Interview

Why Playtika has created a warchest to invest up to $400 million in companies around the world

Why Playtika has created a warchest to invest up to $400 million in companies around the world

On June.5, 2018, the Israel Mobile Summit will take place in Tel Aviv.

One of the Summit’s most prominent speakers is Eric Rapps, Managing Director at Playtika Growth Investments. Eric played a key role in the acquisition of Playtika for $4.4 billion in 2016 by a Chinese Consortium (led by Giant) and is now running their new venture fund.

The founder of the Summit, Ofir Leitner, sat down for a short interview with him.

Ofir Leitner: Playtika has gone through a big change when it got acquired for such a big sum, can you tell us how it changed the company?

Eric Rapps: It sounds like things would have changed since it was such a big exit, but the reality is that nothing changed.

We continue to run and grow the business as we always had. We have very supportive owners and they broadened our mandate and gave us flexibility and support in many new initiatives.

And I assume that one of these initiatives is Playtika Growth Investments, the fund you run these days? What prompted Playtika, a company most people know from the social casino world, to open a fund?

The purpose of the growth fund is to accelerate our evolution into a broader consumer internet business, outside of social casino, and into other fields including casual games and even apps.

We never identified purely as a social casino company, we’ve always identified as a monetisation company.

The purpose of the growth fund is to accelerate our evolution into a broader consumer internet business.

For example, in our first acquisition outside social casino, Jelly Button, a casual games company, we had tremendous success growing the business in a very short period of time and that confirmed that we can apply our know-how in monetisation, analytics, CRM etcetera to businesses outside the social casino world. And that’s what we intend to do in more industries.

It’s very surprising to hear that you do not consider yourselves as a games company – what do you think is different in Playtika’s DNA that makes you identify as a monetisation company?

It’s really just the way in which we built the company, and also a product of not coming from the traditional video games industry.

If you look at management and you look at the people who are responsible for the growth of our business from the early days, no one comes from Activision, no one comes from EA – so we’re not even immersed in that world. When you think about what we’re really good at, it’s really about data and analytics, and that has always been our DNA as a company.

So, do you plan to focus only on gaming or games, or in other companies as well?

We’re looking to invest in games businesses globally, as well as consumer internet companies. Very broadly what we are looking for are businesses where the end customer is a consumer, and where there is an element of CRM, marketing, analytics etcetera, as well as a very frequent transactional component to the business model. I.e. not something you buy every three years but something you buy on a daily or weekly basis.

Bingo Blitz is one of a number of acquisitions made by Playtika in the past

Just to emphasise, we’re looking to diversify and as such we’re not looking only at games companies but also into travel, marketplaces, media entertainment and ecommerce.

Also, what we look for beyond growth and a big market is a team that really understands their product, but they don't necessarily know how to market, monetise and make sense of their data - this is what we specialise in and that's the value that we provide.

When seeking funding, especially in growth stages, most companies are used to going to VCs – why should they go for your fund. What’s your differentiator?

When you get an investment from us you’re getting access to our managerial and transactional expertise, as a company that was acquired for $4.4 billion over 18 months ago and has continued its strong organic growth since.

But most importantly, you get access to our operational resources, you get direct access to our product teams, our monetisation teams, analytics teams and so on.

The way that we felt we can determine if a company has proven itself is if the company has $10 million revenue or more.

And it's not just a 15 minutes phone call once a month, it’s a close collaboration to make sure that we're helping the business strengthen these core functions. It's working with management to build that expertise and DNA, so that ultimately these businesses can grow and sustain themselves.

On your website you state that you invest in companies with over $10 million in revenue – is that a hard criterion?

It's a semi-hard criterion, it's meant to filter out companies that are proven.

We want to get involved with companies only once they've proven themselves, the product has been adopted by the market and the business model has been proven - we don't want to take risks on those things.

The way that we felt we can determine if a company has proven itself is if the company has $10 million revenue or more.

Playtika has done its fair share of acquisitions in the past, are you considering acquisitions in the context of the growth fund?

The people who run Playtika Growth are also the people who run the corporate development team and we've always been an acquisitive company, that's how we grew into our franchises.

We acquired Bingo Blitz then House of Fun - it's part of our strategy to diversify beyond social casino, so we're actively looking for companies that make casual games, midcore games, RPGs and even non-games consumer facing apps and start-ups.

You’ll be speaking soon in the Israel Mobile Summit – how do you see the ecosystem in Israel?

As you know, Playtika’s HQ is still in Israel even after getting acquired first by an American company (Caesars) and then by a Chinese Consortium (led by Giant).

Some people find it very strange that a company of our size, of our success, still conducts management meetings in Hebrew.

Israel is a very entrepreneurial place, and you see many start-ups that have succeeded, which resulted in more start-ups created by employees with their own ideas and the skillset that they built in those companies.

We're very comfortable working with Israeli entrepreneurs and management teams, we see the same talent in our own company and that’s why Israel is an important market for us and we actively seek new investments there.

Eric Rapps will share more insights in the “Investing in the next wave of app exits” panel at the Israel Mobile Summit on June 5th.

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