Supercell just officially announced their strategic investment of $1.5 billion from SoftBank and Gung Ho Entertainment. See the official blog post from Ilkka with a statement from Masayoshi Son, the SoftBank founder.

For us at Initial Capital, the announcement is bittersweet. We led the seed round back in 2010 together with our friends London Venture Partners, Lifeline Ventures and Jari Ovaskainen. We knew the Supercell team from their days at previous companies and were huge fans of their collective ability to craft incredible games. What excited us even more was their long term vision and desire to build a unique culture.

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We have had a blast working with Ilkka and the crew for the past three years – from sparring sessions on product strategy and late night team building sessions to playing keys in the house band. As entrepreneurs, we are a little envious that we will now be backseat passengers as the company takes the next big step toward becoming the first truly global games company.

That said, we are very excited for the team and confident in their future with the expanded resources. We feel very fortunate to have been able to work with so many talented and thoughtful individuals in the company over the past three years. We are also hugely thankful for the incredible financial return on our investment to date as well as the promise of a greater upside still for our remaining share holding. Thank you Ilkka and team!

We also believe that today’s announcement heralds an exciting new direction for the emerging mobile and tablet games industry as a whole. Here are some of the things we expect :

  • Today’s announcement alongside the upcoming IPO of King, will create two financially strong, ambitious, globally minded companies. This will inevitably spur on others, increase the competition for talent and lead to accelerating industry growth.
  • The financial strength of the emerging leaders will also push up production values and marketing budgets further. Few mobile / tablet games will be made with combined production and marketing budgets below $1M in the future.
  • The global nature of the deal will create a competitive advantage out of global scale and managing player relationships regionally. As this model evolves and spreads to others in the market, it will usher in a new era where publishing scale re-emerges as a key source of enterprise value.
  • Mobile game marketing budgets will not only grow substantially but also evolve toward a more balanced approach between mainstream brand advertising and performance advertising, increasing the importance of brand marketing talent and high production assets in combination with the quantitative performance marketing skills.

We look forward to supporting Supercell as continued shareholders, as well as working with our other portfolio companies to navigate the exciting new waters of the industry over the coming years.

Meanwhile, thank you again to Ilkka and team and best of luck for the future. Just remember to celebrate with beer and not champagne. You have earned it.