Softbank's Sprint acquisition may have been the most impactful, but it's not the only significant purchase the Japanese carrier has made this year. Its acquisition of mobile gaming company Supercell represents the largest valuation for a mobile app M&A transaction ever, according to Rutberg & Company.
Last month, SoftBank Corp. agreed to purchase 51% of the Finnish game maker for $1.5 billion, a deal that valued the company at $3 billion. In its latest mobile M&A report, Rutberg & Co. says this huge valuation could be just the start for private companies in the mobile sector. It anticipates $10+ billion exits among venture-backed mobile-first startups over the next three to five years. (See The Best-Funded Mobile Startups of 2013 and Softbank Invests $1.26B in Brightstar.)
For Supercell, which only has a couple of freemium games and about 100 employees, Rutberg Managing Director Rajeev Chand says the transaction drivers included the "company's tremendous financial results, early position in the free-to-play games market, notorious discipline at game testing and killing, and entrepreneurial culture that retained sharp developers."
For its part, Softbank CEO Masayoshi Son has stated his intentions to own the mobile gaming market… and then the mobile Internet market… and then become the world's biggest company, so Supercell was a strategic acquisition on its path to domination.
Although mobile games may seem like a tangential business for a network operator, a recent study by AppLift and Newzoo says they will generate $23.9 billion in revenues by 2016, a 25% annual growth rate from $12.2 billion in 2013.
Overall for the month of October, Rutberg says private companies raised $905 million in 122 venture capital deals. That brings the total deals for 2013 to 936, with private companies raising a total of $7 billion. Last month's biggest wins went to mobile device trade-in company eRecyclingCorp, which raised $105 in financing, location intelligence vendor Telogis' $93 million in financing, and mobile security company LookOut's $55 million round.
— Sarah Reedy, Senior Editor, Light Reading