Decoding the a16z $600 million gaming fund raising deck, why choose to bet on gaming?
Analyzing a16z's $600M gaming fund deck: Why invest in gaming?
On the occasion of its first anniversary, Andrew Chen, the manager of a16z Games Fund One, revealed the fund’s fundraising deck for 2022, and TechFlow provided an interpretation. For example, in Andrew Chen’s view, if he were to write this deck today and talk about why he is investing now, he would certainly write “AIAIAIAI” and make AI the new investment theme.
The main points are:
A vibrant consumer ecosystem has emerged around gaming;
Gaming is typically the killer app on new platforms;
Today’s games are also a massive social network;
Gaming has also undergone enormous changes.
Andrew: Games are driving the GenAI revolution, and these games are showcasing their cultural power at a “miracle moment” because some games, such as The Last of Us and Super Mario, are expanding entertainment IP and becoming movies, among other things.
a16z elaborates on four aspects:
Emerging markets: There are more than 3 billion gamers in the world today;
Younger generation: 250 million children become lifelong gamers;
The COVID-19 pandemic: Accelerating the entry of non-traditional gamers;
Web3/VR trend: Web3 games exploded in 2021, and VR/AR is at an inflection point.
Andrew: This is the slide that explains “why now,” but today we’re going to update this slide with AI AI AI AI AI AI .
Core investment areas:
Game studios: investing in the next generation of games, such as cross-platform, business models from online revenue, and player-led.
Game-related consumer applications: For new platforms, games are often the killer application, from PC to MOBILE to VR/AR, and now to Web3.
Infrastructure: a16z believes that software and tools built for games will become building blocks for the Metaverse.
Andrew: Last year we focused mainly on game studios, Web3, and infrastructure, and this year we continue to maintain this focus, but we are now really turning to the field of artificial intelligence.
In just the first quarter, we encountered over 100 AI x Games companies. By 2023, 80% of Game Fund investments will have a major AI component – reshaping core gameplay or creating tools. We need to balance our investment approach to cover all key areas of gaming while also adapting to new trends.
What are a16z’s advantages in investing in the gaming industry?
a16z believes that their advantages are as follows:
An investment team with senior game industry experience, such as partners from Riot/Tencent and other game giants.
A professional operational platform for game companies.
Cross-game communication and integration, such as games and Crypto\FinTech\Consumer.
a16z has ten years of experience in investing in games.
Among them, a16z emphasized the empowerment platform they built for game founders, which can provide assistance from early financing, publishing, marketing, to growth, recruitment, commercialization, etc., and has established cooperation with the world’s major game companies.
Strong post-investment has always been a feature and advantage of a16z, and its related operating personnel account for the vast majority, so in the eyes of many people, a16z is more like a company or media than a VC.
Andrew: A major part of a16z’s differentiated investment is that we can help the operating team of the invested companies. In fact, most of a16z’s employees focus on this, and only a small part focuses on investment. Game start-ups need this help: recruitment/creators/publishing/publishing.
Last year, we hired @DougMcCracken from Supercell to lead marketing, @Chen from Youtube to lead the “creator” field, and @justmazer from Riot to lead talent recruitment. Everyone has an entrepreneurial mentality, and we all act as masters and work without clear instructions. (More people have joined!)
Andrew: Given the economic downturn, we have spent countless hours dealing with our investment portfolio to maximize its long-term success. This is why the operating team is so strong. Builders need help from builders, and we formed a team in the first year and hired talent from Blizzard, Supercell, Youtube, Riot, Twitch, and Unity to join us!
In recent months, we have also established SPEEDRUN, our game start-up school, to make it easier for new founders to get started.