An investor wanted to complete a Late-stage investment round in a European mobile games developer. The startup offers a full range of publishing, user acquisition, and monetization services for independent third-party game developers. The company has experienced hyper-growth since inception, increasing the founders’ ambitions. They wanted to explore emerging areas such as Web3 and NFTs, while continuing to enhance their core tools to give creators a better chance of succeeding in the hyper-competitive mobile and casual gaming spaces. The company hoped to scale both organically and through strategic acquisitions.
The startup had clearly created a product that resonated with developers and players. Yet this also meant that it had a complex revenue model based on splitting advertising and in-game purchases with game creators. In addition, games are a notoriously hit-driven market. It is intensely competitive and many studios and developers have tried to leverage data to drive optimization. Remaining ahead of the pack and maintaining strong developer relations were key to its future success. Even so, the company was intending to pursue new Web3 products that have attracted huge amounts of hype, but remain unproven as long-term drivers of revenue.
Traditional due diligence is backward-looking and, for High-growth and Disruptive companies, does not provide comfort on a company’s ability to deliver sustainable growth and create value. Also, because traditional due diligence takes a broader industry approach rather than a more precise business model approach, it can only generate a surface-level view of a company’s financial health with a limited picture of an asset’s strengths and weaknesses to consider in the investment process.
The investor retained D’Ornano + Co. to apply its Hybrid Growth Diligence for Late-Stage VC product which identifies in a short timeframe any deal-breaking items, secures key aggregates, and challenges the existence of a clear path to profitability. Going beyond classic due diligence, the firm’s HGD methodology layers Financial, Legal and ESG diligence on top of preliminary business model analysis and incorporates operational data mirroring the company’s economics in the assessment performed. The result is an in-depth analysis performed in record time to satisfy the expectations of an investor assessing a high-growth + disruptive asset in the context of a late-stage round.
Digital Gaming companies are engaged in the production and distribution of video games that are either partially or primarily played through the internet. D’Ornano + Co. has historically conducted multiple Digital Gaming assignments for global investors.