Technology venture capital firm Convergence Partners Investments has stepped out of its usual investment route to take a stake in online casual gaming company SkillPod Media.
Convergence Partners made a name for itself through the personal involvement of former Department of Communications director-general and current chairman of Dimension Data SA Andile Ngcaba.
The venture capital firm lists investments in undersea cable operator Seacom and telecommunications operator Telkom among its holdings.
SkillPod is a smaller operation compared to its other investments, with only three direct employees. SkillPod considers itself a new media, or Web 2.0, business, while Convergence Partners' other investments are in larger and established operations.
Mark van Diggelen, SkillPod founder and CEO, says the cash from the 25.55% stake bought by Convergence Partners will be used to expand the company by employing more direct staff and through more development. Van Diggelen will own about 55% of the shares personally and the remainder will be held by Braby's Media, the owner of local search engine Ananzi.
Cross-border community
SkillPod already has a presence in India, the US and Canada. It plans to expand in several eastern European countries, Russia and China, as well as increase its reach into North and South America.
"We are a Web 2.0-type of operation, because the platform we use is Flash for the online service and FlashLight for the mobiles. We are also developing a community around our business that crosses all borders," he says.
SkillPod buys casual online games, such as solitaire, casino-type games and motor racing games, from Australia, UK, Hong Kong, Canada and the central Asian country of Kazakhstan. The company then outsources development of the games to countries such as India. The company has 230 titles in stock.
"We need more staff and to do more of our development in-house to protect our intellectual capital," Van Diggelen explains.
He says the games for mobile phones are usually downloaded through a wireless applications service provider using a charged-for SMS, while the online games can be played free of charge.
Advertising bonus
SkillPod owns the source code for the games and this is seen as a differentiator, as it enables the company to create a branding and marketing solution for clients.
Convergence Partners CEO Brandon Doyle says he considers SkillPod to be a Web 2.0 firm because it fits the definition of bringing users online with a common purpose, and allows them to interact through embedded functionality within a game.
"We are also excited by this due to the advertising potential. It allows a potential advertiser to get a tailored solution using algorithms to project specific advertising at a user, rather than the generic banner or billboard ads," he notes.
Doyle says Convergence Partners is looking at other content providers that may also be considered Web 2.0 companies.
Share