British firm Mind Candy eyes IPO, U.S. expansion
Feb 15 (Reuters) - British firm Mind Candy, which created the popular online kids game "Moshi Monsters", is branching out to the United States looking to take advantage of the world's largest consumer market ahead of a potential initial public offering, its chief executive told Reuters.
"We can't stay necessarily stay private forever. We have a lot of shareholders and we don't want to sell. Going public at some point is the smartest way forward," Chief Executive Michael Acton Smith said in a recent interview.
This year would be too early for an IPO but it could be in the "next few years," he said.
The company's sole franchise "Moshi Monsters" is targeted at children ages 6 to 11. About 60 million users globally have signed up to raise virtual monster pets in the game.
Based in London, Mind Candy would be the latest company to start out as an online video game maker and then try to become a merchandising powerhouse, on the heels of Rovio, which makes "Angry Birds".
Acton Smith, 37, firmly believes the Internet is a venue that can produce new kids brands just like the traditional areas of TV and movies.
As part of the new trend, the video game company Rovio now licenses everything from "Angry Birds" plush toys to candy, while Zynga last week signed a licensing deal that would let Hasbro make toys based on the social games company's titles.
Acton Smith realized nearly two years ago that he wanted the firm to do much more than just make games. Under his helm, Mind Candy has signed 100 licensing deals, publishes a magazine and is even in talks to make a movie. The company also has a book deal with Penguin.
Some current licensing deals are with Mega Bloks and Activision Blizzard to make a Nintendo DS game.
Acton Smith, who founded Mind Candy in 2003, said the firm sold $100 million worth of "Moshi Monsters"-related merchandise this year.
In New York for this week's Toy Fair, Acton Smith said he wants to sell more of these products in the United States, where "Moshi" is not yet a household name.
"To build a business with global scale that can go public, we absolutely have to be huge in the U.S. and that's one of the many reasons we want 'Moshi' to take off here," Acton Smith said, adding he is considering moving to the U.S. as well.
Acton Smith pointed to recently public Internet companies such as Zynga, Pandora and LinkedIn as well as Facebook's impending IPO, as a sign the IPO market is rebounding.
"The window has been opened this year where it hasn't been in recent years. Investors are understanding there's a huge amount of value in tech businesses," he said.
Acton Smith said his 100-person company will double its staff this year. The company raised a second series of funding in 2010 and may consider raising another round of funding to put more cash on the balance sheet or finance acquisitions.
Last summer, the company was valued at $200 million but now "our valuation is now substantially higher than that," Acton Smith said, declining to disclose information regarding the current valuation or how it was calculated.
In addition, the company is trying to diversify by developing two new games it can market to the same audience of kids who like "Moshi Monsters" as well as build a YouTube-like video website called "Moshi TV."
"Our big bet at Mind Candy is the future of entertainment properties, particularly kids properties, will originate digitally," he said.