speaking of the strategy behind the deal, we may highlight two main reasons for it:

First one is that ByteDance’s technology is something G42 has a particular interest in — an opportunity to learn more about AI algorithms behind TikTok and the overall strategy of a global tech company is of great value for any company interested in growing its business in the attention economy.

Second, we have been recently observing an overall rising interest of the MENA region’s biggest players in the games industry. We have written a lot about this previously, particularly thanks to the Saudi Arabia Public Investment Fund (PIF), which has been one of the most active strategic investors in the gaming industry lately. Overall, we now know about $11B spent by PIF to diversify in gaming, and you can find a detailed deals overview in one of our previous digests. Such activity influences enterprises from other wealthy countries of the region as well, so we can expect more deals like this from the UAE in the foreseeable future.

Again, to us, the investment seems to be not only a sign of the long-term G42’s belief in ByteDance and TikTok in particular, but also an opportunity to get expertise, connections, and insights about both AI algorithms and gaming markets.

We want to thank MGVC and The Games Fund for supporting this digest.

 MERGERS & ACQUISITIONS

Sweden-based game developer and publisher Maximum Entertainment, a subsidiary of Zordix AB (STO: ZORDIX-B), has acquired Romania-based PC & Console games developer FUN Labs for an undisclosed sum. The acquisition is to enhance Maximum Entertainment capacities by adding experienced game developers, which would help the company reach 30% revenue coming from its own titles by 2025.

French video games distributor Plug in Digital has acquired France-based Mobile and Web games developer Celsius Online for an undisclosed sum. Celsius will continue the development of its latest title Mutants: Genesis and will maintain its creative independence, while Plug in Digital will increase and enhance its assets.

US-based Web3 game developer Limit Break acquires the US-based NFT distribution platform FreeNFT. The financial terms of the deal have not been disclosed; this acquisition is expected to enable Limit Break to expand its NFT ecosystem.

 VENTURE FINANCING

GridRival, a US-based fantasy sports platform, has successfully secured $3m in funding, as reported in the SEC filings. The list of investors remains undisclosed. The platform enables motorsports fans users to compete for real cash prizes.

Brazil-based Web3 games developer Jungle has raised $6m in Seed funding. The investment round was co-led by BITKRAFT Ventures, and Framework Ventures, with participation from 32-Bit Ventures, Delphi Digital, Fourth Revolution Capital, and others. The funds will be utilized to expand the team, which is currently focused on developing their premier mobile shooter, incorporating Web3 elements.

immersionED, a US-based historical video game learning platform, has successfully secured $100k in funding according to SEC filings. The company is developing educational modules using the Unreal Engine, leveraging pre-made digital assets, and partnering with video game companies that offer relevant historically-themed content.

China-based Web3 esports platform Moxy has raised $10m in funding. Shima Capital, Polygon, MetaTope, GSR Markets have participated in this round. The funds will be utilized to facilitate the platform’s growth.

US-based payment platform Tilia has raised $22m in strategic funding. Dunamu, and JP Morgan Payments have participated in this round. Tilia serves as an all-in-one payment solution for digital economies, enabling virtual world publishers, mobile applications, and NFT providers to unlock new monetization opportunities. The funds will be utilized to facilitate the platform’s growth.

India-based fantasy-sport gaming platform BuyStars, where players get real-money prizes, has raised $5m in a pre-Series A funding round, led by Lumikai, with participation from existing investors Leo Capital and Chiratae. The sum will be used for further development of the platform and expanding its workforce.

US-based game developer Genpop Interactive has raised $6.5m in a Seed funding round. Makers Fund has led the round, with participation from 1Up Ventures, Good Smile Company, and Studio Trigger. The studio is currently creating a AAA online shooter, but its title is yet to be disclosed.

Germany-based outstaff game developer Flying Sheep Studios has got a $1.2m funding from German Federal Ministry for Economic Affairs and Climate Action for further development of Star Life, a social Web3 MMO game. The title belongs to Australia-based Web3 games developer iCandy Interactive. The funding will go towards further development of the title and expanding the studios’ workforce.

Japan-based PC & Console games publisher and developer Bandai Namco Games (TSE:7832) through its subsidiary O21 fund has made undisclosed investments in US-based tech company DeepMotion and India-based gaming platform SuperGaming. The specific amounts for both investments have not been revealed. The O21 fund was established to concentrate on investments beyond gaming, targeting startups and service providers that develop technologies with potential future applications in the gaming industry.