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A little bit about me

Hi. While this blog is a part of Seed Catalyst’s website, I realised over the initial few weeks that a lot of you are first introduced to the firm via the blog rather than our home page.

So to introduce myself - I’m a business consultant working with early stage technology firms to help streamline their strategy and go-to-market approach and support them for fund raising. 

With this blog, I aim to capture key market trends that I see in the industry, the ecosystem and cross-plays in some of the more interesting and upcoming sectors, as well as cover interesting companies that I meet. 

I will also be addressing vexing and interesting valuation and deal/term-sheet structures that would be of interest to technology start-ups at various stages of their growth.

So let’s get started...

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Zynga acquires Dextrose - JIT PDF Print E-mail
Blog - Mergers Acquisitions
Monday, 04 October 2010 14:45
Image representing Zynga as depicted in CrunchBase

Image via CrunchBase


Sometimes you see transactions and perk up in your chair with a ‘Finally!’ – the issue is not just size but the fit of the acquiree. One such recent transaction was Zynga buying Dextrose AG.

The fact that Zynga had a gaping hole in their HTML5 armour was public knowledge. The games provider is the master of online casual games for Facebook. However when it came to the mobile, especially the iPhone and the iPad, there was this huge Gordian’s knot to be conquered – the presence or rather the absence of Flash. But instead of going the HTML5 route Zynga was converting the games to native apps for the iPhone and iPad. Not the ideal solution, was it?

Flags were raised in certain circles.

And now we see the acquisition of Dextrose, the maker of an HTML5 game development engine for 2D and 2.5D graphics.

What does this imply for Zynga – all new games will be developed in HTML5 will have a simultaneous launch both for the web and mobile.

A look at some of the other guys around with skills in this space and the rationale for Dextrose:

Akihabara – Promoted as an HTML5 game engine with a host of libraries, resets and tools. Well, actually it’s more a collection of HTML5 games using these tools and they aren’t particularly chic.

RocketEngine – Finland based game development toolkit with HTML5 and Canvas support. They are perhaps just a tad premature at the moment but worth keeping an eye on for future inorganic build-ups.

Sencha Touch: An open source and commercial license HTML5 mobile app framework and development platform. The firm has the quality check of market potential and ability to deliver in the form of VC investment of $14 million from Sequoia Capital (June 2010). But they weren’t game focused for Zynga.

Heyzap – An online games platform (more an aggregator to be honest) which is expanding its focus from pure Flash based games to HTML5. The company has raised $3 million from Union Square Ventures, Y Combinator, and angel investors Naval Ravikant and Joshua Schacter. As for their current market reach – their games are currently played on close to 300k websites.

Adobe will of course soon launch the Flash to HTML5 convertor.

But a quick check shows clearly that a Zynga-Dextrose mix is one of the best. For both companies. Zynga gets just the tools it was missing. As for Dextrose - what were their options? 

- licensing a platform for game developers

- expanding to become a games aggregator

- getting acquired

They picked the third and will now operate as Zynga's German arm with a wider scope for implementing the first two.

It’s a pleasure to see German acquisitions based on core skill and technology,( which they do have in good measure) and not just an imitation of American ideas being rolled up into home markets.

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