Minicast: What are VCs looking for in gaming companies?

Venture capitalists (VCs) invest in companies based on various criteria, including the vision, management team, business model, and market potential.

Clayton Larcombe, Chief Investment Officer at PAC Capital, shared his insights on what VCs look for when investing in gaming companies.

Larcombe emphasised the importance of innovation in the gaming industry.

Investors seek companies that can bring significant and long-term impact to the sector by introducing new products or processes. With countless innovations occurring worldwide, only a handful can create meaningful change, he said.

Larcombe also highlighted the "moat," or the competitive advantage, a company possesses in the gaming space.

Investors are wary of ideas that could be easily replicated by large corporations like Microsoft or Tencent. Therefore, a key aspect of investing in gaming is identifying how protected a company is from competitors and how difficult it is to replicate their business model.

As Larcombe explained, "How hard is it for others to do it? And how have I built this little moat around it where people can't get to me."

He also noted the importance of scalability in a business model, emphasising that VCs want to know how a company will expand over time and what its growth potential is.

VCs investing in gaming companies require a deep understanding of the sector and the ability to spot companies that have the potential to thrive in the market. By identifying innovation, scalability, and competitive advantages, VCs can make strategic investments that have the potential to generate high returns.

For gaming companies looking to attract investments, a clear and compelling vision, a strong management team, a scalable business model, and a large and growing market are crucial factors to consider.