<p><img src="https://static4.businessinsider.com/image/602bb36eb3c2a800183cce3b-2400/Flashpoint-HiRes--4.jpg" border="0" alt="Michael Szalontay Alexander Konoplyasty chess" data-mce-source="Flashpoint" data-mce-caption="Flashpoint general partners Michael Szalontay (L) and Alexander Konoplyasty (R)"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>The chess world is among the unexpected beneficiaries of both a yearlong pandemic and the wild popularity of the Netflix show "The Queen's Gambit."</p><p>As <a href="https://www.bloomberg.com/graphics/2020-chess-boom/">Bloomberg reported in December</a>, the chess world has been impacted holistically with a rise in chess set sales, greater popularity of chess channels on Twitch, and growing usership of advice and games sites such as Chess.com.</p><p>Chess.com lets players compete online against other players or a computer opponent for free, and offers learning resources for novices and those who want to improve their game.</p><p>Despite the hobby's dorky reputation, the site boomed through lockdowns in 2020, adding 1 million new users monthly. <a href="https://www.businessinsider.com/the-queens-gambit-netflix-online-chess-app-interest-2020-11"></a></p><p><a href="https://www.businessinsider.com/the-queens-gambit-netflix-online-chess-app-interest-2020-11">Insider previously reported</a> that in November, Chess.com was seeing 100,000 new daily signups, around five times higher than average.</p><p><img src="https://static1.businessinsider.com/image/5fa167e71df1d5001821880c-1774/Screen Shot 2020-10-30 at 2.47.11 PM.png" border="0" alt="queen's gambit" data-mce-source="Netflix"></p><p>Insider spoke to one of Chess.com's early backers, European investment firm Flashpoint, about the rise of the business.</p><p>Flashpoint first invested in Chess.com in 2012 in a secondary transaction, meaning it bought shares from an existing shareholder or shareholders rather than participating in a funding round for new equity. Flashpoint primarily focuses on eastern Europe, and became interested in Chess.com in part thanks to the fact its R&D operations are located in the region. Even then, the business was popular with investors.</p><p>"We tried to get access to the company in primary, which they didn't need, and the only way to come in was secondary," recalls Flashpoint managing partner Alexander Konoplyasty.</p><p>The business, he added, was profitable from the beginning. The site charges monthly subscriptions, and displays ads on its site.</p><p>After multiple secondary transactions, added Flashpoint partner Michael Szalontay, Flashpoint built up a 15% stake in the business.</p><p>As is typical for venture capital companies, which must "exit" their stakes in order to make a return to their investors, or limited partners, Flashpoint then sold up its shares in Chess.com between 2016 and 2018. That has meant Flashpoint hasn't stuck around to benefit from any subsequent rise in Chess.com's value in 2020, although Szalontay personally retains a 2% stake in the company.</p><p>"It was mostly our first fundwe needed exits and we were under pressure from our LPs to provide liquidity back," he said. "We felt the company continued to do well, but when you get an opportunity to exit and return money to investors, you need to think carefully about these situations."</p><p>Flashpoint sold the bulk of its stake to the Scheinberg family, a Flashpoint limited partner and the wealthy cofounders of online poker site PokerStars.</p><p>Szalontay remains on Chess.com's board, and witness the site's boom during the pandemic. "That turned out to be a good decision for me personally," he said.</p><p>Szalontay added that there were two "surges"one triggered by the pandemic, and a second by "The Queen's Gambit."</p><p>"What's been interesting about 'The Queen's Gambit' is that Chess.com's market share has started expanding more, so if the pandemic affected the whole market, it seems 'The Queen's Gambit' has affected us more positively than other players," he said. "Our conclusion is that it seems Chess.com ... is centered around education, it's play for free, and stay to learn. 'The Queen's Gambit' made people interested in playing and getting better at chess, and that's had ... a knock-on effect on paying subscribers."</p><p>Chess.com did not immediately respond to a request for comment on updated numbers.</p><p>Chess.com remains privately owned by the Scheinberg family, as well as the founders of the business. Cofounder Erik Severson remains CEO of Chess.com.</p><p>Asked if Chess.com could IPO, Szalontay said the company had no plans to take the firm public, but added the firm had been approached by buyers.</p><p>"It's hugely profitable, a lot of gaming and potentially media firms would love to get this community," he said. "It's an evergreen game, and I could see it doing successfully financially for a long time."</p><p>He added: "The company has had many approaches from potential buyers, and I'm sure there'll be more approaches."</p><p>Flashpoint is in the process of raising a dedicated secondary fund, with a target close of $200 million, to funnel into growing European startupsparticularly those with eastern European origins.</p><p>The company has $350 million under management across its funds, and its other investments include property management firm Guesty, and Russian streaming service Ivi.com.</p><p><a href="https://www.businessinsider.com/flashpoint-ventures-invested-early-in-pandemic-hit-chesscom-2021-2#comments">Join the conversation about this story »</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/pikes-peak-hill-climb-colorado-most-dangerous-racetrack-2020-2">Why Pikes Peak is the most dangerous racetrack in America</a></p>
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