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GVR Fund: How we work with companies

By Teppei Tsutsui (Managing Director)

If you are intrigued by the potential of VR and AR and want to start your own business and/or create something you feel passionate about, who would you talk to first? Of course, you need to find your co-founders (in case you want), engineers and probably product managers to build your product. You may want to talk to platforms like Oculus, HTC, Sony, Samsung or Google to find out how you can work with them. But what if you want to raise some money? Perhaps Tipatat and Marco from The VR Fund? Or Amitt from Presence Capital? If you want strategic angles, investors like Comcast Ventures, Qualcomm Ventures, and SamsungNext are there for you. Accelerators? Sure, there are Vive X (run by HTC), BoostVC and Rothenberg Ventures' River Program. Yes, you have many options, and they are all great investors and accelerators.

GVR Fund can also help you in many ways, and I want to explain how and why. Before diving into the specifics, here is a quick intro about ourselves. We are a $16M early-stage VR/AR-focused fund that invests primarily in North America. The fund was initiated and launched in April 2016 by GREE, a Japanese mobile gaming company, and we have made 15 investments for the last 15 months. We look at software, contents (gaming & non-gaming), tools and underlying technologies, but don't invest in hardware.

We're a financial investor with strategic leverage

First and foremost, I want to emphasize that GVR Fund is a financial investor, not a strategic investor, meaning that we make a decision on financial returns, not on strategic value to or potential synergies with GREE. Yes, GREE is one of anchor investors in GVR Fund and we're fortunate to have them as our LP, but their commitment is less than 30% of the total fund. We currently have a selective group of outside LPs, mostly from Japan, which I'll explain later. With these, we can make a decision quickly and don't need to consider potential synergies each time.

We know the industry

GREE started creating VR/AR entertainment contents since early 2015 and has already published six game titles on multiple platforms from Samsung Gear to Oculus to HTC Vive. GREE VR Studio was launched in November 2015 and this Tokyo-based studio is leading the VR initiatives at GREE. Also, another team focuses on enterprise applications and are working closely with mobile careers, broadcasting companies and manufacturers. Moreover, GREE is one of the pioneers in the mobile gaming space, so we of course know Apple and Google well. As such, we have built valuable relationships with all the platform players both in the U.S. and Asia and are happy to connect our companies to whoever they want to meet with.

We're based in the Valley

We're a four-person team. While two partners are based out of Tokyo, I and my colleague, Yasushi, are in the Bay area. I started investing in the Valley since 2014 (before that I was an investor in Tokyo), so I'm not local here, but not a newbie either. We believe that being in the Valley or the U.S. is important to support our companies. 14 out of our 15 companies located in the U.S., including NYC, Texas, LA, Seattle and the Valley. Tokyo is 13 hours ahead of NYC and 16 hours ahead of San Francisco. We don't want our companies to wait if they need us. We are responsive and willing to help them in any way.

We'd like to work with peer investors

We always prefer to co-invest with other investors. There hasn't been a case where we were the only investor in a company. Over 15 investments, we have invested with probably more than 50 investors altogether. We like that because other investors can bring different values, unique perspectives, and necessary resources to help our companies. We usually encourage our companies to build the relationship with other investors even before they start raising additional rounds and are happy to introduce to other investors.

Japan angle

I should also highlight the fact that GREE is headquartered in Tokyo, Japan and a publicly-traded company with the market cap of $2.5Bn (about the same size as Zynga). So we know most of the companies from Japan or even Asia and can make intros whenever our companies need. Also, GREE organizes the Japan VR Summit twice a year, the biggest VR/AR conference in Japan. We had the first one in May 2016, the second one in November 2016 and the third one in May 2017. Every time we invite some of our companies (and fellow investors) to speak at the conference. In the backstage, we set up a bunch of meetings with potential partners and investors in Japan for these companies. The next big one is coming this October, so please let us know if any of you are interested in joining us!

Our supporters - LPs

Finally, our LPs are all strategic investors. Colopl is another publicly-traded mobile gaming company from Japan (interestingly the founder used to work for GREE) and manages the largest VR/AR-focused fund in the world with almost $100M. Mixi operates the largest social network site and is also famous for its blockbuster title, Monster Strike. Another LP is Maruhan, an entertainment company with attractive arcade businesses. Lastly, Yahoo Japan. Unlike Yahoo U.S., it is the largest tech company in Japan in terms of revenues, profits and market cap. They also have an investment arm, YJ Capital, with $200M that invest globally. Although our fund is fairly small, we are backed by investors with deeper pockets and our companies can access these funds.

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