Game maker Electronic Arts is poised to invest in a newly-formed, $200 million Canadian venture capital fund made up of former EA employees, peHUB has learned. The firm, called VanEdge Capital, expects to hold its first close on $100 million from six limited partners, including EA, later this month.
Vancouver-based VanEdge plans to focus on early stage digital media opportunities in the United States and abroad and has garnered support not just from one of the world’s largest video game publishers. Limited partners currently executing final diligence on the firm include the Export Development Bank, the Business Development Bank, the British Columbia Investment Management Corp. (one of Canada’s largest pension funds), BC Renaissance Capital Fund and Nicola Investments, says firm co-founder Paul Lee.
VanEdge is hoping to finalize the fund’s first close later this month.
VanEdge’s general partners each come from the Redwood City, Calif.-based gaming giant and have extensive experience managing the unique blend of technology and creative pizzazz that goes into gaming.
“Our competitive advantage is that we have subject matter expertise and great connections and contacts,” Lee says.
General Partner Glenn Entis was previously chief visual and technical officer of Electronic Arts’ Worldwide Studios before becoming a venture capitalist. At EA, he led 3,000 engineers and artists. He came to EA through the company’s acquisition of DreamWorks Interactive, a gaming partnership between DreamWorks and Microsoft, where he was the CEO. He won an Academy Award in 1998 for his early work in 3-D image rendering software.
General Partner Jason Chein works from VanEdge’s office in Shanghai. Before becoming an investor, Chein was a general manager of Electronic Arts China. He will help VanEdge source deals in Asia and will focus on ways to assist the firm’s portfolio companies in connecting with low-cost producers in China.
If VanEdge is able to sew up its first close by the end of the month it will be one of the few new venture funds to get off the ground in recent memory. Its success is fueled, in part, by the firm’s expertise in gaming, an increasingly attractive business for investors.
It also is a way for EA to have a stake in the brain drain to venture capital it’s facing. The company has lost several high-profile executives to prominent VC firms in recent years. Benchmark Capital added Mitch Lasky, a former Jamdat CEO and head of mobile gaming at EA, as a general partner in 2007. Last year, Kleiner Perkins Caufield & Byers hired former EA executive Bing Gordon to help the firm wrap its arms around the gaming sector.
An investment in VanEdge will help EA stay on top of early stage innovations and promising startups, such as social gaming company Playfish, which it purchased late last year for $300 million and another $100 million in potential earnouts.
“The major VC firms are scrambling to get into position to add to their staff and get the right people,” says Lee. “Most venture capitalists are pretty good on technology and the business angle. But what about the character sets and the artwork? Engineers feel much less comfortable with that. Is the game-play engaging? They’re even less comfortable with that.”