Tapjoy Founders, Former Playdom Producer Raise Unusual Funding For New Gaming Company

Tapjoy’s two original co-founders and a former Playdom executive producer who founded the company’s mobile division have raised funding in a very unusual way for a new gaming company.

Called Andover Games, the company has one of the better-known teams in freemium mobile gaming behind it. Its chief executive Craig Dos Santos started Playdom’s mobile gaming division and was an executive producer there behind Mobsters, Sorority Life and Social City. The other co-founders are Lee Linden and Ben Lewis, who co-founded Tapjoy, which became the largest network for driving installs of mobile apps through offer walls after they sold it to Offerpal. (They’re also working on another new mobile commerce company, Karma Science.) They couldn’t comment for the story because of SEC regulations around funding, which may involve private investment.

With an initial $250,000 in bridge funding, Andover plans to release its first wholly-owned game, “Dino Park.” It looks like another casual, animal care-taking simulation game where players take care of dinosaurs. Andover also owns a little less than half of a game called “Spacecraft,” where users build up an army by creating mines, farms and barracks. The company also picked up minority stakes in four other gaming companies over the past year including Rotvig Labs, which made “Spacecraft”, Game Closure, Ecko Code and Tumbleweed Technologies.

The terms of the deal are very unique. Andover is raising up to $4 million through a merger with Ascend Acquisition Corp., a publicly-traded “blank check” company. The structure of the deal stands out because most mobile gaming companies are either bootstrapped, venture backed or are divisions of much larger gaming companies like EA or Activision.

With the merger, Andover gets 75 percent of Ascend’s shares in exchange for up to $4 million in funding from a private placement of Ascend’s securities. That funding will go toward building games, engines and reusable code for future titles. It might also go toward talent or product acquisitions.

Going this way instead of the venture route might give Andover more flexibility if the company intends to raise additional funding down the line and doesn’t want to deal with traditional trappings of a venture round like giving up too many board seats or having to give up a large equity stake in the business.

Ascend Acquisition Corp., the company Andover is merging with, actually has no experience or history in gaming whatsoever. It’s a publicly-traded shell company that exists solely to acquire another company, according to its most recent quarterly earnings filing before the merger. When these vehicles were more popular before the financial crisis, they would usually transfer their listings to the NYSE or NASDAQ once they found a target.

They were a controversial way to bring companies public in what was a lackluster IPO market up until this year. It doesn’t look like Ascend’s listing will be used this way, however, as Andover looks like more of a startup that will build or acquire, and then service freemium mobile games. On the announcement, Ascend’s shares more than doubled from 18 cents to 50 cents today.