Tech Startup: Wata Games

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WATA GAMES

Where: Denver
Website: watagames.com
Founded: 2018

Initial Lightbulb: Co-founder and President Deniz Kahn started playing video games when he was 3, then started collecting Nintendo games by the time he was in middle school. “By the time I was in high school, I was making money doing it,” he says. “I was selling games on eBay.”

It was a small community back then in the early 2000s, but Kahn saw interest growing and thought a third-party grading service was a big need.

“It was kind of like the Wild West in a way, which is good and bad,” he says. “There was no transparency in grading and certification, which is an absolute must. If you look at coins, baseball cards, anything, there are these major third-party certifiers.”

High-dollar sales were usually done behind closed doors, and that presented another problem, he adds. “A hobby can’t grow and flourish if there’s no transparency in the actual transaction.”

Now Wata’s president, Kahn relocated from Chicago to Denver in 2017 to start the company with a since-departed co-founder.

In a Nutshell: Wata’s business model helped cement standards for certification, and a partnership with Heritage Auction brought transparency to big-ticket sales.

Here’s how it works: Customers send in games that are almost always factory-sealed to be graded by these standards in order to authenticate their value.

The certification comes with a slick display case emblazoned with a scannable matrix code that Kahn describes as a “fingerprint” of the game. The price of certification is based on the value of the games and the speed of the service.

Eugene, Oregon-based Josh Byerly says Wata has been a big part of the market’s growth. Byerly has been collecting and selling video games since the early 2000s, but he quit his day job and started doing it full-time as the market took off in 2019.

Byerly says Kahn approached him about investing in Wata as he formed the company. “I wish I had thrown all my money at him,” Byerly laments. “He had a strategy. He had goals in place to make the market what it is today.”

Less than three years after Wata launched, video games have emerged as serious collectibles: One unopened copy of Super Mario Bros. 3 that Wata graded recently fetched $156,000.

“It’s happening so quickly,” Kahn says. “We didn’t open a grading company to just grade games and capitalize on a market, because the market wasn’t there. Our mission and vision was to truly elevate the hobby and grow the market. It’s truly incredible how fast that’s happened.”

While the employee count is undisclosed, Kahn says the company’s revenues are growing by 20% to 25% every month. “We’ve tripled our staff in the last year, and we’re hiring actively,” he notes. “It’s a daily struggle to keep up with our backlog.”

Adds Kahn: “All of this wouldn’t have happened without the team I have. It’s not any one individual. It takes a lot of people and a lot of passion.”

The Market: Kahn says the number of video game collectors has jumped by about 1,000% since 2018. “If we’re talking to the market cap, for lack of a better term, it’s more than 50X [since 2018].

“There aren’t solid numbers,” he notes. “Our share of the market is irrelevant; our plan is to grow the market.”

Financing: Wata has grown to date without outside investors, and there’s no immediate plan to change that strategy. “We’ve been approached by a lot of suitors,” Kahn says. “We’re just waiting to see what the best fit for us is for the future.”