Ukrainian startup DMarket raises $6.5M and welcomes Electronic Arts founder as board member
Ukrainian startup DMarket, which is working on the monetization of items in the games, has raised a $6.5 million round led by Almaz Capital, with support from Xsolla. Trip Hawkins, a founder of Electronic Arts, joined the board.
The editor of AIN.UA tells about the details of the deal.
What does DMarket do?
The company was launched in 2017 by Vlad Panchenko, founder of the Skins.Cash virtual items trading platform, Tamara Slanova, and Alexander Kokhanovskyy, co-founder of the Natus Vincere esports club (the project’s advisor for now). The idea behind DMarket was to build an in-game item trading platform (such as skins for weapons).
In December 2017, the company held the largest Ukrainian ICO of that time, raising the equivalent of $25 million in cryptocurrency. In 2018, due to instability in the cryptocurrency market, the project had to lay off a quarter of its staff.
In 2019, according to the management, fluctuations in the market did not affect DMarket, and the year was successful. In August 2019, the company restarted its platform: it switched from a marketplaces model to an exchange one.
The project attracted $6.5 million in venture funding led by Almaz Capital. The company is now looking for up to $2 million more in investments. The shares, sold to investors, and the valuation of the project are not disclosed.
Trip Hawkins, the founder of one of the world’s most famous game companies Electronic Arts, joined DMarket as a board member.
“I love that DMarket is at the intersection of five growth trends in the game industry: advanced social games, virtual goods trading, fashion, eSports, and blockchain. DMarket has a big opportunity to be a new kind of leader in the game industry,” said DMarket’s new board member Trip Hawkins.
He is sure that the in-game market will take off in the next ten years.
What the company is doing now and where the investment will go
In these times of the pandemic and economic crisis, the gaming industry has grown, unlike other industries. The growth was both in sales and the number of users.
“If back at the end of 2019, according to Newzoo, the number of players in the world was 2.5 billion, now it is 2.7 billion. Our figures also increased – in some markets, the number of users increased by 60% compared to the coronavirus crisis period,” said the co-founder of the company.
According to the founders, DMarket now sells goods worth about $100,000 daily. Late last year, the company signed an agreement with Darewise to trade in-game items from the game Life Beyond, and also added a new payment system Paysafe. They are now negotiating with other game developers.
DMarket now has about 1 million users, and revenue in the first months of 2020 was $450,000, as per AIN.UA data.
According to Panchenko, the raised funds will be spent on the further development of DMarket Technology. It is a solution that allows game developers, players, influencers, and brands to create video game content and generate profit from gaming.
It includes financial and trading services, high-speed item trading, work services for opinion leaders directly in games, etc. In the future, the company plans to bring the same technology to other markets of the entertainment industry: music, fashion, cinema. According to Panchenko, if DMarket Technology is the main product, then the DMarket platform is its implementation in practice, something like a case study.
The company also plans to recruit people to the development team in the coming months, in particular, as top managers. They will mainly be seeking developers in Ukraine.