Epic Games is fundraising at above US$15b value: sources

[SAN FRANCISCO] Epic Games, the Fortnite videogame maker and owner of the Houseparty app that has exploded in popularity during the pandemic, has held talks to raise a new round of funding valuing it above its last valuation of US$15 billion, according to people familiar with the matter.

The company has hired a financial adviser to handle the fundraising, said the people, who asked not to be identified because the matter is private.

The company has discussed raising between US$500 million and US$1 billion, one of the people said.

The exact valuation it was seeking couldn't be learned, but some of the people said it would be significantly higher than US$15 billion.

The plans aren't final and could still change, the people said. A representative for Epic Games declined to comment.

A group including KKR & Co, Vulcan Capital, Kleiner Perkins Caufield Byers, Iconiq Capital and e-sports startup AXiomatic Gaming bought US$1.25 billion of Epic Games' shares in 2018. The company, founded by billionaire Tim Sweeney in his parents' basement in 1991, was valued in the investment at US$15 billion, a person familiar with the matter said at the time.

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Mr Sweeney sold 40 per cent of the company to Chinese Internet giant Tencent Holdings in 2012. Other minority owners include Walt Disney and Endeavor Group Holdings, along with Lightspeed Venture Partners.

Fortnite is a cartoonish fight-to-the-death battle royale where players thrash one another in a struggle for weapons, resources and survival on a shrinking, storm-ravaged island.

HOUSEPARTY GROWS

Epic Games, based in Cary, North Carolina, acquired Houseparty last year for an undisclosed sum.

Alongside Zoom Video Communications, Houseparty may be the product that most defines the current moment, when some 300 million Americans have been urged to stay home to help mitigate the spread of the new coronavirus.

At its core, Houseparty's free mobile and desktop apps let people video chat with friends or family, similarly to Zoom or Apple's FaceTime. But Houseparty, which had previously been popular mainly with teenagers, builds in a slew of other features meant to encourage interaction, including the ability to remotely play games like trivia or Heads Up, or to jump into friends' ongoing conversations.

Houseparty said earlier this month it had 50 million sign ups over 30 days, with some markets seeing as many as 70 times the normal rate of new users.

While Houseparty and Fortnite are brand names, much of Epic's value may lie in its Unreal Engine, a popular software for game developers that's the backbone of hundreds of video games.

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