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Hello readers,
First, the large private information — I’m married! Emma and I had a really small ceremony within the desert city of Moab, Utah, the place we loved every week of mountain climbing, UTVing, consuming, and dancing with our instant household, and we’re again for a couple of weeks earlier than heading out to our honeymoon in Japan. Because of all my readers/colleagues/associates on your type notes!
However earlier than the honeymoon, I’ve some “behind the scenes” tasks to write down about at a16z 🙂
Behind the scenes at a16z
It’s been enjoyable to construct in public and share the behind-the-scenes on my work at Andreessen Horowitz. This previous 12 months, the first focus has been to incubate and launch our new video games fund (I just lately shared the pitch deck we used to lift $660M). I’ve realized a ton in our first 12 months of investing, and I needed to observe up on all of this to speak a few new effort we’ve launched known as SPEEDRUN, the primary startup accelerator targeted on the intersection of Video games x Tech — the place we make investments $500k in startups targeted on all the things from AI, AR/VR, web3, infra, recreation studios, and extra. We goal startups on the very earliest levels of improvement, usually groups with out merchandise or metrics.
If this sounds attention-grabbing to you, please be a part of this system!
Apply to SPEEDRUN 2024. (deadline 9/30/2023)
However earlier than I get forward of myself, let’s begin with somewhat historical past.
What are the most important issues founders face?
Again in 2020 when my colleague Jon Lai and I have been beginning to spend money on the intersection of Video games and Tech, we’d usually sit in a16z’s places of work in Menlo Park and speak about a number of the structural challenges of constructing a startup within the trade. Though the sector is 100% software program and absolutely digital, it had its personal quirks because it was its personal self-contained neighborhood.
And in addition, founders are founders. They wish to join with one another, study the newest, and so they wish to increase cash. These are common, however for our sector of Video games x Tech, we famous a couple of concrete issues:
- There’s not likely a startup neighborhood inside Video games x Tech. I’ve been investing within the sector for the previous few years, and though there are many corporations, and a few large conferences (just like the Recreation Builders Convention), there isn’t actually a spot targeted on founders and new startups. Numerous it’s for very giant recreation builders. So it might be *wonderful* to have the ability to create that, so that folk can study from one another
- There’s numerous distinctive data, and founders have quite a bit to study from one another. The fact is, many of the finest new methods and strategies aren’t written down. And issues are at all times altering. Founders should study from one another. And in case you are in a particular trade, just like the intersection of video games and tech, then the data and relationships are sometimes much more obscure — from selecting recreation engines to launching on Twitch to Discord, to what’s innovative in AI — there’s only a lot. So there’s a chance to carry individuals collectively.
- It’s nice to assist a big, numerous, set of first-time founders. After we see 1000s of startup concepts every year (and sure, it truly is that many), you inevitably find yourself attempting to again the tried-and-true founders which are beginning their second or third firm. Or await traction. But a lot innovation comes from individuals attempting for the primary time. They’ve distinctive challenges — particularly quitting their job 🙂 — and likewise discovering cofounders, selecting the thought, and so on. By doing an accelerator the place there’s a bigger batch of corporations, you inevitably are in a position to construct extra.
- Elevating cash is difficult, however notably so people constructing a brand new recreation. There’s usually fewer angel traders and seed funds to be the primary greenback into the Video games x Tech intersection. And founders might not be as acquainted both — though very helpful corporations like Roblox, Supercell, Riot, and so on have been began, the trade has largely targeted on recreation publishers doing income shares and minimal ensures to finance improvement. (Form of like music, or films). Enterprise capital isn’t as properly understood or identified, and founders usually have a tricky time connecting with angels and seed companies. And for tech corporations that intersect with video games (like a subsequent gen Twitch, Discord, Unity, or that form of factor) you usually discovered your self educating traders, who may not have the relationships and community contained in the trade.
From the founders’ perspective, the above challenges introduced main obstacles to constructing new startups. I’ve usually remarked that it feels a bit like 2005 the place there aren’t tons of of angel traders and dozens of seed traders to get these new corporations off the bottom. There aren’t games-specific GPs at each main fund (whereas there are for SaaS!). And though Video games have unimaginable cultural impression, it’s not properly understood as an funding space.
Nevertheless, in 2020 gaming was only one sector of a number of that I coated within the a16z shopper enterprise fund, and we couldn’t do a lot. Nevertheless, with the creation of GAMES FUND ONE final 12 months, we have been ready to consider these issues from scratch, and with it, we determined to run the experiment to unravel a few of these points, by constructing an accelerator that mixes schooling, neighborhood, capital and extra.
We rallied the crew inside a16z to start placing collectively the thought, then introduced it earlier this 12 months. The consequence: 1600+ corporations utilized. Whoa. I ended up ending an electronic mail to the entire crew saying, hey, that is all we’re going to be engaged on now 🙂 and it’s going to take a lot work we’d all undergo some burnout. But it surely’s going to be enjoyable. After which we began cranking.
An accelerator overview
Let me take y’all by way of some slides on how we describe SPEEDRUN to our founders.
First, we speak about SPEEDRUN as an accelerator as a result of we wish to goal startups in the meanwhile of formation, actually pre-seed or seed. This has a ton of benefits, beginning with the truth that $500k goes a good distance. And we will bundle it with schooling, a neighborhood, and mentorship, so that individuals have an excellent expertise. It additionally permits us to share the businesses with a large set of angels and seed traders, to construct the ecosystem.
After we ran the primary SPEEDRUN batch, it appeared like this:
The provide is form of a slam dunk to new startups. It’s a very good little bit of capital for a brand new crew — $500k — and also you don’t want a product launched and even constructed. The worth prop is as a lot concerning the capital as fixing the opposite issues I discussed earlier on connecting with a founder neighborhood, studying the innovative, and so on. In order that was nice, and we have been happy by what number of corporations utilized.
One of many large classes from the primary batch was — oh man, it’s numerous work. We ended up taking the whole crew and we mainly all labored on SPEEDRUN for the whole two months we have been placing it on. If any of you might have been concerned in organizing particular person advertising occasions, this was like organizing 20+ in a row. This included speaker talks, social occasions, workplace hours, a kickoff and shutting program, a demo day with tons of of attendees, and extra. It was numerous work, but additionally very rewarding.
Above: SPEEDRUN ended up concentrating on founders who had labored both at video games corporations or in adjoining tech corporations. We had 1600+ apply for SPEEDRUN 1 (and we’re at 2000+ for SPEEDRUN 2) and we ended up choosing a couple of dozen — so the conversion charge is properly under 2%, extra selective than a high college. But it surely wasn’t all primarily based on resume, we additionally had very attention-grabbing individuals who simply constructed actually cool merchandise with nice traction, and we funded them primarily based on their progress.
The best way it really works is fairly easy — somebody has to truly undergo 1000’s of purposes 🙂 After which you choose out a subset to interview (in all probability <5-10% of the general), after which you choose down once more till you’re <2% of the whole quantity. This clearly means a loopy variety of 15 minute interviews, and you need to be very selective, but it surely’s additionally extremely enjoyable to listen to so many concepts and meet nice people.
Above: One of many main attracts was the wonderful audio system we have been in a position to carry into the combo. This included interviews and lectures from the creators/founders of Zynga, Valorant, Twitch, Supercell, King (aka the creators of sweet crush!), and way more. We additionally had a bunch of implausible lunches with people like Ben Horowitz and Marc Andreessen right here at a16z, which was enjoyable for all of the founders.
Above: This system we designed emphasised a structured program. This included frequent lectures on each side of making a brand new startup, from fundraising to selecting an concept to all the things else. We layered on social occasions and a ton of time to attach with different founders and workplace hours with the a16z crew.
Above: The finale was a Demo Day in entrance of a lot of a very powerful and influential corporations and VCs within the trade. Over 80% of the startups have been in a position to increase extra cash, and we helped coach them, gave them recommendations on the follow-on course of, and we ended up with a ton of nice co-investors.
Finish to finish, this system was slightly below two months, and by the tip of it, the startups in this system had extra capital, had constructed a neighborhood, and realized a ton of latest abilities for the following part of their journey.
Above: Finally, we declared SPEEDRUN 1 a hit and doubled down with a brand new program for 2024. We made a bunch of adjustments, together with placing a full-time crew to concentrate on it. We elevated the size of this system, dedicated $75M of our video games fund in direction of supporting the businesses, and made a ton of adjustments each large and small to make SPEEDRUN 2 much more of a hit.
The aftermath
It was a blast to take an concept from 2020 that got here up throughout a brainstorm, and switch it into an actual factor a couple of years later as soon as we had the assets. The previous few quarters have felt essentially the most like launching a brand new product as I’ve had within enterprise capital. It jogs my memory of the nice outdated days once I really designed and launched merchandise for a residing 🙂
As you possibly can inform from my writeup on this, general we take into account this entire effort a hit and it’s been a blast to place collectively. We’ll be doing this many extra occasions, and including this as certainly one of our main investing motions — along with our standard large checks into Collection A and B corporations, in addition to later stage corporations, we’re now going to be working an accelerator! Kudos to the whole a16z video games crew for making it occur, it was an enormous crew effort.
Anticipate extra updates on this (and different enjoyable new initiatives at a16z) over time on this weblog. I’d like to share, as a lot as I can, my considering as we navigate the thought maze of beginning a brand new fund contained in the video games trade. Tremendous enjoyable. And eventually, in case you are a founder and to use to a future SPEEDRUN program, right here is the hyperlink to try this.
PS. Get new updates/evaluation on tech and startups
I write a high-quality, weekly e-newsletter masking what’s occurring in Silicon Valley, targeted on startups, advertising, and cell.
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