Unicorn from Europe (Copenhagen, Denmark). Oh wait, they moved to San Francisco.
It looks like there is a lot of talent and founders around the world, but still there is not enough VC and ecosystem to support them outside of Bay Area.
Europe in general have a problem with entrepreneurship. Stockholm, Berlin, London are the exceptions and even they don't really do that well compared to SV.
Zendesk is also Danish originally, Tradeshift is, Podio.. they all end up leaving because the market opportunity in Denmark is very small (6mio) and there isn't easy enough access to talent when you need to scale up
The biggest mistake many entrepreneurs do in Denmark is that they start with Denmark as a test market and so it's very hard for them to actually scale both mentally and practically.
The primary issue in my mind isn't really income taxes (although they do play a role). Denmark have a progressive tax system which means the top bracket pays around 52% or something like that (and cars have 180% taxes on top of the value of the car).
Denmark also have one of the most beneficial holdning company tax rules in Europe which allows for a lot of possibilities for startups.
And keep in mind that it's very easy to be unemployed and build a startup in Denmark. Healthcare is free, education is free, childcare is heavily subsidized, you get social benefits.
What really hinders Denmark is a combination of a small market, small ambitions and the lack of a proper ecosystem with alumni (they leave) and not to forget the in my mind crippling effect of the harmonization of the EU (not the common market which is great) and last but not least. There is very little tradition of scaling a company big (Denmark haven't created a +1000 person company for the last 50 years or something like that)
> Europe in general have a problem with entrepreneurship
Correction: Europe has a problem with hyper-accelerated, Silicon-Valley-style VC-fueled entrepreneurship. I see a lot of bootstrapped/slower-growth entrepreneurship in Europe, and that is in no danger of going away.
Facebook is cannibalizing all social media and Google is cannibalizing all search. Those markets are practically gone, there isn't much room for a second place and there's definitely no room for a third place. That VCs keep pumping money in such startups, well, that goes to show how irrational the ecosystem is.
> Zendesk is also Danish originally, Tradeshift is, Podio.. they all end up leaving because the market opportunity in Denmark is very small (6mio) and there isn't easy enough access to talent when you need to scale up
Podio mostly had a sales-office in SF; most development was in Copenhagen (until Citrix moved most of it to North Carolina half a year back or so)
While I'm not aware of their legal statuses, both Zendesk and Tradeshift has non-trivial amounts of development in Copenhagen.
Realm moved (and was part of Ycombinator, even) and then moved back to Copenhagen.
Falcon.io always had most of their development in Copenhagen and only really moved sales elsewhere.
It generally seem to me that they take a few semesters stateside to get known/funding/... and them move back. I've heard access to talent, employee mentality and "founders' wanted kids to grow up sane" amongst reasons for moving wholly/partially back.
Of course there are examples of starups who keep their HQ in Denmark.
But the fact remains that most who go big aren't.
Podio is now a US company not a Danish one.
Tradeshift CEO has a kid and live in SF.
Zendesk is US.
Skype was never even Danish and was bought by US company twice.
And when Danish startups gets bought it's mostly by US companies.
Universal Robot got sold to a US company.
Even Rocket Internet mostly successful deals was selling to US companies.
The idea that they just take a few semesters is wrong and it's missing the point. Where are all the European companies who buy american startups? Where are the Danish companies who buy Danish or European startups?
There is a general lack of activity in the European startup scene. It's not that it's not possible it's just that it's very unlikely to make it.
It's not really unexpected. The road to success was paved a decade or two ago. Stockholm has very few "random" successful startup, it's pretty much all things that Sweden has been traditionally good at. Creative industries (music, games, ads) and infrastructure (telecom, databases, payments).
That's what I would figure, as well.
My company moved to Seattle when we needed to expand and hire talent. Still a tech culture, but houses are still in the 6-digit range, and you don't have to pay $200k/year for a fresh graduate with a degree from CodeAcademy.
It is hard, but when you're an "It" company in hypergrowth it's the only place to be. When you're 20 people, it's easier being in a small city and just finding the best talent available. It's much harder to scale like Google/Facebook/Yahoo elsewhere. (It's possible in Seattle/NY/Boston/Austin, just tougher at the hypergrowth moment)
The TL;DR of parts of my theory is that harmonization is trying to solve a lot of problems politically which might as well be solved by startups and technology.
Furthermore when you harmonize things you end up turning things that might be a problem in one country a law in a country where it isn't. Sometimes it's good sometimes thats bad. But it's not without problems.
It's a complex issue and I don't claim to have a bullet proof theory but I think there is something to it.
In general people in Denmark don't have a ton of money to invest after paying taxes. If they do invest in Danish companies, those companies are held back somewhat by rules and further taxes. Some years ago there was a "entrepreneur tax" in Denmark which was an extra tax that affected business angels.
Employees could also be required to pay taxes on employee stocks - money that they had not earned yet because they had not sold them.
It is? I'm pretty ignorant with stocks so please excuse the stupid questions but I thought you weren't taxed until after selling them. Is that not the case? How does it work?
If you exercise stock options, you get taxed on the difference between the strike price and the market value at the time you exercise, as normal income (not capital gains).
This can be a big problem if you exercise stock options, then the price of the stock drops. You might not be able to sell the stock for enough to pay the taxes you owe, and although you can take a capital loss, you can't use capital losses to offset normal income (beyond a fairly small limit each year).
The same is true if you are given actual stock. You owe taxes when it vests (or hypothetically when you are given it if it is unrestricted stock) not when you sell it.
That just moves the point where you have to lay out money to even earlier. That's great if it's an early stage startup where the shares are worth practically nothing, but it's even worse if they are already worth a lot.
Oh sure; but you won't have to lay down any money until you sell your stock; and paying taxes on real money is a lot easier than paying taxes on imaginary money.
That's only true for NQ options. With ISO options you aren't taxed until you actually sell the shares they covert to, and then as a capital gain tax, not as ordinary income.
That's not true, the ISO option spread at exercise is taxed via AMT [1]. In general you shouldn't give out tax advice, and if you do at least make sure you have your facts straight. Plenty of early employees have been bitten by this rule and it doesn't that people perpetuate incorrect information.
That's only true when the value of your options is pretty small. ISOs are taxed under the AMT plan as regular income at a rate of 26-28%, and so you might be forced to pay taxes on them anyways.
Source: I had a fat AMT tax bill precisely because of this. :/
The taxation structures around stock options in the United States appear extremely complex. Google for something like "taxation of stock options in private company"...
I'm certainly not an expert, so don't listen to me for any financial or legal advice.
When you receive something of value from your employer, it generally counts as taxable income. This includes grants of stock or other perks such as a housing allowance or a car.
Like most Bay Area tech workers, I'm compensated partially in stock. Every month, X shares of my restricted stock "vest", which means, in practical terms, that I receive those shares. That counts as taxable income at the current market value of those shares. To avoid making me pay a large tax bill come April, my employer actually withholds some of those shares of stock to cover the tax bill.
(I've never been entirely sure how this stock-withholding works from a tax perspective. Do they immediately sell those shares and pay the proceeds to the government along with the rest of my income tax withholding?)
> To avoid making me pay a large tax bill come April, my employer actually withholds some of those shares of stock to cover the tax bill.
I think that your employer actually sells just enough of those shares at the time of vesting to cover the taxes. Any cash remaining difference is given to you in your next paycheck (i.e. 2 shares at $100 ea. are sold to cover $120 of taxes, and $80 is given to you). Could be wrong though.
You also get taxed when exercising options even if you don't immediately sell the shares you just bought. Something like the difference between the strike price and the current value being treated as income you earn upon exercising the options, so it's taxable.
True, but doesn't Denmark have big tax exemptions for investments you make through retirement accounts (which are limited in withdrawals until you're older)?
Of course, that probably wouldn't apply to non-public investments, and the caps are two low to be usable by Dane angels (far from home in the Bay especially).
Generally speaking, European are more risk adverse than Americans (I'll exclude the UK as Brits are a bit culturally closer to the US).
You will find investors, but it will be very difficult to find someone willing to take risks and bet big. For me they behave more like bankers than VCs.
Don't get me wrong, this kind of investors is fundamental for an economy to function as not all businesses are high risk/high reward and to be honest SV VCs could learn one thing or two about common sense from these folks.
However, it means that if you come with a "crazy idea" or if you are basically saying that you will lose money for several years, it will be very very hard to find an investor in Europe.
The European market being generally also more conservative and much more fragmented, scaling up is also much more expensive.
Last but not least, Americans are very good at finding good European startups and importing them in the USA.
Same situation here in Spain. It's very difficult (it's expensive) to be an entrepreneur. I mean, is very difficult for someone who has an idea, to validate it and built it just to see how the market accepts it. You have to register yourself as an independent professional which cost is around €260/month (plus other bureaucratic processes you need to complete [and pay for them of course]).
"You have to register yourself as an independent professional which cost is around €260/month"
I think you're referring to social security contributions for (which pay for healthcare and pension etc.). The amount is in the same ball park as a single freelancer would pay for healthcare in the US.
Do you have to register as a autonomo even if you have zero income? If not, can't you build and start to validate your idea without charging money? That seems to be what a lot of SV startups do.
Well, people don't really start companies (not that easily at least) and it's really a shame because the government should ease things for everyone now that the unemployment level in Spain is around 22%
Oh, btw, a couple of days ago the government announced that they will raise the corporation tax. [1]
It's got nothing to do with 'accounting' at all, it's a matter of potential. Lots of smug fools laughed at $15 billion valuation for Facebook. A few years later and it's generating more than that in annual revenue.
It seems that many people still find it difficult to comprehend what 1+ billion internet/computer users means for technology companies that are capable of scaling.
There are many VC backed companies that never state their valuation.
There are many VC backed companies that do state their valuation after every funding round and buy up all the press releases [on techcrunch, exhibit a] so everybody knows. So their secretaries, banking partners, trophy wives, and sycophants fawn over them more.
All of those companies have completely different 409a valuations, which are MUCH lower, because you can't just say "well 10% was sold for this much, so therefore 100% is this much". Nobody ever posts those.
The FASB accounting standards are also much more intelligent.
These valuations are literally only for impressionable people that don't want an intelligent valuation.
409A is lower because preferred shares have more rights over common shares. Employees want that number to be lower, to enjoy greater gains and lower exercise costs. In any case, as a company approaches an IPO event, the spread between common and preferred disappears. None of this is particularly controversial.
Yes, and? It's exactly that kind of focus - focusing on the average outcome rather than the power law outlier outcomes that return your entire fund - that characterize the people who laughed at FB's valuation, as opposed to the VCs who invested in FB.
I agree that risk is certainly required if you want to make a return on your investments, however, all I'm saying is that for every Facebook, there are hundreds more that don't make it where money gets wasted. If I were an investor I'd want to make sure there was a tangible product doing something innovative out there, rather than just a new way to collect and sell user data. I'm not a VC nor do I really inderstand the mindset though, so if investing in miracles is your thing and has worked for you then more power to you.
Just want to point out that in many industries a revenue multiple of less than 1.0 is expected [1], such that generating greater than $15 billion in revenue does not automatically result in a company worth $15 billion. That being said, FB's net assets are $50 billion (and it's market cap is much, much (holy cow it's alot) higher), so clearly those that got in at a $15 billion valuation are very happy right now.
Software, for good reason, is not one of those industries (like aerospace, home furniture, etc.). Incremental capital cost in software per user is vanishingly small compared to building planes or sofas.
Market valuations are not the same as accounting valuations; American companies also have to use the "sane, conservative" figure in the appropriate contexts.
Yeah, they'd laugh at you in London for asking for this kind of valuation unfortunately. (Except for the usual caveat of knowing the right people, etc.)
It's not all that bad for the European (and other) countries involved though. A common pattern I've seen in multi-founder companies is for one or more (typically business-oriented) co-founders to move to the Bay and open what is technically the headquarters, while other (usually more technical) co-founders stay in the motherland and keep running a large development shop from there. Kind of like how every US bank needs a big New York office, even if a lot of their work is actually carried out in other parts of the country.
That's a pretty silly statement though. It's like expecting actors not to do movies in Hollywood. Even if they would have stayed (like a number of Swedish game companies) they would have most likely been bought by a US company in the end (like a number of Swedish game companies). If there's anything wrong with Europe it's this defeatist attitude in favor of the US instead of finding ways that gives you an edge.
As someone who has started companies in the US, UK, Sweden and Netherlands I must say that the US startup environment is still way ahead. There are ways of finding your European edge, but it isn't easy to get access to the people who will talk to you about growth funding. And the funds are smaller and often more cautious.
To say we Europeans are all defeatist is a bit of an unnecessary generalisation. ;)
For what its worth, Unity is a pretty global company. They have marketing based in SF but also have an office out of Bellevue. The majority of development though is still based out of Copenhagen and other European companies.
They're quite different jobs also. Core Unity engine development and most of the tech jobs are in Copenhagen, while the SF office is mostly sales/marketing/accounting. It was kind of a half-move where they moved the "business office" to SF but didn't move the technical team. That happened years ago, initially mostly because of sales: having an "SF" company and a sales team based in SF made it easier to get in contact with the large customers who produced most of their licensing revenue (at least at the time).
you can craft all the laws you want, the mega-tech companies will always cluster in SFBay. If you're Dutch and you start a subsea oil exploration robotics company you will certainly open an office in Houston. And then your biggest customers and market will rapidly be Houston, and so your largest office becomes the head office. If you're Colombian and invent a brilliant trading algorithm, you will probably move to New York, regardless of the laws in Colombia.
This is just common sense. The best bet is to proudly foster these small companies which go big overseas and also have an ecosystem of smaller players who don't have huge multinational ambitions, likely also funded by these unicorn exits when the money recycles locally.
Of course, tune and craft laws and regulations to create the most output. But stop trying to fight this clustering effect...
> Part of the EU is open borders, why stop with the EU member-state borders?
Because of the language borders usually correspond to the national borders of the EU member states. And if not language borders then completely different systems of taxation, employment rights etc.
The biggest chunk of their development team is still in Copenhagen (and the rest is scattered all over the world, with little actually happening in SF). You can't beat SF/SV when it comes to funding and networking with the industry. But when it comes to actually hiring engineers, Copenhagen still offers a big pool of highly skilled people with fewer other interesting jobs to choose from. It seems the optimal strategy is to develop in Europe, but have a sales/management presence in SF, maybe even officially re-incorporating there, even if it's mostly a front.
Does anyone know what (if anything) generally happens to employee stock options in the event of these large funding rounds. Most options schemes are effectively designed around the idea of "liquidity event" which used to mean IPO in successful cases.
These days when we see large investment rounds and acquisitions replacing a lot of what IPOs used to do, where does that leave options holders? I suppose this question also applies to early investors and founders too.
There will be a new 409a value following the round. The 409a value is the price of common shares that an independent valuation firm determines. An increasing 409a means that future stock options will have a higher strike price. For existing option holders who have options but haven't exercised, a rising 409a means a larger tax bill.
If the option holder decides to exercise, they will have to pay tax on the spread between the strike price and the 409a value at the time of exercise. This can be painful if the 409a value jumps significantly. There are a few companies like Uber, Airbnb, etc where the price jumped so much that many employees were stuck with massive tax bills.
If you find yourself in a similar situation, some funds like the ESOFund can help cover the up front cost and allow you to keep future upside.
It might be a good idea with comments like this to disclose that you're professionally involved with ESOFund - most people won't click through to your profile to discover that.
I think you're missing that the stock might not be liquid. If you're an employee at a pre-IPO startup, you might not be able to just exercise your options and immediately sell some of the stock (since there's no public market and you may be restricted from various private sales). But you may still want to exercise the options (because you're leaving the company, you're worried about a larger tax bill down the road, etc.)
As smeyer pointed out, for most startups, employees are not allowed to sell/transfer the shares. Startups like to keep the cap table locked down and have no incentive to allow their employees sell. Sometimes, the company will allow a new investor to buy a % of the common shares from employees (usually when the company does not want additional dilution). For the average startup (ones that are not as well known as Uber, Unity, etc), there is little to no secondary market.
Nothing. $181M at $1.5B sounds pretty good to me. But in reality the employees are no richer today than they were yesterday. If everything goes right and the stars align, in several years there will be a liquidity event for investors, then founders/execs, then employees.
Unity is getting to the stage where early employees can start cashing out through secondaries. Marketplaces like Equidate[1] can help with that.
[1]: https://equidateinc.com/ - disclosure: I'm an investor in Equidate, and they're my favorite. There's a few others in the space like SharesPost, EquityZen, etc.
It generally will impact only new employees coming into the company. Their options become more expensive to obtain, and therefore will be less profitable in the future if an IPO occurs, compared to existing employee equity options. Sometimes you see share buy backs in these rounds, but typically only for the founders.
Generally nothing, which is to say that the value of the company is higher so the options are "worth" more, but since there is still no way to sell them you cannot capture any of that value.
It also makes it more expensive to exercise the options for employees as AMT will be assessed on the difference between the strike price (what the options cost to exercise) and their new higher "value".
Unfortunately for Unity, they don't make any more money on a hit game than on a big-budget failure. All that matters is how many seat licenses they sell. Selling developer tools is not a great business.
The Unreal Engine has an interesting license. There is no upfront cost but there is a 5% royalty that starts after the first $3,000 of revenue per product per quarter. Which is great for smaller shops, but seems like it would scare away the larger organizations.
Larger orgs never use that license. They all negotiate privately and secure a license for a fixed cost and no rev share. IIRC the cost for a AAA game Is around a few hundred thousand.
Unreal Engine is the most used Game Engine in the industry (not counting indie/mobile games w/ Unity), especially for AAA games. HeartBreak shared the list. For professional development the Unreal Engine makes it possible to make amazing games with a small team of programmers, iteration time is fast making development a lot faster than before or trying to use a custom engine without well developed tools.
One reason for this is because a game engine is so huge and complex that they have a massive learning curve, much more so than any web framework.
If you use Unreal Engine / Unity, you have a pretty big pool of talent that is already proficient with the engine and can hit the ground running, rather than having weeks of learning the intricacies of your specific game engine.
Epic still offer completely upfront licensing with no revenue splitting, although the price isn't published. UE3 was supposedly in the $500k range so I imagine UE4 is similar.
But, seeing a breakout hit made with Unity is very likely to make a lot of devs think, "I know, I'll use Unity!" I'm confident there's gonna be a big sales bump from the success of Pokemon Go.
I have no proof for this but I'd guess they are making a lot of their money from their video ad network. By making it super easy to integrate into mobile games built with the engine they get a lot of ad publishers on board easily and can then sell ad space.
I've been playing with it a bit in the last few days, that's pretty interesting. I've got an older android phone, and it runs really smoothly for me. I'll have to give Unity another look I think.
I wonder, what are the current opinions about the end game for Unity? What is the goal of seeking this new funding? My understanding was they are profitable.
Beyond continuing to dominate the indie/pro game dev space, and slowly but surely expanding the scope and capabilities of the Unity Asset Store (devs selling code and assets to fellow devs), they're firmly on board the "democratization" train: make game development available to everyone [1].
Looking to the horizon, post VR hype, they're trying to take this further with experiments like Carte Blanche, which is creating VR from within VR itself for non-technical users [2].
But a consumer-oriented approach isn't in their DNA and isn't well aligned with their core business. Meanwhile, VR/AR startups who are entirely focused on this view of the world will evolve the right DNA and could build significant consumer-oriented value over the next few years. A war chest will come in handy if Unity wants to acquire that value and inject new DNA.
They have the chance to be the platform for developing any sort of AR/VR applications. Not just for games, for any kind of application as the medium rises in popularity and eventually starts seeing mass market proliferation.
Well Unreal Engine has been going fast with all the Tencent money[1]. Unity took VC already[2], they put in the EA former CEO after that and it is heavily focused on service based/subscription based now[3]. They recently changed their whole setup to subscription only on June 28th[4].
My guess is they are going mostly subscription and infrastructure for games. They may one day offer a royalty or force larger companies into a royalty but right now not having one to companies like Nintendo is very attractive over Unreal Engine which takes 5% gross. They are taking money to build this infrastructure that has been in progress for 3-4 years to subscription/services. Their mission is to 'democratize game development' so I hope they always think of the smalls and mediums, not just the bigs. Unreal is really competitive now and if they don't take money they could slip. I have used Unity since 2008/version 2 and love it for mobile. I have also use Unreal since 2003 and love the latest version, they removed tons of unnecessary complexity to compete with Unity but still more for advanced devs and bigger PC/console games over mobile -- though they would like to take the place of Unity.
It's worth looking at who's at the helm. You don't make John Riccitiello[1] your CEO just to be bought by Microsoft, unless the price tag is extremely high (possible). He's there to build a huge business, plausibly bound for IPO.
Actually, Bioware/Pandemic made John Riccitiello its CEO just to be acquired by EA (but not before Riccitiello has resigned and joined the EA as the CEO again).
Well, of course, this might have something to do with him being a partner in Elevation, which bought Bioware/Pandemic and, likely, invested in Unity as well (he had been sitting on the Unity board before becoming the CEO after being fired from EA).
UnityScript is so far from TypeScript that would never happen. UnityScript is absolutely nothing like real JavaScript and has none of JavaScript's real features.
The C# is entirely standard. It's compiled to normal IL bytecode. You can call any other IL code from it in DLLs as well, compiled in F# or VB.NET etc. You can even use a newer C# version than their supplied compiler supports if you set it up so you build the IL yourself since it uses the same IL. You lose a few conveniences like opening scripts directly from the editor but it works well otherwise if you want the new C# features. I believe it's also a bit more efficient that way to some degree.
Because they just took $181M of other peoples money and those people are going to want a return on that investment. If you want to be company that just makes modest profits year after year selling good tools to people you can't accept large bags of outside money.
Because it is a business. Actions have to be focused around objectives, where goals are the stepping stones to said objective.
"Why can't they be a company that just makes good tools and sells them to people?"
That in itself can be an endgame. A profitable game development company that makes great tools. However, if they are already profitable, and seem to already do this - why take the money? Hence my question.
There's no particular reason that profitability means funding should end. Companies should continue to attract outside funding so long as there are investments to be made for significant future profits that can't be covered by current profits.
Maybe a merge with Valve. So they will become the platform to build and to sell the games. They will have all the developers and resources on the game development world.
Doubtful. Valve has Source, their own game engine which their entire game portfolio is built on in one form or another. While rare it has been occasionally licensed out to other developers. Merging with Valve with two different competing big budget engines to maintain and improve. I just don't see how a merger could benefit either company.
My guess is they want to move much faster in some areas, in particular VR/AR, so that competition (mainly Unreal Engine) doesn't capture the market. That requires more investment than they can currently afford.
Unreal Engine is better in some aspects, but Unity has a very active community.
Unity's flavor of C# is years behind modern C# though. They're supposed to use IL2CPP to fix that but 2 years later [1] it's still only used in one platform (iOS) and a half (WebGL). They also have some modicum of support for .NET Core but it's unusable since a lot of existing code just doesn't work.
They have some super talented people, but I frankly think they're just strapped for resources. I hope this round of investments will allow them to scale their engineering team and get scripting side of things more solid.
With all the recent C#/.Net open sourcing, they have a lot of tools at their disposal, but from my perspective they're not using them to their full potential.
But now there is an open source and cross platform compiler/runtime that they can use, dot net core. It should be much easier to incorporate that into unity.
The text in the Unity Editor is much too small on a high-DPI display like a MacBook Pro Retina or a high-DPI ThinkPad.
In Windows, the only way to run the Editor with any kind of readability is to let the Windows compatibility scaling kick in (as it does by default). So the text is bigger but really fuzzy. If you turn off compatibility scaling the text is much too small to read.
On OSX it's not quite as bad, but the text is still a lot smaller than other OSX apps on this display.
Adding to the trouble is the very poor contrast in both the "personal" (lighter gray) theme and the "pro" (dark) theme. The pro theme is just awful - so little contrast between the text and the background that I can barely read it. The personal theme is better, but still seriously lacking in contrast.
Every other development app I use offers a theme with reasonable contrast and has been updated to work properly on high-DPI displays - except for Unity and Unreal Engine.
I wonder if we're talking about the same thing? The Unity Editor I'm referring to is Unity's graphical environment where you edit your scenes and stuff.
Of course I use Visual Studio to edit my C# code. And I'm fortunate to be doing more "systems plumbing" than 3D graphics, so I get to spend more time in VS2015 than in the Unity Editor. But there's still no avoiding the latter.
Seems a bit low for a company that seems to be doing so well. Does anyone have insight into why the valuation isn't higher?
For those unfamiliar with it, Unity is the go-to game engine for most smaller companies, and many cross platform (mobile/desktop) games. It also has some of the best support for VR.
I suspect that people aren't yet convinced that Unity will triumph over the more sophisticated, more popular, established competitors like unreal and frostbite, even though unity is well-placed for, and well-executing, a disruptive "democraticising" play.
I thought it looked about right. From a developer's standpoint, it's about as crufty as a lot of other less developed options. I personally would invest in Corona before Unity.
Invest. I took an OpenGL course in college and it was terrible. Ended up dropping out of the course since it seemed a pointless way of doing things. I tried Unity over the Christmas break (hacking around with VR) and was very impressed. I'm not in the games industry btw.
In this case, video game technology would be a super-set of other applications. Take any non-game usage and turn it into a game, for example.
First, I think Minecraft was an over-valuation as well.
Second, it's more of a personal affront.
When I first saw Minecraft, I thought it was simple and something that anyone could make. I would rather see 15 unique block-building games made by amateurs gain success than one predictable commercial application. Obviously not the kind of success VC's want to see. Maybe this is because when I was the target demographic age (11-14) I was trying to make a Doom renderer. With the amount of time that your average kid plays Minecraft and with that amount of focus, you could easily instruct a child how to make Minecraft from scratch.
When I first saw Unity, I thought it was similar to what I was trying to achieve programming. This was back when I was working on making cross-platform (homebrew) games that supported PC, Linux, and Sony PSP, plus doing some Wii development commercially and making WebGL games. When you're thinking competitively, every framework is an enemy.
I have to agree that Unity has value, and perhaps this is a fair evaluation of their value, but when I first heard about Unity (2008?), it was unorganized and it didn't seem like the project organizers had the necessary know-how to actually build the project. One of those, I have a really great idea projects. Somehow, they've been able to make connections all over the industry and come a long way since then.
I'm not exactly sure what nearly $200 million will do for them now. For the upstarter, the real capital needed in this field is about $50,000 for development kits for each platform and twice that for licenses to develop as well, and a $100,000 education plus about $1000 in library books and about as much time as Unity has been in existence, a decade or so. That's just for one person, but that would be quite a bit of work for one billion dollars. The point is, the product is worthless unless it's built by experts.
The whole market of video game engines is upside-down, but that's another issue. Another reason to be upset is that lower entry barriers lead to lower quality commercial releases. Many top-selling games now have terrible performance and crippling bugs.
I think it's undervalued. Unity is the go-to platform for quickly building mobile and VR games. I wouldn't be surprised to see full percentage points of all computing time spent on the platform. A few percent of the world's consumer computer use is definitely worth 1.5b.
Well, the business in the business is getting smaller, as it's still a terrible place to work. And the video game industry is always cannibalizing itself.
That doesn't really change that it is a gigantic industry. The people are shoveling money at video games and the industry will be there to vacuum it up, whether the developers are happy or not.
Arguably, Unity is just the kind of tool that will allow smaller, more ethical development shops to prosper in the games industry. We have already seen a huge array of wildly succesful games by small dev shops, that is a trend likely to continue.
For interest sake, a recent popular space sim has reached 113 million dollars in crowd funding and it won't be released for at least a year or two more.
People throw money at the mere possibility of a game, there is no shortage of cash flowing through the industry.
The video game industry market cap is around 17e9 USD2015[0]. Unity accounts for ~9% of the value. I'm not sure if it's an accurate valuation but it doesn't seem to be a ridiculous percentage given where they are in the production food chain.
What's odd to me is that Epic Games is majority owned by Tim Sweeney, who has a < $1 billion net worth, and in serious and performance sensitive (VR) applications, UE4 is very difficult contention for Unity.
Other than that, I've really lost track of the values of other game companies, other than knowing that EA and Ubisoft want to eat the sun.
I didn't realise game engine is 100% of budget of a game? More like 1% (even on small scale). That would put their ideal sales around 15 million, pre tax and expenses per year. That's a long way from $1.5B valuation, even in most optimistic scenarios.
It looks like there is a lot of talent and founders around the world, but still there is not enough VC and ecosystem to support them outside of Bay Area.