Today we announced the launch of VGames, a new fund that was initiated by games expert Eitan Reisel. VGames is a dedicated fund just for games, with a strong focus on studios based out of Israel and Eastern Europe. We are announcing a first close of $30M, with an overall target to reach $40M.
VGames is a very big deal for Viola Ventures. In the past 2 years we’ve been thinking a lot about innovation in venture capital, and how we can expand our strategies and investment tools to better fit the changing market. Becoming an LP is one of those new strategies for us.
Throughout our history we’ve only invested directly in startups, but recently we began to think that we can and should launch 1 or 2 fund investments in specific areas we believe we can quickly build an early stage portfolio. In VGames specifically, we took a relatively big step and committed to a large portion of the overall 1st close.
There are 4 major reasons behind this move.
1. We believe in GAMES. And we love GAMES
First of all, we are big believers in games. This is not because of COVID-19 (we started working on VGames long before the Coronavirus was born). It is because we know that games is the future of entertainment.
With more and more people staying at home, and with more and more screen time, consumers are looking for new types of storytelling. This can be the lean back experience (Netflix, HBO, Apple TV+) or it can be the lean forward, interactive model. Games are perfect for the 2nd version, and the numbers speak for themselves. Since the outbreak of Coronavirus, the video games industry has grown by 60% in playtime – strong evidence for the fact that games equal entertainment.
2. A focused LP fund is the perfect strategy
So it’s a huge market. But it’s not only that. Video game companies are very cash efficient. Unlike with other types of startups, in the world of games you can know quite quickly if you are onto something, and you don’t need a lot of capital to reach profitability. This means that a seed fund can do a great job at showing early signals of what is working and what is not.
By backing Eitan and VGames, we are now closely associated with a focused fund that has access to the best studios in the world. His activity will potentially enable Viola to partner with these studios in the future, after they have proven market fit and maybe even proven unit economies.
3. Eitan is the perfect guy for this job
We’ve not only chosen the best strategy, but we’ve also partnered with the best person for the job. I have been supporting Eitan since late 2018, and I can say he is hard working, honest, smart, relentless and more than anything – a real gamer. We (Viola) are very excited to be supporting him in launching this new fund.
Overall it’s a perfect partnership – we bring the VC experience in areas such as fund management, selection process, reserve management and value creation. Eitan brings the specific vertical knowledge – a deep understanding and network in the world of games.
4. We believe in vertical markets
From the Viola perspective, the VGames investment is a piece of a broader puzzle: Our strong commitment to vertical markets. We believe future startups are going to win in specific verticals, less so through horizontal tech innovation. Games is just one of these many verticals.
One final and important point – investing in games is a lot of fun, and fun is an important part of our job.
Now I have the perfect excuse to play games all night on my Xbox and call it work.