Venture capital firm Andreessen Horowitz (a16z) has launched a $600 million fund dedicated to gaming startups with a focus on Web3, saying it believes “gaming infrastructure and technology will be the key building blocks of the Metaverse.”
The fund, dubbed “GAMES FUND ONE”, will invest in three main areas: game studios, consumer applications that support gamer communities like Discord, and game infrastructure providers.
The a16z team stated that “the coming Metaverse will be created by game companies using game technology” and that the industry has already “solved many of the problems that need to be solved to create the Metaverse”. The company believes that games will become “the main way to spend time.”
The a16z move means that since mid-April, VCs and game industry giants have poured nearly $3 billion into Web3 games or Metaverse projects. Venture capital firm White Star Capital has raised $120 million for its decentralized finance (DeFi) and games-focused fund, and committed $200 million to blockchain gaming projects from Framework Ventures that happened in April 2022.
Metaverse projects also receive huge amounts of money from the titans of the gaming industry. Last month, Epic Games, creator of the hit game Fortnite, raised $2 billion to build a metaverse with funding from Sony and LEGO.
The a16z team pointed to the billions of dollars in revenue that games like Minecraft bring in, using the open-world game as an example of a title that has maintained a long-term active community that is more like a social network. Minecraft is currently the best-selling game of all time, and according to gaming stats platform ActivePlayer, it has averaged 173 million players in the last 30 days, despite being released almost 11 years ago.
Related: There’s room for the Metaverse in 2022, but virtual space is far from perfect
It is a16z’s first fund dedicated exclusively to games, but the firm has supported successful gaming-related projects in the past, including virtual reality (VR) company Oculus and game developer Zynga, saying the investment “reinforced our belief that games require special attention.”
The foundation has been joined by founders of game development companies and popular games such as Riot Games co-founder Mark Merrill, co-founders Alex Larsen and Jeffrey Zirlin of Sky Mavis, which owns the popular blockchain game Axie Infinity, and Kevin Lin, founder of gaming company Metatheory. which received $24 million in a funding round led by a16z.