DealBook: Angry Birds Creator Raises $42 Million

Rovio’s Angry Birds game being played on an iPad.Henrik Kettunen/Bloomberg NewsRovio’s Angry Birds game being played on an iPad.

Who would have guessed that a mobile game based on a group of malcontent birds and sinister pigs could become such a lucrative franchise?

Rovio Mobile, the Finnish game company behind Angry Birds, has raised $42 million in a financing round led by the venture capital firms Accel Partners and Atomico Ventures. Felicis Ventures also participated in the round.

Niklas Zennstrom, a co-founder of Skype and Atomic Ventures, is joining Rovio’s board.

“Angry Birds is one of the fastest-growing online products I’ve seen, growing even faster than Skype, and the company has done a brilliant job of extending it across different platforms and merchandise,” Mr. Zennstrom said in a statement on Thursday.

Rovio has become one of the fastest growing mobile game companies, thanks to the meteoric rise of Angry Birds, its flagship product. The game, which had its debut on iPhones in late 2009, now boasts 40 million active users and has become a full-fledged entertainment franchise, with its own line of plush toys. According to the company, its offline merchandise venture is flourishing, with more than two million units sold.

“We will strengthen the position of Rovio and continue building our franchises in gaming, merchandising and broadcast media,” the chief executive, Mikael Hed, said in a statement on Thursday.

The company said it planned to use the capital to push Angry Birds onto new platforms, including video game consoles, and extend its reach internationally.

As mobile devices and social networks become more engrained in consumer culture, game developers like Rovio and Zynga have become incredibly popular in the last few years.

Some analysts, however, are skeptical that these businesses, which often rely on just a handful of blockbuster games, can sustain growth in the long term.

But Richard Wong of Accel Partners says he is confident that Rovio is more than a one hit wonder.

“Mario brothers started as a very specific arcade game and then moved across a lot of different platforms,” Mr. Wong said in an interview with DealBook on Thursday.”Once you have a huge audience, you can start to develop new pieces of intellectual property.”

Full press release below:

$42m Series A Investment in Rovio
Accel Partners and Atomico Ventures Co-Lead Investment Round with Felicis Ventures Participating

Espoo, Finland – 10 March, 2011 – Rovio, the creator of the Angry Birds entertainment franchise, today announced a $42m Series A investment in the company to facilitate its strategic expansion. Currently, Angry Birds is played by 40 million monthly active users, and the game has grown from an App Store success to become one of the most recognized entertainment franchises in just over a year.

The funding round was co-led by Accel Partners, the venture capital firm known for working with fast-growing companies including Facebook, Groupon and AdMob, and Atomico Ventures, the venture capital firm created by Skype co-founder Niklas Zennström. Leading super angel fund Felicis Ventures also participated. Niklas Zennström, who also co-founded Kazaa and Rdio, will be joining the board of Rovio.

Rovio has ambitious plans that the investors endorse and will facilitate. The investment will transform Rovio’s growth, allowing it to increase its reach internationally, and across markets including mobile, social media and other platforms, and via merchandising and media production and partnerships. “With Angry Birds, we have successfully launched not only a strong new brand, but also a whole new entertainment franchise,” said Mikael Hed, CEO and co-founder of Rovio. “Angry Birds will continue to grow, and we aim to create more similar success stories. We will strengthen the position of Rovio and continue building our franchises in gaming, merchandising and broadcast media.”

“The proliferation of touchscreen smartphones and tablets has lead to a huge growth in demand for mobile entertainment”, said Rich Wong, Partner at Accel Partners. “These growth trends are changing the entire media field, and Rovio is perfectly positioned to drive this change. We believe this is just the beginning.”

“This investment will give Rovio wings,” said Niklas Zennström, CEO and Founder of Atomico. “The company has an outstanding management team and is a category winner with huge potential, making it precisely the kind of company we like to back. Angry Birds is one of the fastest-growing online products I’ve seen, growing even faster than Skype, and the company has done a brilliant job of extending it across different platforms and merchandise. I’m really looking forward to joining the board, and helping the team to fulfill its ambitions.”

“The passionate consumer response to Angry Birds has been nothing short of a phenomenon, proving that the powerful consumer experiences can win dedicated players across all demographics,” said Aydin Senkut, Managing director of Felicis Ventures. “We’re very proud of the amazing success that the Rovio team has experienced since we began working together last summer.”

Rovio recently announced that sales of Angry Birds plush toys have passed 2 million units. The commitment and retention rate of Angry Birds fans remains high, as does the demand for Angry Birds virtual goods: 40% of new customers on the iOS platform purchase the Mighty Eagle downloadable content.

Rovio has been expanding steadily through 2010 and 2011, and has 50 employees in Espoo, Finland. Currently, Rovio is busy expanding Angry Birds to even more gaming platforms and forms of media. The company has earlier announced plans to roll out an online Angry Birds experience towards summer 2011, as well as developing Angry Birds games for all major consoles later in the year.

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