What Everyone Made From The Ngmoco-DeNa Deal

Yesterday, Japanese mobile gaming company DeNa announced its acquisition of iPhone gaming startup ngmoco for up to $400 million. (We first reported on the acquisition talks here). The price includes $300 million up front in cash and stock, plus another $100 million earnout if ngmoco hits certain performance milestones. We also reported yesterday that ngmoco’s largest investor, Kleiner Perkins, is set to take “more than $100 million off the table” for its share of the company, assuming the full amount is paid out. Well, it turns out the exact number could be closer to $130 million.

Thanks to financial documents filed by DeNa in Japan, and discovered by Stuart Dredge at Mobile Entertainment, we now know each major shareholder’s stake in the company and how much they will make from the deal. Kleiner owned a third of the company, or 32.7 percent. IVP owned 25 percent, now worth $100 million. Two of the co-founders, CEO Neil Young and chief creative officer Bob Stevenson, each owned 9.5 percent of the company, worth a potential payout of $38 million.

Here is a breakdown, showing a range of how much each stake is worth, using both the $300 million and $400 million purchase prices. (You can never really count on an earnout until it is actually earned):

  • KPCB Holdings (32.72%) = $98M-$130M
  • Institutional Venture Partners (25.31%) = $76M-$101M
  • Norwest Venture Partners (13.46%) = $40M-$54M
  • Neil Young (9.52%) = $28M-$38M
  • Bob Stevenson (9.52%) $28M-$38M
  • Google Ventures (3.65%) = $11M-$14.6M
  • Maples Investments (1.81%) =$5.4M-$7.2M


The document (in Japanese) also listed ngmoco’s sales and losses for 2008 and 2009.  In 2008, sales were $484,000 and it posted a net loss of $2.46 million.  In 2009, sales were only $3.16 million, and losses ballooned to $10.89 million. While the documents don’t go into 2010 revenues, our sources indicate that the company is on a $30 million revenue run rate, which would be 10 times last year’s numbers.

The company’s revenues didn’t really start to take off until it launched its free-to-play strategy using the iPhone’s in-app purchases as its main revenue driver.  The 2009 revenues only represent two months worth of that strategy, and only two game titles. So far this year, it’s launched another 15 Free-2-Play games, which are not counted in its 2009 revenues.

DeNa also released a set of slides in English (embedded below) laying out the strategy behind its purchase. Basically, it will use ngmoco as a way to enter the U.S. market, and much of the acquisition value is more likely tied to its potential for future revenues than as a multiple of current ones.

Update: One thing that appears to be missing from these numbers is the shares held by employees, which throws off all the calculations. A person with direct knowledge of this transaction tells me that employees other than the founders owned a double-digit percentage of shares, which is not reflected in these numbers at all. Putting the relevant table through Google Translate from the Japanese also suggests that employee shares are not being counted here. The table is titled “Major shareholders and shareholding ratio,” but at the bottom it says:

None of capital between
Personnel None

So a key piece of information appears to be missing here.