What VCs Don't See: Why We're Bullish on Gaming Startups

Gaming is expanding its reach into every part of our lives (education, medicine, music) and is becoming the foremost battleground for the future of big tech. This strikes me as analogous to the Facebook story from above. The market clearly believes video games represent a valuable opportunity, but may be underrating the scale by orders of magnitude... See more

The gaming industry reaches a point at which even adjacent markets suffer from this growth. Indeed, Netflix thinks ‘Fortnite” is a bigger threat than a direct competitor like HBO. The video games industry is silently taking over the entertainment world.

Companies that attach themselves to a specific game early in their development process run the risk of being shut out by publishers or becoming niche products unable to break into other games. Some of today’s most successful gaming companies such as Twitch or Discord can attribute much of their success to being game-agnostic.

The tech industry is built on the venture capital model where hockey stick growth and selling to a larger company or going public are markers of success. But the traditional VC model does not leave much room for startups that might not be the next unicorn but still generate revenue — just not the type of returns investors are looking for.

Gaming as a talent and audience opportunity: Collaborations with gaming influencers and streamers, Investments in esports leagues and brands, Label imprints and management arms focused on gaming and esports,

Many Founders have a fantasy that data will be an ongoing insight engine — that as they collect more and more data, they will get more and more insights that will give their startup an ongoing advantage.

As gaming becomes the on-ramp to digital worlds and crypto economies, this stigma will fade. We’ll stop thinking of gaming as games with an overt objective, and start thinking of gaming companies as 1) social networks, and 2) economies.