a16z Games Fund: Investing in the Future of Gaming

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Posted Jan 15, 2025

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Close-up of a PlayStation 5 controller resting on its console, showcasing modern gaming technology.
Credit: pexels.com, Close-up of a PlayStation 5 controller resting on its console, showcasing modern gaming technology.

The a16z Games Fund is a venture capital fund that's specifically focused on investing in the future of gaming. It was launched in 2017 by Andreessen Horowitz, a well-known venture capital firm.

The fund has already made some impressive investments, including a $20 million investment in the popular online gaming platform, Discord. This investment highlights the fund's focus on supporting innovative gaming companies.

With a strong team of experienced investors and a deep understanding of the gaming industry, the a16z Games Fund is well-positioned to identify and support the next big thing in gaming.

Our Investment Themes

We're excited to share our investment focus with you. We're looking to invest in game studios that create continually updated online services, where players form integral parts of the game through multiplayer and user-generated content.

These "games-as-a-service" have become rich, interactive social networks, with players making in-game friendships that are just as meaningful as those made in-person. We believe this is a key aspect of the gaming industry's growth.

Credit: youtube.com, Introducing: a16z GAMES FUND ONE

We're also interested in investing in companies that cater to gamers, such as social apps and platforms. For example, Discord helps gamers build community, while Twitch allows millions to tune in daily to watch creators livestream video.

Finally, we see a huge opportunity in the infrastructure needed to build great games. As games evolve into virtual worlds and online services, the demand for tools and services is skyrocketing.

Why Games

GAMES FUND ONE has been nearly a decade in the making, with a16z backing companies like Zynga and Oculus in the 2010s.

Their experience with game studios and underlying games technologies has cemented their belief that games require a specialized focus.

a16z has invested across the ecosystem, backing veterans from established players like Riot Games, CCP, and Epic Games, as well as from consumer tech startups that target gamers.

Their cross-functional team of experts from across the firm, many of whom are themselves gamers, work closely with portfolio companies to accelerate their time to success.

Credit: youtube.com, Virtual Worlds Mean Real Business: How Games Power the Future

This team includes games industry veterans from companies like Riot Games, Twitch, EA, Tencent, and Oculus, who are dedicated to helping portfolio companies with everything from building digital communities to managing their virtual economies.

a16z is proud to be joined in this fund by games industry leaders and visionaries, including David Baszucki, founder of Roblox, and Marc Merrill, cofounder of Riot Games.

Their investment team is hiring, and they want to hear from you if you're building, supporting, or partnering with the next generation of games.

What's Happening

Andreesen Horowitz, a venture capital firm, is raising a new fund dedicated solely to gaming. This fund is expected to be a significant investment in the gaming industry.

The firm has already been investing heavily in the space, with investments totaling $1.08 billion since the beginning of 2021. These investments were concentrated in three main sectors: crypto/blockchain gaming, mobile gaming, and traditional online gaming.

Credit: youtube.com, Office Hours: a16z $600M Gaming Fund

The firm's focus on gaming and crypto is driven by its belief that a gaming framework or layer will be required to reach "minimum viable participation" in crypto. This is a crucial step in making crypto more accessible and user-friendly.

Players can benefit from blockchain technology in gaming, including increased financialization, financial alignments, and interoperability. For example, players can use assets in games as collateral to trade for other items or experiences.

Here are some key benefits of blockchain in gaming:

  • Increased financialization: Players can use assets in games as collateral to trade for other items or experiences
  • Financial alignments: The ability for gamers to participate in their game economies and receive actual financial benefit
  • Interoperability: Participation across ecosystem (i.e. being able to bring characters across from Roblox into League of Legends)
  • Better game economies: Better ability to monetize gamers vs. the existing free-to-play model
  • Reduced customer acquisition costs: Sharing a portion of economics with players and creators in your game economies means lower customer acquisition costs than traditional free-to-play games
  • Captured leakage costs: When games are created in a closed ecosystem there tends to be economic activity that takes place outside of the game economy and transactions are lost — interoperability fixes this

Why It Matters

The gaming market is a massive industry that's worth paying attention to. It was estimated at $180 billion in 2020, surpassing the global movie and North American sports markets combined.

This market is expected to grow to $218 billion by 2023, a significant increase that presents opportunities for investment and innovation. Newzoo forecasts that 77% of 2023 spending, or $168 billion, will be on in-game items.

The potential for deeper monetization of existing paying players and some monetization of unpaid players is substantial. This could lead to a significant upside in market size and capital availability.

What's Next?

Credit: youtube.com, What's Next for Esports Startups

As we continue to monitor the developments around Andreesen Horowitz's new gaming fund, it's clear that blockchain-based gaming is an area of focus that's here to stay.

We can expect to see entirely new in-game economies arising, as Andreesen Horowitz has already placed a bet on the convergence of blockchain and gaming with its investment in YGG, an NFT-based play-to-earn company.

The firm's belief is that a gaming framework or layer will be required to reach "minimum viable participation" in crypto, and gaming can benefit greatly from some of the tenants of blockchain.

Andreesen Horowitz has already invested $1.08 billion in the gaming space since 2021, with a focus on crypto/blockchain gaming, mobile gaming, and traditional online gaming.

The new fund will likely focus on investing at the intersection of gaming and crypto, where players can use assets in games as collateral to trade for other items or experiences, and participate in their game economies to receive actual financial benefit.

Credit: youtube.com, Building the future of Gaming with Andreessen Horowitz (A16Z Games)

We'll be keeping an eye on established gaming investing funds like BITKRAFT, Galaxy Interactive, Griffin Gaming Partners, and Makers Fund to see where dollars are flowing in the space.

By monitoring these funds, we'll get a better understanding of the trends and opportunities emerging in the gaming industry, particularly in the area of blockchain-based gaming.

Here are some key areas where we can expect to see innovation and growth:

  • Play-to-earn mechanisms, where players complete tasks within a game to earn a form of wage or salary
  • Interoperability between game ecosystems, allowing players to bring characters and assets across different games
  • Better game economies, with more financial alignment between players and game creators

Frequently Asked Questions

How big is the A16Z games fund?

A16Z's gaming fund is a $600 million investment pool. This fund is part of a larger $7.2 billion fundraising effort by the venture capital firm.

How much equity does an A16Z speedrun take?

A16Z Speedrun invests $750K in each selected company, but the equity stake taken is not explicitly stated in the provided information.

Who is the owner of A16Z?

AH Capital Management, LLC (A16Z) is owned by Marc Andreessen and Ben Horowitz, who founded the company in 2009. They are the co-founders and private owners of the venture capital firm.

Did Andreessen Horowitz fund close?

Yes, Andreessen Horowitz's new funds have closed, securing $7.2 billion in total funding. The funds include American Dynamism, Applications, and Games, among others.

Anne Wiegand

Anne Wiegand

Writer

Anne Wiegand is a seasoned writer with a passion for sharing insightful commentary on the world of finance. With a keen eye for detail and a knack for breaking down complex topics, Anne has established herself as a trusted voice in the industry. Her articles on "Gold Chart" and "Mining Stocks" have been well-received by readers and industry professionals alike, offering a unique perspective on market trends and investment opportunities.

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