Venture capital powerhouse A16z, co-founded by Marc Andreessen and Ben Horowitz, has just unveiled a substantial $600 million gaming fund as part of a broader $7.2 billion investment initiative. This move comes at a crucial juncture for the gaming industry, which has weathered significant layoffs totaling 20,000 over the past eighteen months.

A16z also recently announced the opening of applications for the third installment of its highly successful Speedrun tech and games accelerator program - with a staggering $75 million earmarked for investment. In this article, we will cover everything you need to know about the new fund and how to apply to the Speedrun accelerator program.

Over $7 Billion

Ben Horowitz, one of A16z's founders, outlined the distribution of the $7.2 billion across various venture strategies in a recent blog post on their website. These include allocations for American dynamism ($600 million), apps ($1 billion), web2/web3 games ($600 million), infrastructure ($1.25 billion), and growth ($3.75 billion). Notably, the injection of funds into the gaming sector underscores its importance amidst market challenges.

Previously, A16z had raised $600 million for its gaming fund, bringing the total investment in gaming to $1.2 billion. Horowitz expressed the significance of this milestone, reflecting on the firm's evolution since its inception in 2009.

Initially focused on a narrow band of companies, A16z has adapted to the changing landscape, recognizing the expansive opportunities presented by software-centric businesses. Ben Horowitz commented in a press release:

“This marks an important milestone for us. When Marc and I started the firm in 2009, the conventional wisdom in venture capital was that in any given year, only 15 companies would ever generate $100 million in revenue and those 15 companies would drive almost all of VC returns. At that time, the conventional wisdom was right. Venture capital firms configured themselves to address a market of 15 important companies. This meant relatively small fund sizes and a small number of partners in a single fund was the optimal approach. Andreessen Horowitz began in exactly this way with a $300 million fund and 2 General Partners.”

Ben Horowitz added: “Shortly after we started the firm, all that began to change. My partner Marc saw the new world coming and wrote about it in 2011 in a piece called, ‘Software is Eating the World.’ What he predicted then came true. In the past 10 years, nearly every significant business has been reimagined as a software company, and the market for these companies has, as a result, increased dramatically. Along the way, each submarket – American Dynamism, Apps (Consumer, Enterprise, Fintech), Bio+Health, Crypto, Games, Growth, and Infrastructure – has become as big as the original entire Venture Capital market.”

More Players Than Ever

Jonathan Lai, a partner at A16z, echoed Ben Horowitz's sentiments, emphasizing the ripe environment for game startups. Lai highlighted the abundance of players, platforms, tools, and funding available, positioning the current era as optimal for gaming entrepreneurship. A16z's commitment to early-stage founders is evident through initiatives like the A16z Games Speedrun, inviting applications for the summer cohort.

“After a decade in the games industry, I believe there’s never been a better time to build a game startup than today: There are more players and platforms than ever before — more tools and tech to help build games than ever before — more funding for game startups than ever before.”

Jonathan Lai elaborated on the firm's investment focus, which encompasses game studios pioneering new genres, the infrastructure supporting developers, and the burgeoning ecosystem of consumer apps centered around gaming. With a hands-on approach, A16z aims to foster growth across all stages of development, from preseed to Series A/B.

Ben Horowitz added in a concluding statement: “As a result, to win in each category, we needed to expand from one great investor in each segment to a dedicated investing team with a differentiated platform in each category to help the best founders in those fields build amazing companies. Each area requires deep expertise, so it’s not wise to try to cross-train someone in, for example, Games and Infrastructure. More importantly, founders building AI foundation models need an entirely different set of networks and capabilities than founders building biotech therapies.”

A16z's latest move signals confidence in the gaming sector's resilience and potential for innovation amidst industry-wide challenges. As the landscape continues to evolve, the injection of substantial funds underscores the firm's commitment to supporting and shaping the future of gaming.

A16z Games Speedrun

The A16z Games Speedrun Accelerator, which will now call Los Angeles home, is set to kick off its third cohort, known as SR003. This intensive 12-week program is designed to provide game and tech entrepreneurs with the tools and resources needed to thrive in today's competitive landscape.

The program will culminate in a Demo Day during SF Tech Week, offering participants a platform to showcase their innovations to potential investors. Josh Lu, investing partner for A16z Games, highlighted the unique opportunity Speedrun presents for entrepreneurs at the intersection of technology and gaming.

"Speedrun brings together tech and games, two worlds that sit on the frontline of massive transformations and attract some of the world’s most innovative entrepreneurs," said Lu. "Our Speedrun program not only provides capital support but also a team of operators and partners who have worked across the games industry and can equip them with the knowledge that helps them go from zero to launch."

$750K Up for Grabs

A16z Games has upped the ante for SR003, increasing its investment to $750,000 in each selected Speedrun company. The previous class, SR002, boasted an impressive lineup of startups disrupting various sectors of the Tech x Games industry. From infrastructure and tools to game studios and consumer apps/platforms, the diversity of ventures showcased the program's broad reach and impact.

• 43% infrastructure plus tools, with alums from top tech companies such as Discord, Zynga, Google, Apple, Square, Palantir, Magic Leap and Xsolla.
• 35% games studios, founded by both newcomers and veterans in the space from companies including Rocket League, Blizzard, Epic Games, Jam City, King, and Supercell.
• 25% consumer apps/platforms, creating community and safe spaces for players online, led by veterans from Magic Leap, Crunchyroll, Dapper Labs, Canva, and Snap.
• 49% AI, led by PhDs from Stanford, MIT, and Oxford.

The Speedrun program prides itself on its selectivity, admitting only about 1% of applicants for its last cohort. However, the benefits are clear, with 80% of participating companies from SR001 securing funding from investors after graduation at Demo Day.

Interested applicants for SR003 can submit their applications starting today until May 19, 2024, here. The program is scheduled to commence on July 29, 2024, promising another wave of innovation in the tech and gaming spheres.

Final Thoughts

For aspiring entrepreneurs looking to make their mark in the gaming industry, A16z's Speedrun accelerator and new fund presents a golden opportunity to turn their dreams into reality. Apply now and join the ranks of visionaries shaping the future of gaming.