1am Gaming "Hello World"
Who, what, why, when, how . . .
Like so many people who eventually ended up in the gaming industry, I grew up tinkering with the games that I played. Making maps in realtime strategy games and first person shooters to play with friends was my first exposure to “development” in any form. I made a fun little PC game in grad school before working at Riot on IP extensions (cinematics/music videos) experienced by hundreds of millions of players, and thanks to the Riot’s support, had the opportunity to start my second company and design the drone game that ultimately got our tech out into the world and eventually acquired. After that, I was dead set on starting another company in the gaming space. So how did we end up here, after 4.5 years of investing in gaming, with a new VC firm instead?
A friend of mine who has worked in gaming for over two decades now put it best: “this industry needs investors who have been builders.” Both of my colleagues have also started companies, and we have four exits between us. Specialist venture capital is relatively new to the games space, which has grown to close to $200B in revenue largely without it. As we’ve discussed previously, that growth has come with increased competition and a constant evolution across the spectrum of design, technology, and go-to-market. Take the traditional challenges of venture-backed technology entrepreneurship, combine them with a unique discipline that incorporates both art and science and has to strike a chord with customers as a discretionary expense, and you have a lucrative but extremely challenging space- in which being able to rely on investors who have “been there and done that” is an incredible advantage for entrepreneurs.
Our thesis is simple:
backing veterans who have already exited successfully before, or have built a massive business from zero inside a blue-chip incumbent;
who are targeting large, minimum multi-billion-dollar addressable markets;
and have de-risked the opportunity to a degree with a prototype and/or early data
by offering them empathetic support as trusted advisors who have lived the full lifecycle of building businesses, from capital raising to achieving product market fit to exiting
in the service of an exponential 10X+ outcome.
We strive to be the investors that we always wanted to have as entrepreneurs- the kind who bring solutions based on experience when bumps in the road inevitably arise. We always tell entrepreneurs to talk to our portfolio founders before they work with us to diligence this for themselves and keep us honest about delivering on this promise. Though we’re still in the early innings of our two 10-year funds, we’ve guided founders through financings, acquisition offers, product launches, and growing multimillion-dollar products from zero.
From a deployment and portfolio construction perspective, we focus on low single-digit-million-dollar checks for 10%+ equity ownership, and usually take a Board seat. We typically lead or co-lead the first (in some cases second) institutional financing, when the company is still in its earliest stages of growth.
We raised our first two funds within a much larger generalist practice, and began working on spinning out into our own firm upon closing the second, in order to “form-fit” every aspect of 1am to the needs of our founders in that critical early stage of building, and best deliver on the return profile sought by our LPs.
We are based in Los Angeles, the beating heart of the industry, and our office is in downtown Santa Monica- in the funny way life has of bringing things full circle, it’s not far from where I used to work at Riot’s old offices at the former Yahoo Center, before the massive beautiful flagship space they have now. I sat on an endcap next to the guys who ran the champions, skins, and events teams :)
The blog that you’re reading is a response to a request from LPs from our second fundraise. Over the course of 2022 we met many new partners, who enjoyed getting to know us and hearing/seeing the pitch- but gave us unanimous feedback that the massive clunky dataroom of decks, spreadsheets, and docs to which we pointed them upon confirming their interest in the fund was painful to get through, hence this format. We are not currently fundraising, but we do love meeting in person and over zoom to share our perspective- give me a shout at louis@1amgaming.com anytime- but apart from that, the best way to get to know us and our thinking is in these posts. The first 10 posts are a bit more philosophical: intended to share our mindspace on the industry, our practice, approach to the market, where we see opportunity, and the like.
This post, in addition to being the “official” Hello World post for the new firm, represents a bit of a gear-change for us. Now that we’re up and running, we’ll be speaking a bit more freely about the specifics of what we do in the market and with our founders to best deliver on the promise of our portfolio companies. In other words, you’ll see how we actually put the frameworks shared in previous posts into action.
And now for a final word on how all of this ties back to the theme of this blog, why I personally decided to jump into the VC fray, and how we ended up here. As those of you who’ve been reading since the beginning know, this blog’s theme is inspired by the “bottom lane” gameplay in Riot’s multi-billion-dollar-revenue game League of Legends. Two characters work together: one (the “carry”) with the goal of accumulating as much gold as possible by completing objectives and taking out enemy players, while the other does everything possible to protect, heal, and empower the carry. When I was considering moving to the other side of the table from entrepreneur to VC, a mentor GP told me to think about how much larger an impact I could have on the gaming industry by supporting many companies as an investor rather than founding another single one. That latter role in League of Legends is the “support” and it happens to be my favorite- it is a privilege to do everything I can for all of the stellar “carries” that compose our cohorts of portfolio company founders.