The fastest-growing company in America, as dabbed by Inc. Magazine, is going public. Skillz, the leading mobile esports gaming platform for competitive tournaments, has announced a merger with Flying Eagle Acquisition Corp. The new partner is a blank-check firm run by veteran Hollywood executives, former MGM Holdings Inc. movie studio chief Harry Sloan and film producer Jeff Sagansky.
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In the merger + IPO operation, Skillz has been valued a whopping $3.5 billion, or 6.3 times its projected 2022 revenue. Flying Eagle is putting $690 million of cash in trust into the operation. Additional investors, led by Wellington Management Company, include Fidelity Management & Research Company, LLC, Franklin Templeton, and Neuberger Berman funds. They have committed to invest $159 million in the form of a PIPE at a price of $10.00 per share of Class A common stock of Flying Eagle. This passage will happen immediately prior to the closing of the transaction.
Skillz expects revenue of $225 million in fiscal 2020, with a year over year growth of 88%. Fiscal revenue has skyrocketed from $17 million in the fiscal year 2017 to $120 million in the last full fiscal year. “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 Andrew Paradise, CEO and Founder of Skillz. “Skillz fulfills the human desire for community and competition and is shaping the future of interactive entertainment.”
The company is planning to use the additional financial power from the merger to increase its users’ base and expand to more countries. At present, Skillz boasts more than 30 million players, 20,000 developers, more than 3.5 million daily tournaments and $60 million monthly prizes. The company was founded in 2012 by Andrew Paradise and Casey Chafkin in Boston. Its present headquarters are located in San Francisco. In its first three years of operations, Skillz launched 550 games and partnered with 1,100 game studios. By December 2017, its growth rate was 50,000%.
Flying Eagle’s Harry Sloan has been involved with video games since 1999. Sloan is an investor and board member of ZeniMax Media, owner of Bethesda Game Studio and one of the first big esports games “Quake.” “I’ve been active in the evolution of gaming for 20 years and I believe Skillz has position itself as the platform for the future of gaming,” Sloan said about the merger.
The IPO had been planned by Skillz later in the year, sometime in the fourth quarter. Its surprisingly strong growth in the second quarter stimulated multiple blank-check companies to jump on the bandwagon and speed up its entrance on public markets.
[Written By External Partner]