How Fortis focused on a developer-based M&A strategy | Jeferson Valadares interview

In the downturn, life isn’t easy for game developers. Fortis hopes to provide some shelter for them so they can focus on making big triple-A games.

Founded by game veterans Shawn Foust, Steve Chiang, and Calvin Lau, Fortis started out with a bang by raising a lot of money from Las Vegas Sands, the big casino empire. That gave them a war chest to both grow its own game studios and acquire some as well.

Jeferson Valadares, a veteran of game companies — such as Doppio, Bandai Namco, Electronic Arts, BioWare and Playfish — came aboard as a vice president (with the acquisition of Doppio by Fortis) to help with corporate acquisitions of other game studios. While the economic environment has made other game companies risk averse, Fortis has a chance to continue building its development talent with acquisitions. The company can provide cover for its talent while they work on games.

I spoke with Valadares about this approach. Here’s an edited transcript of our interview.

GamesBeat: How big is Fortis now?

Jeferson Valadares: We eventually grew to the five teams we have now. We’re just over 300 people. The interesting thing about corporate development is that I’ve never done this before. It was a challenge that (cofounder) Shawn Foust sent to me. He interviewed a bunch of people and didn’t like anyone. It’s usually finance people. He said, “When we started, you brought in a team. You referred the two teams we acquired. You know how to network.” We’re in Brazil, but I’ve lived in Finland, in the U.K., in California, in Portugal. “You know a lot of people. You know what a good team looks like. Why don’t you do the job?”

I said, “Are you crazy? I’ve never done this before.” I’ve only worked with teams. But eventually it made sense. The thing that sealed it for me was that when it was announced, so many people in the company said they were so glad I was the corp dev guy. Usually corporate guys bring a mix of good and bad. They said that the chance of me bringing in something good is higher than normal. So I guess it makes sense to them.

GamesBeat: The VP of games title is what you have, right?

Valadares: Yes. That’s going to change to VP of corporate development. I have to update my LinkedIn. That will be my new title, probably this week.

GamesBeat: Going back, they acquired Doppio in 2021?

Valadares: Right.

GamesBeat: Does it still have its own independent studio within the structure of Fortis?

Valadares: No. The way it works, we call it a global studio. We have a single studio which is composed of different teams. The people who came from Doppio are mostly in the same team, but we didn’t want to–we all have a bad history in the past when you have this local studio culture that is different from the outside culture. It creates this moat mentality. People don’t want to cooperate with each other. At EA it was very hard to work across teams. I worked on Mirror’s Edge, and I wanted to work with the DICE people, but the first time I came to them they wouldn’t even have meetings. I had to fly to Stockholm, knock on the door, and eventually they took a meeting with me so I could start working with them.

We try to avoid this feeling of independent studios. We’re all globally remote, so we don’t have a physical location anymore. We thought we would create this global studio concept. People join and they become part of this larger studio, even though they’ll probably stay on the same team. Right now, we have five teams.

GamesBeat: And the team distinction is by which projects they’re working on?

Valadares: Yeah, it’s by game, and then organized by time zone. Instead of being, “This is the Portugal team,” it’s the team that works in a particular time zone. That allows people from Romania and the U.K. and Portugal and Brazil to cooperate. We try to avoid people from, say, Eastern Europe and the U.S. west coast being on the same game, because that’s kind of painful.

Right now, it’s one team to one project, but it’s possible in the future that we might move a team–more than likely we would merge two teams into a single one. We’ve made them so they’re fluid. Another part of this global studio structure–I was at EA at times when a team needed help, and they would get 10 people from San Francisco, 10 people from Vancouver. But each team would resist that, because they had their own stuff to work on. In our case we’re trying not to create those barriers in the first place and be more fluid.

GamesBeat: Are you conditioning the developers to lend a hand that way, then?

Valadares: Basically, when we bring people in, we explain to them, “You’re joining this team, but you’re a Fortis employee.” We talk about “Fortis first.” You’re here as part of the bigger company. Right now, you’re on this game, but two years from now you might be on a different game. I think people actually like that in the long term. A lot of people don’t want to do the same thing all the time. We often encourage people to change teams if they’re interested. Maybe there’s someone who likes more fantasy stuff, but they’re working on a realistic, modern-day game. They can say, “Hey, I’d be more happy on this other team.” We can talk about it and move people over.

We try to preserve the chemistry of existing teams, though. If I look back on my career, the most reproducible way to success is keeping a team together – learning together, releasing games together. We want to keep that chemistry. We try to move groups of people within teams, rather than just individuals, as much as possible.

GamesBeat: Do you have some genre specialties now? Among the five teams, are any of them focused in certain areas?

Valadares: No, they tend to be–internally we call them opportunity spaces. They tend to be focused on different ones. But we try to keep it to–like I said, if someone starts being good at something, we don’t want to move them to something else. As much as possible we want to keep people working on the thing they’re good at.

GamesBeat: For corp dev, what’s the strategy that you’ll be executing?

Valadares: The main goal is to find–we’ve been building the company, like I said. We have 300 people and five teams at the moment. We’re in a place where we feel good about this year and next year. But as we start to look at the future, as games come along, if they’re as successful as we expect, then the teams will stay on them. We’re now starting to think about how we have to plant the seeds of our next games.

One of the best ways for that to start is with a team that already knows how to work well with each other. That’s the first thing we’re looking at from a corp dev point of view. Can we find good teams out there that are interested in joining a larger company? Maybe they’re tired of doing fundraising. They don’t want to do their own publishing. At some point, when a studio grows, they either have to build their own publishing capabilities or they have to work with a publisher. Those things might not be pleasant for someone who just wants to make games. Our pitch is, “If you just want to focus on games and you like the stuff we’re talking about – community, systems design innovation – then joining us might be a good thing.” You can be part of our team.

We have all the support. We have publishing. We have a platform team that does all the analytics. You can just focus on making a great game.

GamesBeat: Are you specializing in any platforms?

Valadares: We look at every platform. We’re always going to have a mobile version, but we have many games that are cross-platform, including some games that are actually better played on PC and other form factors. But we always want to have a mobile version. That’s our strategy at the moment.

GamesBeat: Have you already done any deals yourself, or is that still to come?

Valadares: We had the initial three when the company started, acquiring three companies. Now we’re starting the second round. I’ve taken over this role full time in the last couple of months. We’ve been meeting a lot of teams. That’s a mix of our networks, going to conferences – I was in Torino last week, I’m going to be at Gamescom – a mix of being out there and meeting teams. If I wanted to travel even more I could, because there are so many conferences these days. I’ve been trying to limit it to once a month. But it’s still quite a bit of travel. Racking up those miles.

We try to focus more on the slightly less traditional gaming markets. We focus on Eastern Europe, Brazil. As you know, there’s a lot of talent in these places that’s underappreciated. We can reach them, because we have global publishing and world class production teams. We can help them reach their potential. We tend to look at those regions as our bigger focus.

GamesBeat: Is it more of a buyer’s market now, given the state of the world economy?

Valadares: That’s part of why we decided to step on the gas like this. We know that the market–this certainly wasn’t the case in 2021. It’s a very different market now. In 2021 money was cheap. A lot of people were funding things. Not just VCs, but publishers and all sorts of platforms. A lot of that money dried up last year and this year. It’s recovering a bit, but we feel like some really good teams might be suffering because of market conditions. If we can match with them and bring them here so that they can be successful, that’s what we’re trying to do.

When Doppio started in 2018, we bootstrapped the first year. My co-founder and I wanted to see if there was something there for ourselves. Once we found that, then we went to raise money. It wasn’t easy, but we got it. In 2021, when we were raising the second round, that was way faster. There was more competition. We could take the direction we wanted to go, which has not always been the case. In 2021 there was a lot of money in the market. Now it’s a bit more like the normal state of things. If you have a good track record and good product, you can still raise money, but you might just get one rather than five. You might have to accept some VCs that aren’t your favorites because your favorites aren’t doing deals. In 2021 you had more choice, more options. Now it’s more like normal, in a slightly different way.

GamesBeat: What were the other two companies besides Doppio that were acquired at the beginning?

Valadares: They were a studio in Romania called Metagame and a studio in Brazil called Oktagon. With Doppio, those were the three companies that Fortis acquired.

GamesBeat: Where did you work before I came to Doppio?

Valadares: Before Doppio I was head of mobile for Bandai Namco in the west. My job was to figure out which games in Japan were worth publishing in the U.S. You had Dragon Ball, yes please, and then some crazy games–you know how Japan is. There are some games that do well over there that might not do so well elsewhere. My job was to focus on things like Dragon Ball and less on the other ones, but also to create new western-focused projects. We signed a deal with the NBA to make sports games, things like that.

Prior to that I was at different parts of Electronic Arts. I worked on mobile games. I worked at BioWare. Before that I was in the U.K. at Playfish and EA Mobile. Digital Chocolate when I was in Helsinki. It’s a long history. It helped build my network. A lot of my friends are entrepreneurs now because they had success at these companies and now they’re raising money. It helps when we’re out there talking to people.

GamesBeat: You’ve mostly worked in mobile games, then?

Valadares: I worked on a few PC/console games, but largely mobile, yeah. A little bit of Facebook at the beginning.

GamesBeat: What are some things you’re learning about corp dev in the process?

Valadares: This wasn’t fully formed in my head when I started, but now that I’ve been talking to people and doing this for a couple of months, developers do give good feedback. I talk to them and they say, “Oh, you understand games. You know how hard it is to run a company.” There are certain things–if someone sends an email and you take a week to reply, for the person who’s not replying it’s a small thing, but for the developer who’s anxious about funding, it’s a big deal. Because I’ve been on that side–I’ve worked with a lot of VCs where I would send an email, go to bed, and then I’d wake up in the middle of the night looking to see if they replied already, because that answer is so important.

I hadn’t realized–I think Shawn was the one who spotted this first. Having had the experience of being at a company, selling a company, building teams before, building games before, it really helps when I talk to developers. We speak the same language. I’m not just trying to run it like a financial transaction. Is there some chemistry here? Will this work for all of us going forward?

As we look around, we see all sorts of everything. There are people who’ve never raised any money. There are people who’ve raised some money, so they have pressure from investors to do something. There are people who’ve made three or four games, but they haven’t been successful. At the beginning I thought we were going to make a particular kind of deal, but now I’m learning that each deal is unique. We have to take into account what a company has done, what they want to do, and what they’re bringing. Then we respond to that.

The deals are more flexible than I thought they would be. That’s okay. We’re a more flexible company than many others, perhaps. But that was a realization that I had. This isn’t a cookie-cutter thing. You have to understand a company’s situation and evaluate it appropriately.

GamesBeat: Are you reporting to any one particular person?

Valadares: Yeah, it’s Shawn, the COO.

GamesBeat: How big are the opportunities you would go after? Do you have a sense of that?

Valadares: We’re not focusing on any specific amounts, but we’re basically interested in teams. We might go as high as about 100 people. We prefer a smaller size, but if there’s a good team with 80 or 90 people, we’d consider that too. More than that would be different to integrate into the way we’re doing things. But even a five-person team made up of really good people who have made games together, that would be interesting.

GamesBeat: What’s your sense of the state of mobile games right now?

Valadares: It’s funny. That’s another benefit of being on the road. You go and talk to everyone. If you’re looking to learn about AI, a lot of people are using gen AI stuff to help with their exploration processes or upload assets. It’s really interesting to see what everyone is doing. The general sense about mobile is that it’s in flux. It’s in a state of disruption. Nobody really knows where it’s going to end. It’s hard right now. But if you look back in the past, something will come up in the next year, whether it’s independent app stores or–I don’t know exactly what’s going to happen. Right now it’s hard to predict what’s next.

That’s part of the reason we’re doing cross-platform. We don’t want to be reliant on a single way of being successful. We don’t want to put all the chips in mobile, even though we have a lot of mobile DNA. Everybody is a bit worried. There are a few companies that have been successful by doing certain things in the new world of post-IDFA, but a lot of people are still uncertain. The last few years have been relatively stable, and now everyone’s trying to figure out what’s going to happen next. We’ll hopefully have something new to reveal soon. We’re trying to have an announcement this year.

GamesBeat: Does it feel like there are still lingering problems from IDFA? Are there bigger things that may be affecting how games do when they launch?

Valadares: People had a playbook, and now that playbook is gone. Some people are rewriting their own playbooks, with mixed results. I see a lot of people who just don’t know what to do. They try to find a publisher or they go away from mobile. But again, the market dipped for the first time in the last couple of years. There’s a general feeling of doom.

As I said, there are people who have been successful, who are having a good time creating their own ways of doing marketing. Some people are focusing more on community. They’re trying to find a niche where they can build an image and a reputation. There are definitely ways to be successful. But five years ago, everybody knew what to do. You spent a certain amount of money and followed the steps, and if it didn’t work you moved on. It was more predictable, or I might say plannable. Once you had the metrics it was easy enough to go with. Now, even if you have the metrics, it’s not that clear. It’s challenging from that perspective.

GamesBeat: When you look at the forces in the market, what do you think about in terms of–the U.S. and China aren’t getting along as well. There are the CFIUS rules there. Does that mean China is going to be off-limits now, or is it still possible to do deals in China? We still have Russia and Ukraine. We have Saudi money coming into the market. How do you think this can affect the area you’re in?

Valadares: In the EU as well there’s a lot of discussion about global companies taking Chinese money. There’s obviously the Russia situation. I know a lot of people who are uneasy with Saudi money, like you mentioned. For us, we know what we’re good at and we’re going forward. We’re primarily looking for game teams, not necessarily publishing capabilities. China is still something we look at.

The world is getting a bit harder. It was already going in that direction even before the war, but it’s a crystallizing effect. I think the opportunity is still big. There are still new markets like India that are growing like crazy. There are still plenty of accessible places where you can go, even if China is the biggest one at the moment. There are a lot of places where you can still grow.

GamesBeat: Is there anything else you wanted to mention today?

Valadares: The only other thing I was going to say–we’re coming at this from more of a developer’s point of view. We know how hard it is for them. We know how harrowing the process of selling a company can be. Because we’re also entrepreneurs–all of us have built and sold a company. Shawn built and sold a company. I did the same. We’ve all gone through the cycle. We like to help, even if it’s not with us. I often say, when I’m networking with a company, “Even if you don’t think it’s a perfect fit, introduce me anyway.” We might say, “Well, you should talk to this publisher. You should talk to this VC.” We just want more games to get made. If it’s with us, great, but if it’s not with us, that’s fine too. If it’s not a perfect fit, we still want to be helpful.

You never know what might happen in five years. A lot of this work is about seeding for the future. Timing is everything. The time might not be now, but it might be in two or three years. We just want to be as helpful as we can for everyone.