Tencent Holdings Ltd., a Shenzen, China-based Internet company, has purchased a minority stake in U.S.-based startup Pocket Gems Inc.
Pocket Gems, which develops interactive entertainment and mobile games, confirmed the investment as it gears up for global expansion. Pocket Gems is aiming to expand its reach to over a billion gamers all over the world via its original IP and Mantis Engine.
Founded in 2009, Pocket Gems has backing from Sequoia Capital, a venture capital firm. The company's latest game War Dragons has garnered popularity among gamers primarily due to the appealing 3D graphics, which have been done using Pocket Gems' own technology.
"We're thrilled to be partnering with Tencent, whose unparalleled strength in games publishing and operations in China will help us create great mobile games and entertainment for players globally,” Ben Liu, CEO of Pocket Gems, said.
While Pocket Gems did not reveal the stakes of Tencent, sources in a Wall Street Journal report have said that the Chinese company has a 20 percent stake. Tencent is reportedly shelling out $60 million for its stake in the company and will also get a place on Pocket Gems' board.
"Over the past five years, Pocket Gems' talented team of game-makers has created a portfolio of popular products and technical innovations that have attracted a wide audience in the Western mobile games market," stated Steven Ma, Tencent's SVP. "We look forward to working more closely with them to bring innovation and excitement to gamers around the world."
Tencent seems to be on an investment spree. It already has a 14.6 percent stake in Glu Mobile Inc, another U.S.-based mobile games company. In April, the Chinese company invested $126 million.
In December 2014, Tencent also bought a small stake in Aiming Inc, a Japanese game developer. In May of the same year, Tencent shelled out $500 million for a 28 percent stake in another mobile games company, Korea-based CJ Games Corp.
With Tencent holding a stake in Pocket Gems, the latter will likely benefit from the former's proficiency in the gaming and interactive entertainment arena. Tencent's understanding of the psyche of mobile gamers in the west will play a key role and aid Pocket Gems in developing engaging content.
Thanks to the collaboration, Pocket Gems will also have at its disposal the opportunity to make inroads into the burgeoning Chinese gaming market, which saw a growth of over 100 percent last year.
