Analyzing a16z: $600M Gaming Fund Pitch Deck - Why Bet on Gaming?

A year ago, crypto venture capital giant Andreessen Horowitz (a16z) announced the launch of its first gaming fund, Games Fund One, with $600 million in scale. One year later, the fund has made 25 investments.

On its first anniversary, Games Fund One's managing partner Andrew Chen disclosed the fund's 2022 fundraising deck, which TechFlow analyzes with added commentary from Andrew Chen. For instance, according to Andrew Chen, if he were writing this deck today about why now is the time to invest, he would definitely write "AIAIAIAI" and include AI as a new investment theme.

## Overview: Why Gaming?

The main points are:

- A vibrant consumer ecosystem has developed around gaming

- Gaming is often the biggest killer app on new platforms

- Today's games are also massive social networks

- Gaming has undergone tremendous changes today

Andrew: Yes, because some games like The Last of Us, Super Mario, etc. are expanding entertainment IP into movies and other formats.

## Why Now?

a16z explains from four perspectives:

**Emerging Markets**: Over 3 billion gamers worldwide today

**Younger Generation**: 250 million children becoming lifelong gamers

**COVID Pandemic**: Accelerated entry of non-traditional gamers

**Web3/VR Wave**: Web3 gaming exploded in 2021, VR/AR at inflection point

Andrew: This is the slide explaining "why now," but today we would update this slide with AI AI AI AI AI AI :)

## Core Investment Areas:

**Gaming Studios**: Investing in next-generation games, such as cross-platform games with business models based on online revenue, driven by players

**Gaming-related Consumer Applications**: For new platforms, gaming is often the biggest killer app, from PC to mobile to VR/AR to Web3

**Infrastructure**: In a16z's view, software and tools built for gaming will become the building blocks of the Metaverse

Andrew: Last year, we focused primarily on gaming studios, Web3, and infrastructure. This year we continue to maintain this focus, but are really starting to pivot toward AI. In Q1 alone, we encountered over 100 AI x Games companies, and by 2023, 80% of the gaming fund's investments have a major AI component - either 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 Advantages Does a16z Have in Gaming Investment?

a16z believes their advantages lie in several areas:

- Investment team with senior gaming industry experience, with partners from major gaming companies like Riot/Tencent

- Specialized operational platform for gaming companies

- Cross-gaming communication and integration, such as gaming with crypto/fintech/consumer

- a16z has ten years of gaming investment experience

Among these, a16z particularly highlighted an empowerment platform they built for gaming founders, providing help from early-stage funding, publishing, marketing to growth, recruitment, commercialization, and establishing partnerships with the world's major gaming companies.

Strong post-investment support has always been a16z's characteristic and advantage, with related operational staff making up the vast majority, which is why many view a16z less as a VC and more as a company or media organization.

Andrew: A major part of a16z's differentiated investment approach is our operational team that can help portfolio companies. In fact, the vast majority of a16z employees focus on this, with only a small portion focusing on investment. Gaming startups need help with: hiring/creators/distribution/publishing.

Last year, we hired @DougMcCracken from Supercell to lead marketing, @Chen from YouTube to lead the "creators" space, and @justmazer from Riot to lead talent recruitment. Everyone has an entrepreneurial mindset, we all act like owners, working without explicit direction. (And more people joining!)

Andrew: Given the economic downturn, we've spent countless hours working with our portfolio to maximize their chances of long-term success. This is when having such a strong operational team matters. Builders need to help builders, and we assembled the team in year one, hiring talent from Blizzard, Supercell, YouTube, Riot, Twitch, and Unity to join us!

In recent months, we've also established SPEEDRUN, our gaming startup school, making it easier for new founders to get started.