
Unity raises $181M round at a reported $1.5B valuation - doppp
https://techcrunch.com/2016/07/13/unity-announces-181-million-monster-round-led-by-dfj-growth/
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jakozaur
Unicorn from Europe (Copenhagen, Denmark). Oh wait, they moved to San
Francisco.

It looks like there is a lot of talent and founders around the world, but
still there is not enough VC and ecosystem to support them outside of Bay
Area.

~~~
ThomPete
Dane here (now expat)

Europe in general have a problem with entrepreneurship. Stockholm, Berlin,
London are the exceptions and even they don't really do that well compared to
SV.

Zendesk is also Danish originally, Tradeshift is, Podio.. they all end up
leaving because the market opportunity in Denmark is very small (6mio) and
there isn't easy enough access to talent when you need to scale up

The biggest mistake many entrepreneurs do in Denmark is that they start with
Denmark as a test market and so it's very hard for them to actually scale both
mentally and practically.

The primary issue in my mind isn't really income taxes (although they do play
a role). Denmark have a progressive tax system which means the top bracket
pays around 52% or something like that (and cars have 180% taxes on top of the
value of the car).

Denmark also have one of the most beneficial holdning company tax rules in
Europe which allows for a lot of possibilities for startups.

And keep in mind that it's very easy to be unemployed and build a startup in
Denmark. Healthcare is free, education is free, childcare is heavily
subsidized, you get social benefits.

What really hinders Denmark is a combination of a small market, small
ambitions and the lack of a proper ecosystem with alumni (they leave) and not
to forget the in my mind crippling effect of the harmonization of the EU (not
the common market which is great) and last but not least. There is very little
tradition of scaling a company big (Denmark haven't created a +1000 person
company for the last 50 years or something like that)

~~~
ced
_there isn 't easy enough access to talent when you need to scale up_

Isn't it harder/costlier to find talent in highly competitive SV than it is in
Europe?

~~~
MyNameIsFred
That's what I would figure, as well. My company moved to Seattle when we
needed to expand and hire talent. Still a tech culture, but houses are still
in the 6-digit range, and you don't have to pay $200k/year for a fresh
graduate with a degree from CodeAcademy.

~~~
hobo_mark
Maybe you mean a certificate, but they don't even give that.

~~~
MyNameIsFred
It was a (lousy) joke.

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netcan
Curious side question.

Does anyone know what (if anything) generally happens to employee stock
options in the event of these large funding rounds. Most options schemes are
effectively designed around the idea of "liquidity event" which used to mean
IPO in successful cases.

These days when we see large investment rounds and acquisitions replacing a
lot of what IPOs used to do, where does that leave options holders? I suppose
this question also applies to early investors and founders too.

~~~
chrdlu
There will be a new 409a value following the round. The 409a value is the
price of common shares that an independent valuation firm determines. An
increasing 409a means that future stock options will have a higher strike
price. For existing option holders who have options but haven't exercised, a
rising 409a means a larger tax bill.

If the option holder decides to exercise, they will have to pay tax on the
spread between the strike price and the 409a value at the time of exercise.
This can be painful if the 409a value jumps significantly. There are a few
companies like Uber, Airbnb, etc where the price jumped so much that many
employees were stuck with massive tax bills.

If you find yourself in a similar situation, some funds like the ESOFund can
help cover the up front cost and allow you to keep future upside.

~~~
ryanSrich
Wouldn't you just sell your stock immediately and use that cash to pay the
tax? Perhaps I'm missing something.

~~~
smeyer
I think you're missing that the stock might not be liquid. If you're an
employee at a pre-IPO startup, you might not be able to just exercise your
options and immediately sell some of the stock (since there's no public market
and you may be restricted from various private sales). But you may still want
to exercise the options (because you're leaving the company, you're worried
about a larger tax bill down the road, etc.)

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gourneau
Just wanted to chime in and say Pokemon Go is another Unity game. Unity games
seem to be doing extremely well on mobile.

~~~
jim-greer
Unfortunately for Unity, they don't make any more money on a hit game than on
a big-budget failure. All that matters is how many seat licenses they sell.
Selling developer tools is not a great business.

~~~
gourneau
The Unreal Engine has an interesting license. There is no upfront cost but
there is a 5% royalty that starts after the first $3,000 of revenue per
product per quarter. Which is great for smaller shops, but seems like it would
scare away the larger organizations.

~~~
socialist_coder
Larger orgs never use that license. They all negotiate privately and secure a
license for a fixed cost and no rev share. IIRC the cost for a AAA game Is
around a few hundred thousand.

~~~
michaelvoz
Source? Do AAA games even use that engine? Do most AAA games not have their
own engine?

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heartbreak
Yep there are quite a few on this list:
[https://en.wikipedia.org/wiki/List_of_Unreal_Engine_games](https://en.wikipedia.org/wiki/List_of_Unreal_Engine_games)

~~~
michaelvoz
I had no idea! Thank you.

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michaelvoz
I wonder, what are the current opinions about the end game for Unity? What is
the goal of seeking this new funding? My understanding was they are
profitable.

~~~
SneakerXZ
My guess would be Microsoft. Unity uses C# and it would fit into Microsoft
strategy.

~~~
cloudmike
It's worth looking at who's at the helm. You don't make John Riccitiello[1]
your CEO just to be bought by Microsoft, unless the price tag is extremely
high (possible). He's there to build a huge business, plausibly bound for IPO.

[1]
[https://en.wikipedia.org/wiki/John_Riccitiello](https://en.wikipedia.org/wiki/John_Riccitiello)

~~~
pandaman
Actually, Bioware/Pandemic made John Riccitiello its CEO just to be acquired
by EA (but not before Riccitiello has resigned and joined the EA as the CEO
again). Well, of course, this might have something to do with him being a
partner in Elevation, which bought Bioware/Pandemic and, likely, invested in
Unity as well (he had been sitting on the Unity board before becoming the CEO
after being fired from EA).

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bitsweet
For VCs that want to invest in VR this is the logical place; it is too early
to invest in apps and too late to get in to the hardware.

~~~
intrasight
By no means is it too late to get into hardware. We're very early in the VR/AR
wave, and most current hardware sucks.

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AWildDHHAppears
It's a big boost for .NET in general, too.

~~~
himanshuy
Why would you say that? Sorry, I don't know much about Unity Technologies.

~~~
Infinitesimus
You can use C# in Unity which is huge (and partly why I'm leaning towards
unity if I ever get into that space vs Unreal)

~~~
whatever_dude
Unity's flavor of C# is years behind modern C# though. They're supposed to use
IL2CPP to fix that but 2 years later [1] it's still only used in one platform
(iOS) and a half (WebGL). They also have some modicum of support for .NET Core
but it's unusable since a lot of existing code just doesn't work.

They have some super talented people, but I frankly think they're just
strapped for resources. I hope this round of investments will allow them to
scale their engineering team and get scripting side of things more solid.

With all the recent C#/.Net open sourcing, they have a lot of tools at their
disposal, but from my perspective they're not using them to their full
potential.

[1] [http://blogs.unity3d.com/2014/05/20/the-future-of-
scripting-...](http://blogs.unity3d.com/2014/05/20/the-future-of-scripting-in-
unity/)

~~~
Nelkins
Unity joined the .NET Foundation in April and has publicly stated that they
are working on support for the most recent versions of C# [1].

[1] [http://blogs.unity3d.com/2016/04/01/unity-joins-the-net-
foun...](http://blogs.unity3d.com/2016/04/01/unity-joins-the-net-foundation/)

~~~
whatever_dude
They announced the same thing on the 2014 post.

They do have _some_ kind of mono compiler update in alpha according to their
roadmap [1], not for the runtime.

I wouldn't hold my breath, that's all.

[1] [https://unity3d.com/unity/roadmap](https://unity3d.com/unity/roadmap)

~~~
flukus
But now there is an open source and cross platform compiler/runtime that they
can use, dot net core. It should be much easier to incorporate that into
unity.

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pdeva1
Unity makes no money off the games themselves. Its equivalent to a dev tools
company. Does $125/dev/month really make that much money?

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mratzloff
Congrats to Unity. Maybe they can use some of that case to fix the UI. At
modern resolutions it's unusable.

~~~
mathattack
Can you be more specific?

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Stratoscope
The text in the Unity Editor is much too small on a high-DPI display like a
MacBook Pro Retina or a high-DPI ThinkPad.

In Windows, the only way to run the Editor with any kind of readability is to
let the Windows compatibility scaling kick in (as it does by default). So the
text is bigger but really fuzzy. If you turn off compatibility scaling the
text is much too small to read.

On OSX it's not quite as bad, but the text is still a lot smaller than other
OSX apps on this display.

Adding to the trouble is the very poor contrast in both the "personal"
(lighter gray) theme and the "pro" (dark) theme. The pro theme is just awful -
so little contrast between the text and the background that I can barely read
it. The personal theme is better, but still seriously lacking in contrast.

Every other development app I use offers a theme with reasonable contrast and
has been updated to work properly on high-DPI displays - except for Unity and
Unreal Engine.

~~~
aphextron
Unity Editor is awful. Why would you ever use that over VS or an actual text
editor?

~~~
Stratoscope
I wonder if we're talking about the same thing? The Unity Editor I'm referring
to is Unity's graphical environment where you edit your scenes and stuff.

Of course I use Visual Studio to edit my C# code. And I'm fortunate to be
doing more "systems plumbing" than 3D graphics, so I get to spend more time in
VS2015 than in the Unity Editor. But there's still no avoiding the latter.

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rcheu
Seems a bit low for a company that seems to be doing so well. Does anyone have
insight into why the valuation isn't higher?

For those unfamiliar with it, Unity is the go-to game engine for most smaller
companies, and many cross platform (mobile/desktop) games. It also has some of
the best support for VR.

~~~
hyperpallium
I suspect that people aren't yet convinced that Unity will triumph over the
more sophisticated, more popular, established competitors like unreal and
frostbite, even though unity is well-placed for, and well-executing, a
disruptive "democraticising" play.

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cwkoss
In-browser Unity has horrible performance.

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dcw303
Great, now _please_ use some of that cash to hire more developers. We've been
waiting for a modern .net runtime update for years!

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questionr
fyi their "crunchbase" profile to the right shows the wrong company (its not
[http://www.unity.hr](http://www.unity.hr), but instead
[https://unity3d.com/](https://unity3d.com/))

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shmerl
I hope they'll catch up on Vulkan support soon.

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tostitos1979
Man .. wish they were a publicly traded company :(

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marblar
Do you wish that because you work there?

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exolymph
My assumption was that tostitos1979 wanted to invest in Unity, not cash out.

~~~
tostitos1979
Invest. I took an OpenGL course in college and it was terrible. Ended up
dropping out of the course since it seemed a pointless way of doing things. I
tried Unity over the Christmas break (hacking around with VR) and was very
impressed. I'm not in the games industry btw.

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aphextron
How are they only valued at 1.5? Unity is the most advanced game engine in
existence. Leaps and bounds above the competition.

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synaesthesisx
After trying Hololens (of which all the demos I tried were built on Unity) I
could see it becoming HUGE for AR/VR.

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sjg007
Queue Microsoft acquisition.

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gohrt
Is Unity Web Player ever going to work in Chrome again?

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aev3O
I think they are focussing on WebGL

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xigency
This seems like an incredible over valuation for a company in video game
technology.

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DINKDINK
What do you think is reasonable?

The video game industry market cap is around 17e9 USD2015[0]. Unity accounts
for ~9% of the value. I'm not sure if it's an accurate valuation but it
doesn't seem to be a ridiculous percentage given where they are in the
production food chain.

[0][http://www.statista.com/statistics/246892/value-of-the-
video...](http://www.statista.com/statistics/246892/value-of-the-video-game-
market-in-the-us/)

~~~
kamilner
That seems odd, Electronic Arts alone has a market cap of ~23.5B:
[https://finance.yahoo.com/quote/EA/key-
statistics?ltr=1](https://finance.yahoo.com/quote/EA/key-statistics?ltr=1)

~~~
xigency
What's odd to me is that Epic Games is majority owned by Tim Sweeney, who has
a < $1 billion net worth, and in _serious_ and performance sensitive (VR)
applications, UE4 is very difficult contention for Unity.

Other than that, I've really lost track of the values of other game companies,
other than knowing that EA and Ubisoft want to eat the sun.

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ozy23378
Anyone else thought this post was about Ubuntu's Unity and thus relieved?

~~~
georgestephanis
I was thinking Rick James --
[https://www.youtube.com/watch?v=3yLJ5NHARMk](https://www.youtube.com/watch?v=3yLJ5NHARMk)

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georgestephanis
[https://www.youtube.com/watch?v=3yLJ5NHARMk](https://www.youtube.com/watch?v=3yLJ5NHARMk)

