Istanbul has become a city to watch when it comes to casual gaming startups, boosted by the likes of Peak (acquired by Zynga for $1.8 billion) and Dream (valued at $1 billion in a funding round last year). Now, a new startup is announcing a major round of funding to make its own mark on the space. Spyke Games, which hopes to bring a new dimension to casual games by using multiplayer functionality and other social elements, has raised $55 million in a seed round of funding.
"Teams and alliances, clans, tournaments -- these exist in the midcore genre and that is why they are so sticky," co-founder and CEO Rina Onur Sirinoglu said in an interview. "They let people play together and compete together. We are betting this will start happening in casual games, too."
The funding is coming from a single investor, Griffin Gaming Partners, a VC that focuses (as you can guess by its name) on startups working in and around the games industry. Other companies in its portfolio include Discord, Forte, AppLovin, Overwolf and WinZO.
This is a big sum for a seed round in any country, but as it happens, it's the largest seed round to date for a startup out of Turkey, underscoring just how much things have evolved in the country when it comes to attracting investment. As a point of reference, when Peak was acquired for $1.8 billion by Zynga, it had raised a mere $19 million in 10 years.
What's even more notable is that Spyke has raised this money before it's even launched anything. Its first game, Royal Riches, has been out in a limited release and is due to launch globally this month.
Part of the reason for the strong investor interest lies in the co-founders and their collective track record. Co-founder and CEO Rina Onur Sirinoglu had also been a co-founder at Peak and its chief product officer; COO Remi Onur was previously Peak's head of design; CPO Barkin Basaran had been a senior product manager both at Peak and then Zynga, CTO Fuat Coşkun was Peak's director of engineering; and CMO Mithat Madra had been an executive at Riot Games, among other places.
For Spyke, the outsized round was raised to match the startup's ambitions. Sirinoglu acknowledged that the round is an outsized one for the Turkish market.
"Turkey has always been known as a capital-efficient place for startups," she said in an interview, referring to the fact that there is a strong pipeline of engineers coming out of education in the country, but also the fact that hiring them is "super affordable" compared to hiring equivalent talent in London or the Bay Area. "Historically startups have been able to stretch a couple of million dollars to great lengths."
But she added that Spyke decided to take a different approach. "We are doing this a second time around, and we think we have landed on something huge," she said. "We have long-term goals to be one of the largest gaming companies in the world, and we want to be able to reach that goal in a quick amount of time."
Spyke's arrival in the market comes at an interesting crossroads for casual gaming. On one side, the genre has been around for years now, and so the time is ripe to try to disrupt it. The big question will be whether it will be another casual gaming company, or another kind of entity altogether that is also vying for the same engagement hours as casual games.
"It's not just competing against the world of other casual games, but also companies like TikTok," Sirinoglu said.
The hugely popular video app has not, to date, published any games that you actively play in the app, but it has very much carved out a place for itself in the gaming community. Last November it launched a new games experience, The Game Room, where people go to watch a live show where high profile people play games. Others regularly post gameplay videos in the app. It feels sometimes like it's just a short step further for TikTok itself to launch games within the app.
It's for this reason that Spyke's basic premise is not just to make more casual games, but to bring in more social elements into the mix, something that she and her co-founders started to see hints of while still at Peak.
She said the team there "unintentionally" built in social elements into Toy Blast and "stumbled" on to a community of players.
"With Peak, we didn’t have the infrastructure but across games we noticed a cross pollination between Toy Blast, Toon Blast and other similar games." User patterns that they found, meanwhile, are going to be applied at Spyke.
"The interesting thing about the social studio is that the majority of revenues came not from chips or coins but those selling virtual items in private chat rooms," she said. These were related to games, but also to relationships being formed among players. "That was in the back of our minds and so we want to create technology to keep that activity within our infrastructure."
Their decision to leave and build a new company to explore this says a lot about how often some of the best ideas at startups are easier to explore at a clean slate than trying to carve out a place for disruption within an existing entity. It's all the more interesting considering Zynga's track record in social gaming over the years, and its early days of looking to build in social elements by way of Facebook integrations.
“Spyke has the perfect combination of a deeply experienced team with proven success developing games and an unwavering focus on execution,” said Griffin Gaming Partner’s MD Phil Sanderson. He has joined Spyke’s board of directors with this round.