Slush funds: NGP to invest in MAG Interactive

At the Slush start-up conference in Helsinki today, Swedish mobile game development company MAG Interactive announced that Nokia Growth Partners (NGP) will lead a $6 million first investment round in the company. MAG is the development studio responsible for smash-hit word puzzle Ruzzle, among other titles.

Walter Masalin, principal at NGP, sat down with Conversations to explain the reasons for the investment, and the strategy behind it.

What is NGP, and what is its relationship to Nokia?

NGP manages a venture capital investment fund established by Nokia. We look to make investments in growth stage technology companies that will be successful and so deliver a profit to our sole investor, Nokia.

So an investment by us isn’t the same thing as Nokia investing in or acquiring a company. When that happens, it’s about feeding into Nokia’s products and services directly. When NGP invests, it’s primarily about accelerating the growth of the company itself and delivering a profit to our investor.

That said, we work in close collaboration with our colleagues in the Nokia business units and many of our portfolio companies will also do business with Nokia. We gain a lot of insights from them into trends and future areas of growth in mobile. And, in turn, we do our part for Nokia and share our understanding of where emerging business opportunities and promising technologies may be found.

Why has NGP chosen to invest in MAG Interactive?

To step back a little, NGP always looks to invest in areas of interest, and so develop expertise in those areas. One of them is media and entertainment. In the mobile gaming space, we have invested in KongZhong, a leading Chinese mobile entertainment provider. We have also invested in SponsorPay, a monetization platform targeting game developers and, earlier this year, our investment in Grand Cru, the Finnish gaming company soon to release Supernauts, was announced.

There’s a vibrant Nordic gaming cluster that’s extremely successful and innovative. Look at the likes of Rovio, King, Supercell, Mojang and others. When we looked at MAG, we found a highly experienced team that wants to build a portfolio of successful titles.

They are very metrics-driven and take a very structured approach to game development. Their analytics engine and metrics reporting drive real-time decisions about modifications and alterations to existing game play flow and logic. It results in games that people really can’t put down.

They’re successful and profitable already, and we’re confident they’ll be a very good investment.

So why is MAG seeking investment if it’s already successful?

What’s next for MAG is to take the company to the next level, to up its game. We absolutely believe that their best days lie ahead of them.

They want to expand quicker than they could do organically. To do that, they needed partnerships and introductions to people that can help around the globe and to get a strong board and advisors. With NGP involvement, our global network, and the advisors we have introduced to MAG, the company is making rapid progress to a more global reach.

There are lots of opportunities right now that they’ll be able to take advantage of.

To give a concrete example, they are constantly adding new languages and are in the process of expanding in Russia, where there’s every opportunity of replicating the success they’ve had elsewhere. NGP has also tapped into its network to get some specific advice around this. We also see opportunities in the Windows Phone space, of course.

Great games are often risk-taking – they go against conventions and trends. Is it true that the responsibilities of VC investment make it less easy for games developers to take risks?

I disagree with that. I’d say that without funding, it’s really difficult to take risks, because you have to put food on the table. External investment creates the breathing space that’s required to try something different. Especially with games, you typically need to test a few things before really hitting the sweet spot and, if you do, you also want to make sure you have sufficient funding for sales & marketing.

A really good example is Grand Cru, our pure-play mobile gaming company investment. They have yet to publish their first title, but they have had sufficient resources and time to really build something new and polish it. That would not have been possible without venture capital backing the company. Yet we have faith in the team as we know they’re doing something very revolutionary with social gaming and user-created assets that requires a long gestation period.

Here’s to the further success of MAG Interactive, and thank you, Walter, for your time.