Wednesday, July 9, 2008
Interview with Jawad Ansari and Shiraz Akmal, GCube Ventures
Story by Benjamin F. Kuo
GCube Ventures (www.gcubeventures.com) is a new investment firm launching today focused on the video game industry. The firm is headed by Jawad Ansari, the former General Partner at Miven Venture Partners, and Shiraz Akmal, most recently Vice President of Global Operations at THQ. We thought it would be particularly interesting to talk with GCube, because we constantly hear from entrepreneurs in the video game industry who have a hard time finding investors and getting their projects started. We sat down with Jawad and Shiraz to talk a little bit about GCube Ventures, the challenges of getting funding for video game entrepreneurs, and what the opportunity they see focusing in on this market. (Photo, from left: Shiraz Akmal, Jawad Ansari, and venture partner Asra Rasheed).
Tell us a little bit about your new firm, and what its focus is?
Shiraz Akmal: Today, we're announcing the launch of our investment firm, which is focused on the interactive entertainment space. We're focused on all aspects of the game ecosystem. We have two initiatives with GCube. The first part, is we syndicate strategic capital from our global co-investor network, which we've been building over the last few months, including with strategic value-added investors, as well as funds from our own balance sheet. The second initiative, which we will be announcing later this year, will be a generate purpose fund, which we will share details with at that time.
You mention you're focused on the game ecosystem--any specific kinds of game companies?
Shiraz Akmal: Great question. The best way to look at this, is to look at the game ecosystem. From an investment point of view, we invest in all companies that fuel the growth of the game industry worldwide. That might be a development studio, or middleware, or outsourcing services, or even working with governments trying to incubate and grow companies in the interactive space, and even training and vocational schools--which are becoming more and more popular in Asia. That also might be online companies such as social networks or casual gaming sites. All of these, and more make up the global game ecosystem.
Our readers would be interested in your background--how'd you guys get into this?
Shiraz Akmal: I've been in the game business all of my life. For the last nine years, I've been at THQ, leaving as VP of Global Operations and Product Development. The last three years have been very interesting. I've visited developers, met with governments, and looked at technology all over the world, anyone trying to get into the interactive space, or in the interactive space trying to add gaming content. From my perspective, I saw a huge opportunity to help out--not just at one company, my former employer, but many companies. THQ is a fantastic company, but GCube allows me to help many companies, and brings me together with my partner Jawad Ansari, who has a broad experience worldwide.
Jawad Ansari: One reason that we have built this great partnership, was when I met Shiraz I saw the opportunity to help many companies. That was one of the reasons we started GCube. Shiraz has a very deep domain knowledge, and has seen lots of companies over the 20 plus year span of his time in the industry. He can see how value gets unlocked, and how it can be unleashed, and is interested in doing it over multiple companies, rather than just one firm.
My background is over the last fifteen years, I have been involved in hard core investment, venture capital, private equity, fund-of-funds, and hedge funds. All aspects of the investment bucket and global investment management. My last company, Corporate Metrix, managed $3 billion in outside investments, from clients such as Victor Tsao (Linksys), Safi Quereshey (AST Research), and others. In parallel, I managed Miven Venture Partners, a $100M venture capital firm, which focused on global media and consumer-facing application technology. We made investments in India, China, and the U.S., with IPOs in China and significant up round in the U.S., Canada, and India. As part of that, at Corporate Metrix, I invested in many venture capital funds, 40 of them in the U.S., in such funds as Sequoia, Kleiner Perkins, and others. Prior to that, I was with Irvine Ventures, which was behind the seed investment and IPO of Nexcard, which went to the market with a $3.5 billion market cap. My career in venture capital started in 1994 -- I'm dating myself--so I've spent 14, 15 years in this market.
How are you positioned versus other venture firms?
Jawad Ansari: We know the venture market, and also know some of the partners and principals at other VC firms who cover the game business. The way we look at it, is because of our background in this industry, we can be a partner in the game business and can move much more quickly than when partners don't know the game business.
Shiraz Akmal: Jawad is the investment guy. I bring experience building game studios and operations. What we saw happening is interactive entertainment and games are becoming the dominant form of entertainment. Every single media company, and game company has announced in the last year that they are putting hundreds of millions of dollars to invest in the game space--in some cases, billions. On the other side, we see entrepreneurs all around the world who are building companies related to the game business. In each geography, we see companies looking to go from the local to the global market. through the combination of Jawad with his global investment experience, and myself with the global game experience, creates a pre-eminent firm for entrepreneurs and media companies looking to invest in the space.
Jawad Ansari: Versus other venture capital firms, we are positioning ourselves as an ideal co-investor, probably leading a syndicate because of our domain knowledge, so that we can reduce risk in their portfolio. Most general purposes funds are focused on diversification of their portfolio, versus focused on a single sector.
Entrepreneurs tell us it's tough to find companies interested in gaming, why do you think that has been the case?
Jawad Ansari: Clearly, a lot of the partners at traditional venture capital firms don't have the relevant background. Their background tends to be much more along the hard technology of Silicon Valley. It's the comfort factor, and lack of understanding and deep domain knowledge. Plus, with globalization, the global business needs of firms needs to be fully comprehended. That's one of the reasons we feel that we can be positioned to help other venture capital firms, help the market, and help entrepreneurs get to funding.
What are the aspects of globalization and the forces you see at work there?
Jawad Ansari: There's clearly globalization going on with the advent of China and India. There are big companies out of India on an acquisition spree, and others going into the Indian market.
Shiraz Akmal: To add to that, what is happening in the game business can be looked at through two lenses. There's the transformation of the fundamental business dynamics of how revenue is generated. What I mean by that is the shift from brick and mortar retail to online. We're actually seeing that happen in the music and film business as well. What that creates is the opportunity, and the need, to transform fundamentally how business is done. It doesn't matter if it's console or PC, there's a transformation of the business happening. The second is the expansion of the business worldwide. There are mature markets, and then there are emerging markets. In Asia, they skipped the retail model and moved online directly. In the Middle East, they're looking to build infrastructure. In the U.S., you're seeing a shift toward the online model. Jawad and I see lots of companies in Asia looking to move into the U.S., and lots of companies in the U.S. moving to both Asia and Europe. There are lots of investment opportunities for GCube, where we can help by injecting capital and helping companies to grow, where we can tap strategic relationships, bring our Rolodex, and help bridge that gap.
What's your view on where the game industry is going, and how that intersects with the media business?
Shiraz Akmal: One of the key trends we are seeing, is that every single media company has announced an investment in the game industry. Why is that? Because the game business is their business now. It's an interesting time for game companies. It will be interesting to see if traditional media incorporates the game business, or the game business become the media giants of tomorrow. There's a transformation possible on both sides. I see a little bit of both. There's a definite opportunity to build businesses that they may be interested in acquiring.
Anything else we ought to mention, or thoughts you'd like to share?
Shiraz Akmal: People should feel free to reach out to us, both entrepreneurs looking to build a business or who have a business and are looking at expanding. If you're from the investment community, we're interested in talking.
Jawad Ansari: Knowing the investment business for the last fifteen years, and now focusing 100 percent on the game industry, one thing we notice is that lots of entrepreneurs spend a lot of time and energy building their products--without thinking about how their business should be run, or how that would make money. A lot of the time, it would be beneficial to drop us a line, tell us what you're thinking of doing, and we might be able to tailor your thoughts on what is really fundable or what might be successful--without them investing lots of time, and resources, and possibly their own money on a project.