Source: 0xmin, TechFlow Research

On the occasion of the first anniversary, Games Fund One manager Andrew Chen disclosed the fund’s fundraising deck in 2022. Shenzhen TechFlow interpreted it and added Andrew Chen’s current comments. For example, in Andrew Chen's opinion, if he were writing this deck today and talking about why he should invest now, he would definitely write "AIAIAIAI" and regard AI as a new investment theme.

Overview: Why games?

The main points are:

A vibrant consumer ecosystem has developed around gaming;

Games are often the biggest killer apps on new platforms;

Gaming today is also a massive social network;

Today, the game has also changed dramatically.

Andrew: Games are driving the GenAI revolution, and these games are demonstrating their cultural power in “miracle moments” as some games, such as The Last of Us and Super Mario, are expanding entertainment IPs and becoming movies, etc.

Why now?

a16z explains this from four aspects.

Emerging Markets: There are more than 3 billion gamers in the world today

Young generation: 250 million kids become lifelong gamers

The COVID-19 pandemic: Accelerating the entry of non-traditional gamers

Web3/VR wave: Web3 games exploded in 2021, VR/AR is at a turning point

Andrew: That was the “Why Now” slide, but today we’re going to update that slide with AI AI AI AI AI AI :).

Core investment areas:

Game studios: Invest in next-generation games, such as cross-platform, business models derived from online revenue, and driven by players

Game-related consumer applications: Games are often the biggest killer applications for new platforms, from PC to MOBILE to VR/AR to Web3.

Infrastructure: In a16z's view, software and tools built for games will become the building blocks of the MetaVerse.

Andrew: Last year, we were primarily focused on game studios, Web3, and infrastructure, and this year we’re continuing that focus but really starting to move into the AI ​​space.

In the first quarter alone, we encountered over 100 AI x Games companies, and by 2023, 80% of investments in gaming funds will have a major AI component - reinventing 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 the advantages of a16z investing in the gaming sector?

a16z believes that their advantages lie in the following aspects:

An investment team with extensive experience in the gaming industry, such as partners from major gaming companies such as Riot/Tencent;

Own a professional operation platform for gaming companies;

Cross-game communication and integration, such as games and Crypto\Fintech\Consumption;

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, distribution, marketing to growth, recruitment, commercialization, etc., and has established cooperative relationships with the world's major game companies.

Strong post-investment has always been the feature and advantage of a16z, and related operations personnel also account for the vast majority of it. Therefore, in the eyes of many people, a16z is more of a company or media than a VC.

Andrew: A major part of a16z’s differentiated investing is that we can help the operations teams of the companies we invest in. In fact, the vast majority of a16z employees are focused on this, with only a small portion focused on investing. Game startups need help with these: recruiting/creators/distribution/publishing.

Last year we hired @DougMcCracken from Supercell to lead marketing, @Chen from Youtube to lead the Creators area, and @justmazer from Riot to lead talent acquisition. Everyone has a startup mentality, and we all act like owners and work without explicit instructions. (More to come!)

Andrew: Given the economic downturn, we spent countless hours working on our portfolio to maximize its likelihood of long-term success. That’s when the operations team became so powerful. Builders needed to help builders, and we built out the team in our first year and hired talent from Blizzard, Supercell, Youtube, Riot, Twitch, and Unity to join us!

In recent months, we’ve also built SPEEDRUN, our gaming startup school, to make it easier for new founders to get started.