Cloud Video Gaming Startup Abya Eyes Funding Round in Early 2022

(Bloomberg) -- Uruguayan technology startup Abya Corp plans to raise as much as $20 million from venture capital investors early next year to expand its cloud-based video gaming platform across Latin America, according to chairman and co-founder Waldemar Fernandez.

Abya’s planned fourth quarter launch of its subscription service in five South American countries -- akin to a Netflix-type service for gaming -- should boost its current $166 million valuation ahead of a funding round in January or February, he said. Fernandez said that American Capital Partners LLC has been an early investor.

“Ideally, I’d like to do it two or three months after launching because that will have a very significant impact on the valuation,” said Fernandez, a Uruguayan banking and tech entrepreneur who has lived in the U.S. for 50 years.

The glut of liquidity sloshing around financial markets after years of money printing by major central banks has yield-starved investors pouring money into fast growing companies in emerging markets. That flood of cash helped mint Uruguay’s first tech unicorn, payments platform dLocal, which now has a market capitalization of more than $18 billion less than four months after going public in the U.S.

While U.S.-based Abya is in no hurry to tap outside money after issuing $2 million in convertible debt to an undisclosed investor in March, Fernandez is talking to investment bankers about organizing an initial public offering in the U.S. as soon as the second half of 2022.

Abya’s proprietary cloud gaming software allows subscribers to play their favorite video games from just about any web connected device without having to pay hundreds of dollars for costly game consoles. Abya struck an alliance with Nvidia this year to offer the chipmaker’s GeForce Now service featuring hundreds of AAA rated games -- the industry’s term for top-tier titles with the best graphics -- for hardcore gamers. Abya manages its own catalog of third-party titles for casual and mid-core gamers. 

Some of the world’s biggest digital companies are pouring money into interactive entertainment. Netflix recently hired a former Electronic Arts Inc. executive to lead its push into video gaming, while Microsoft said in June its Xbox gaming unit is developing a cloud-based streaming service.

Chief executive officer Franco Miceli, the 36-year-old former head of R&D at Uruguay’s one laptop per child program, co-founded Abya in 2018 with Fernandez and Nicolas Jodal, a founding partner and CEO of Uruguayan software company Genexus.

Abya signed a hosting agreement in July with Uruguay’s state-run telecommunications company Antel to serve major cities in Argentina, Brazil, Chile, Paraguay and Uruguay. Several thousand of the more than 230,000 people already signed up for the service, are using the beta version of Abya’s platform ahead of full deployment, Miceli said.

Abya is negotiating hosting and connectivity services with several companies to offer cloud gaming in Central America and other South American countries during 2022, though the pace of expansion will depend on the availability of servers amid a global shortage of computer chips, he said.

“Our main concern right now isn’t so much profitability as accumulating markets and users,” Fernandez said. “I think profitability will come in a year and a half or two years because we are going to continue investing.”

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