How is A16z’s Games Fund One going to spend $600m?


A16z’s first dedicated games vertical, Games Fund One, was announced last week. And our friends on the Deconstructor of Fun podcast got the scoop straight afterwards, with an in-depth chat between DoF founder Mishka Katkoff and A16z’s general partner Jonathan Lai.

The podcast addressed where the fund will be spending its money – and why so many of A16z’s investments go to ex-Riot founders.

First, a bit on Lai himself. He started out in games as a producer at Riot, helping to build and ship the Riot API before working in the firm’s esports arm. After the Tencent acquisition, Lai moved over to Riot’s new owner full-time, mixing work in publishing, business development and investments. Three years ago Lai joined A16z and has been part of investments in 20 companies including Roblox, Overwolf, RTFKT, Mainframe and more. 

Lai says the firm wants to expand the A16z investments team from five to “double or treble that size” in the coming months. It’ll also be building out A16z’s support team, which is currently around 300 people, by hiring people from Twitch, Discord, YouTube and the like to work with founders under A16z’s wing.

a16z’s Games Fund One team is led by Jonathan Lai, Andrew Chen and James Gwertzman.

On investment strategy, Lai says that Games Fund One will continue to invest early at seed and series A stage, but will also “double down on companies within our portfolio.”

“If we invest in the series A, and then things are working out, we would potentially be in a series B and be able to support our companies from seed all the way up until, hopefully, something like an IPO stage,” he says.

Games Fund One plans to invest in every part of the industry’s tech stack, says Lai, both in game studios and in underlying infrastructure. 

“One of the exciting things to us is that in many cases, a game company might start at one layer of the stack and then vertically expand,” he says.

“Epic is a great example of that. They started off building a game, then they built an engine to support that game, and now they’ve commercialised that engine and they’ve even expanded to become a marketplace and a developer platform – they’ve basically become full stack. Roblox is the same way, and Steam and Valve have also undergone that transition.”

One part of that tech stack A16z won’t be investing in – for now – is in games hardware itself.  “Consumer hardware has traditionally been a tough one to invest in because there’s so much complexity around supply chains, having to stand up factories, shipping stuff around the world and making sure that you can fulfil logistics,” says Lai.

“Traditionally the best investments there, in our opinion, come in at a later stage. There’s nothing that we have crossed out forever, it’s more of a matter of, like, what’s the right time and what’s the right stage for this particular vertical.”

On founders, Lai says the team will target investing in two particular profiles: freshman and seniors.

With freshman teams Games Fund One wants hustle, innovation, speed and the ability to convince senior people to work for them further down the road. Lai describes the senior team profile as having shipped a successful game, worked at a big company or they’re spinning up their second start-up. 

Which leads into the Riot question. Lai’s former colleagues at the League of Legends maker seem to be getting plenty of A16z investment when they leave and start their own studios, and it’s the same with folks who worked at Blizzard and Epic.

Lai says these founders get investment because they are people who “know what success looks like at the highest level.”

“When they start companies, these companies usually have similar levels of ambition – they want to make a next-gen Riot,” says Lai. “They want to make something which is going to be played globally, by everyone, for years. And we like that because our mission is that we want to back ambitious founders who want to build generational companies.”

Finally on its web3 investments to date, Lai says he and the Games Fund One team are “long term bullish” on the space and is realistic about the “ups and downs” new tech frontiers have at their beginnings.

“My personal hypothesis around web3 is that it just ends up actually being a part of every game long term,” he adds. “Just like the cloud, you know – it’s just a part of the tech stack that most multiplayer games run on. As a consumer, you don’t choose a game based on whether it is in AWS or GCP or Azure. It’s just running in the background and it makes certain types of gameplay mechanics possible.”

There’s plenty more insight from Lai in the full Deconstructor of Fun podcast here.

Scroll to Top