A Games-Only VC Firm

At E3, N. Evan Van Zelfden hunkers down with Jawad Ansari, who used to be a regular venture capitalist, managing a diverse portfolio of investments worth $3 billion. But when he founded GCube Ventures with partner Shiraz Akmal, he wanted to focus on a particular market.

"We're different from a traditional investment firm, because we understand the business," says Akmal, previously a corporate vice president at THQ, an international game publisher. "We're not investing in other industries."

Before forming the partnership, the duo performed an analysis of their connections on the website LinkedIn and discovered that though both of them had thousands of professional contacts, they reflected two different spheres of influence: one for game development, one for financial investment.

"When [people] hear 'game,' they think we just invest in the content," Akmal says. "That's just one of thirteen sectors. It's like investing in movies: you can invest in the movies -- but then there's the theaters, the distribution, the back lots, the catering -- everything that actually goes into creating that movie are all related."

"We invest in the ecosystem," continues Akmal. "And we look at the ecosystem of the game industry as thirteen sectors. Publishers generally invest in one or two sectors -- developers and content. But there are things like middleware."

He elaborates further. "If you look at the businesses that are in those spaces, where do they get their investments? It's very fragmented, and it's generally from random investors."

Akmal believes his new firm can help the companies integrate into other sectors, making them more profitable, and therefore making that investment more profitable. "And that's something that hasn't been done."

Akmal gives the example of one of their unnamed clients, a "consumer facing product store," as he explains "We could help them integrate what they're doing into the game business where they get another revenue stream."

The normal way deal-flow works, Ansari explains, is by looking at proposals, making quick decisions, and following-up accordingly. But because of the strong connection to the core game business, and core investment business, the firm is already in talks with traditional types.

"The other deal-flow we're getting is from the VC sector," says Ansari. Because GCube is the only firm to focus on the game industry, he reports, most tier-one firms are eager to work with them on game matters. Particularly when it comes to unlocking the potential of companies that such a venture firm has already invested in, because, as Akmal says, "Most investors see media entertainment as a hot exciting space."

"What we're doing for the first few deals are product specific things," says Ansari. "We have a few term-sheets out." He'll be announcing a venture fund later this year, and says the firm currently takes equity for manufacturing deals because of the level of involvement taken. "We're looking at deals from a few hundred thousand dollars to upwards of a hundred million dollars," adds Akmal. In the first year, the firm will close eight-to-twelve deals.

Akmal continues by talking about the maturity of an industry, saying one measure is the number of serial-entrepreneurs. "You can look at the software-enterprise business. There are people who have done business after business that for the last twenty, thirty years, and have been successful at doing that."

But that's not something that's seen in the games business. "I think the time is right for firms like ourselves to really help encourage that," says Akmal. "There are places in the world that don't even have game markets yet."