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‘Star Citizen’ Developer Valuation Nearly Half Billion Following $46 Million Private Investment

Crowdfunded developer Cloud Imperium Games is raising $46 million from a private investment that now values the company behind the massive, in-development title “Star Citizen” at $496 million, the company tells Variety.

The investment comes from father and son Clive and Keith Calder and will be used, according to the company, to create a “marketing war chest” for the 2020 release of the game’s campaign mode entitled Squadron 42.

Development on that long-awaited campaign, according to a development roadmap made public Wednesday, is slated to finish in the spring of 2020, with a summer 2020 release.

Founder Chris Roberts says the new deal will help the company maintain its independence and ensure that all the crowdfunding money raised and being raised through the sale of subscriptions and virtual goods, will continue to be focused on game development.

The deal came about, Roberts wrote in an open letter to the community, as the company started investigating ways to raise funds for the marketing of Squadron 42.

“During this process, we were introduced to Clive Calder, and his son Keith, who have both been interested in the confluence of entertainment with the ability to directly connect with an audience online,” Roberts wrote. “Clive founded the most successful independent music company, Zomba, which was home to some of the biggest music acts in the world. Keith is an independent film producer; whose company Snoot Entertainment’s most recent films are the critically acclaimed ‘Blindspotting’ and the Academy Award-nominated ‘Anomalisa.’  During our first meeting we got on like a house on fire, with Clive telling me about how he wished that when he built Zomba, you could have connected to the fans of an artist bypassing the myriad of media gatekeepers in the way ‘Star Citizen’ does, and which wasn’t possible 15 years ago. Keith and I swapped war stories about the film industry and talked about how refreshing it is to be able to utilize crowdfunding to create a project that normally would fly against what is currently considered mainstream.”

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The budding relationship turned into a financial deal which gives the two Calders about 10 percent share of Cloud Imperium in exchange for $46 million. As part of that process, the company is also taking on two outside board members. Dan Offner, who is Clive and Keith Calder’s nominee, and Eli Klein, who has long served as an advisor to the company.

The control of the company and the board still firmly stays with myself,” Roberts wrote. “ We wouldn’t have taken anyone on board if we didn’t feel that they were fully aligned with our vision, philosophy and could add valuable insight in navigating the business challenges ahead.”

One of the reasons Roberts decided to look to an outside investor, he told Variety during an interview earlier this week, was because he wasn’t happy with the alternatives. While he says development on the game progresses nicely, he believes that once the single-player campaign is finished the company will need to spend significant money on marketing. He doesn’t want to spend crowd-raised money on that and he doesn’t want to go back to those who supported the game throughout the process to ask for more money to essentially market the game to other people.

That left the option of selling the company, going public, or working with an outside publisher. But he said, he wanted to maintain control of the project as the company continues to look toward the future.

“My goal is that we’re in this for the very long haul,” he said. “We’re trying to build this universe that you just escape to and we want to be around in 10 or 15 years like ‘World of Warcraft.’ So how do we make the game as big and cool as possible, but also secure the company?”

The move is likely to rile some Kickstarter backers of Cloud Imperium, so the company also Thursday, released a snapshot of its spending dating back to the start of crowdfunding for the game in 2012. Those figures, which run through 2017, show that the company spent $193.3 million from 2012 to 2017, with about a quarter of that spent in 2017. A bulk of that spending is on the company’s staff which ballooned from about 50 at launch to 464 last year, to “over 500” in 2018.

The money pays for development, but also includes a reserve, that Roberts refers to as padding.

“We’ve also kept padding and it has always gone up and down,” he said. “In 2015, when we shot a lot of performance capture, we spent a bit more, it was almost like doing a film shoot. That burned a bit more of it. But we’ve always kept a pad. I think because we are crowdfunded, we’re almost like early access people still don’t trust it.”

“With the investment this allows us to also have a bigger pad.”

Roberts said the investment is strictly for marketing of the game, not an attempt to keep the company afloat. He said that Cloud Imperium Games had its biggest month to date last month, bringing in more than $10 million and noted that all operating companies need to have a steady stream of income from customers to stay afloat. He added that the company makes internal projects of income and is within 2% to 5% every year. “So we’ve turned into a very predictable business at the moment.”

“It’s like saying what happens if Take-Two doesn’t bring any money in tomorrow,” he said. “We’re behaving very much like a live product now. We’ve shifted to a quarterly release model. Because we are consistently delivering content every quarter, new ships, new items, new weapons, new things to do, there has been much greater engagement.”

That’s also because the content is bringing with it more things to do, Roberts said.

“Now there is a reason to go do things, to earn money, to buy ships,” he said. “There is a proper game look happening, and more and more features are coming online. It’s feeling like an actual game instead of parts of one.”

While the decision to release the company’s UK and U.S. financials on Thursday was driven in part by news of the new investment, Roberts said that the company has been releasing financials for the UK side of the business since the company opened offices there, a requirement under UK law.

“Every time we released financials in the UK we had this debate about sharing everything,” he said. “We’re open on the development side, and we made this pledge that the money would go toward development, so maybe we should just show it. We just decided now is the time to do that and it doesn’t hurt that we’re including news of an investment that will support marketing.”

Roberts said he believes most of the “Star Citizen” fans and backers will understand the decision to seek outside investment.

“I think people will get it, I’m hoping backers will say, ‘OK, this is cool.’” “We’re doing development as promised, and now we’ve sorted out the next stage: Getting it out to the wider public.”

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