A pandemic may seem like an inopportune time for an angel investor with less than two years under his belt to launch a dedicated fund. But an Israeli veteran of the gaming industry has nearly reached the targeted goal of his debut early-stage fund.
Eitan Reisel said he has raised $30 million of a $40 million fund for VGames, a Tel Aviv, games-focused firm that invests primarily in gaming studios. Anchoring the fund is Israeli venture firm Viola Ventures.
Reisel, who is the sole GP of the fund, said he aims to make mostly pre-seed and seed deals in Israel, but is also looking at Eastern Europe as well as internationally.
Reisel said he has already invested in three companies, with two in Israel and one in the US, and he aims to complete two deals a quarter, investing $500,000 to $2 million.
As the former head of Google Games in Tel Aviv, Reisel began making angel investments about a year-and-a-half ago. But he said it’s hard to back a hit when only investing in one or two companies.
“With Israel booming, and the games games market seeing growth, I decided to do this as a fund,” Reisel said.
Raising a gaming fund amid a pandemic doesn’t hurt either. In contrast to other tech sectors that are negatively impacted by the coronavirus or the economic slowdown, the video game industry is generally seen as resilient to those factors. Gaming giant Zynga in May saw sales jump more than 50 percent as homebound consumers play more mobile games.
Not only is there an audience of users in lockdown at home and looking for entertainment options, most video game developers, publishers and operators have been able to maintain operations with employees working from home, helping to keep fresh the pipeline of new releases.
In May, market researcher Newzoo, which specializes in games and e-sports analytics, issued its annual report and forecast that this year’s global games market will see revenue of $159.3 billion, a year-on-year growth of plus 9.3 percent, and reach $200 billion by 2023.
“Gaming is not an industry that will be going bankrupt anytime soon,” Reisel said.
Mobile gaming is expected to see the biggest increase, Newzoo reported, but Reisel said he is not platform specific and is looking at gaming content for PCs, mobile and consoles. He said he prefers to be the only or initial investor in his companies.
Know your LPs
Anchoring the gaming fund is Viola Ventures, a 20-year-old venture investor from Israel. Reisel said he is also raising money from family offices and individuals within the gaming industry.
Through its history, Viola Ventures has only invested directly in start-ups, but has recently made two fund investments in specific sectors which the firm hopes can help it to build out an early-stage portfolio. VGames is one such fund and the other one is Tech.bio, which focuses on computational biology.
Reisel said he didn’t previously have a relationship with Viola Ventures or general partner Danny Cohen, who is spearheading the firm’s initiative into gaming. But said having the anchor helps with other LPs and is attractive to gaming companies as well.
“My advice to GPs who are starting a fund is know who you are raising from,” he said.
For its part, Viola Ventures noted that the gaming sector requires an expertise and know-how of the marketing and monetization machine. Associating with a firm that has access to studios it couldn’t reach, Viola Ventures is hoping to partner with the start-ups after they have proven market fit and economics.
“This is why we decided that the best way for Viola Ventures to be involved in this domain is by joining up with a domain expert like Eitan,” Cohen said. “We truly believe unicorns can emerge from this industry.”
Action item: Email Eitan Reisel at email@example.com