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Billion Dollar Unicorns: Garena Files Privately in New Avatar

Posted on Monday, Jul 17th 2017

Singapore-based Garena became the most valuable Billion Dollar Unicorn from South East Asia riding on the popularity of its games. It has now expanded into e-wallets and e-commerce in the South East Asian region and has filed privately for an IPO after rebranding itself as Sea.

Sea’s Journey

When Forrest Li heard Steve Job’s famous “Stay hungry, stay foolish” commencement speech at his girlfriend’s Stanford graduation in 2005, he was inspired and realized he wanted to do something different. While pursuing his MBA at Stanford, he was also influenced by the alumni network, visits to VC firms near campus, and big-company CEO speakers. Back in Singapore, and now married to his girlfriend, Li continued to build his network. He met several influential people including Skype co-founder Toivo Annus. He then set up his first enterprise backed by three members of his network.

His first venture GG Game was involved in developing single-player gaming products, instead of the high demand multi-player games. But the venture soon shut down as it could not withstand the financial meltdown. However, Li’s investors did not give up on him. With their backing, Li founded Garena Interactive in 2009.

In 2010, the company released Garena+, which was an online gaming and social platform focused on the Southeast Asian markets. The platform successfully integrated communications capabilities with digital content and offered impressive gaming and networking capabilities. Since 2009, Garena has launched over ten games on its platform including three of the most popular titles in Southeast Asia: League of Legends, Heroes of Newerth, and FIFA Online 3.

In 2015, Garena expanded into the fast growing mobile payments segment with the release of AirPay. AirPay has been developed keeping in mind the emerging markets and allows users with no bank accounts and credit cards to set up pre-payment accounts that can be used to pay for not just online games but also for their telephone bills, utilities, and e-commerce transactions.

In 2016, Garena extended its reach to the e-commerce with the launch of its e-commerce app Shopee that leverages the popularity of social media to enable social commerce. It is already available in seven markets throughout Southeast Asia: Indonesia, Singapore, Malaysia, Thailand, Vietnam, the Philippines, and Taiwan.

In May 2017, following a massive round of investment for its growth, Garena rebranded itself as Sea. Sea will be the new brand at the corporate branding level. The company will continue to use the name Garena for its online gaming business.

Sea’s Financials

The company earns its revenues primarily through sales of virtual goods. Revenues have grown from $17 million in 2011, over $200 million in 2014 to $300 million in 2015. The company is expected to have turned profitable in the early years.

Sea is a venture funded company. It has raised $722 million so far from investors including Cathay Financial Holding, Farallon Capital Management, GDP Venture, General Atlantic, Government of Singapore, Hillhouse Capital Group, JG Summit Holdings, Keytone Ventures, Khazanah Nasional, Mistletoe, Ontario Teachers Pension Plan, SeaTown International, Tencent Holdings, Toivo Annus, and Uni-President Enterprises Corporation. In 2014, the company was valued at $1 billion. Its latest funding round was held in May 2017 when it raised $550 million at an undisclosed valuation. An earlier funding round for $170 million in March 2016 valued it at $3.75 billion.

Following the funding in May 2017, Sea is reported to have filed privately with the U.S. Securities and Exchange Commission. It is said to be considering a 2018 listing and is working with Goldman Sachs and Morgan Stanley for the IPO. Under the Jumpstart Our Business Startups (JOBS) Act, companies with less than $1 billion in annual revenue can file for an IPO with the SEC privately and work out the details outside the public eye.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

This segment is a part in the series : Billion Dollar Unicorns


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