RESEARCH TRIANGLE PARK – Friday’s stunning news that Cary-based Epic Games has raised $1.25 billion in investment capital not only is huge for the Tim Sweeney-run video game technology company but also for the Triangle.
“Over the long term, it might be more important than landing Amazon or Apple, because Epic is home grown,” says veteran tech attorney Jim Verdonik of Ward and Smith, referring to the Triangle being a candidate for Amazon’s HQ2 and a new campus from Apple.
The news will raise the profile of Triangle entrepreneurial companies among investors looking for deals, let along the impact it could have on jobs and other opportunities Epic could create.
“WOW!!!!!!”
So declared Verdonik who has worked with North Carolina tech firms from startup to IPO and exit.
Epic Games lands whopping $1.25B in new financing from high-profile investors
Declared Cary-based investor David Gardner of Cofounders Capital: “[G]reat news for one of our local economy and status as a gaming hub.”
To put the Epic Games funding in perspective:
- The total is more than all NC firms are likely to raise in venture capital this entire year.
- Apple has discussed a new campus in Research Triangle Park worth about the same amount.
- The $1.25 billion is the size of initial public offerings. For example, it’s more money than Quintiles raised in 2013 at just under $1 billion. The scale of IPOs can be wide. While Red Hat was valued at more than $3 billion after its IPO in 2002, communications provider Bandwidth raised $80 million in its IPO last December.
A home run for Sweeney
In other words, Epic’s cofounder and CEO Sweeney hit a grand slam home run in the bottom of the 9th inning to win the World Series.
Sweeney has taken outside money before – more than $300 million for 40 percent of the company’s shares in 2013.
The Wall Street Journal says the deal immediately values Epic at $15 billion. That’s nearly double the value Bloomberg news assigned to Epic recently as the company continued to rake in hundreds of millions of dollars from its wildly popular online game Fortnite.
Epic already has far exceeded the value of North Carolina’s three other “unicorns” such as AvidXchange and Red Ventures, which have $1 billion or more in valuation as emerging companies backed by venture capital.
There certainly will be an angel effect on other Triangle and NC entrepreneurial companies as more investors see big names such as KKR and Kleiner Perkins putting money into Epic, according to Verdonik.
“This could move the RTP area up several notches in the VC and tech worlds,” Verdonik explains.
“Many areas can attract an outside company expansion by offering tax and other incentives– very few areas can grow big companies I am personally pleased because it validates the strategy of growing our own – not just chasing outside companies.”
Multiple Triangle benefits
Verdonik also says the Epic success reflects on the collective efforts of many people over the last three decades to create a tech economy in the Triangle.
“A lot of local people have worked hard to create a great local ecosysytem for entrepreneurs.,” he says. “This validates their efforts.
“First, because it dispels myth that we can’t grow big value in RTP – that will make it easier for other local companies to attract outside capital and attract entrepreneurs from around the country.
“Second, as Epic starts using that money, it will increase employees and help local vendors.
“Third, over time, Epic employee will invest in other games, AI and other new companies.
“Fourth, over time, Epic employees will invest in other local companies.
“Fifth, games companies attract many kinds of creative talent not just software programmers– artists, writers etc – it can create critical mass for creative communities here that go beyond technology.
“Sixth, RTP has specialized in business to business software – big business to consumer businesses have been scarce – this will increase the marketing, sales and media people who are important to selling to consumers.
“Seventh, the factors I mentioned above will strengthen local universities.”
Epic’s no one-trick company
Gardner says Epic drew investors not only because of Fortnite and other games it has developed over the years (such as Gears of War, which it sold to a Microsoft subsidiary, and Unreal Tournament) but its game technology.
