Lessons from launching SPEEDRUN, the Games x Tech startup accelerator at andrewchen

Hello readers,

First, the massive private information — I’m married! Emma and I had a really small ceremony within the desert city of Moab, Utah, the place we loved per week of climbing, UTVing, consuming, and dancing with our quick household, and we’re again for a couple of weeks earlier than heading out to our honeymoon in Japan. Due to all my readers/colleagues/mates to your type notes!

However earlier than the honeymoon, I’ve some “behind the scenes” tasks to write down about at a16z 🙂

Behind the scenes at a16z
It’s been enjoyable to construct in public and share the behind-the-scenes on my work at Andreessen Horowitz. This previous yr, the first focus has been to incubate and launch our new video games fund (I not too long ago shared the pitch deck we used to boost $660M). I’ve realized a ton in our first yr of investing, and I wished to comply with up on all of this to speak a couple of new effort we’ve launched known as SPEEDRUN, the primary startup accelerator targeted on the intersection of Video games x Tech — the place we make investments $500k in startups targeted on the whole lot from AI, AR/VR, web3, infra, recreation studios, and extra. We goal startups on the very earliest phases of improvement, usually groups with out merchandise or metrics.

If this sounds attention-grabbing to you, please be a part of this system!

Apply to SPEEDRUN 2024. (deadline 9/30/2023)

However earlier than I get forward of myself, let’s begin with somewhat historical past.

What are the largest issues founders face?
Again in 2020 when my colleague Jon Lai and I had been beginning to put money into the intersection of Video games and Tech, we might usually sit in a16z’s places of work in Menlo Park and discuss a number of the structural challenges of constructing a startup within the trade. Though the sector is 100% software program and absolutely digital, it had its personal quirks because it was its personal self-contained group.

And likewise, founders are founders. They need to join with one another, be taught the most recent, and so they need to elevate cash. These are common, however for our sector of Video games x Tech, we famous a couple of concrete issues:

• There’s probably not a startup group inside Video games x Tech. I’ve been investing within the sector for the previous few years, and though there are many corporations, and a few large conferences (just like the Sport Builders Convention), there isn’t actually a spot targeted on founders and new startups. Loads of it’s for very massive recreation builders. So it could be *superb* to have the ability to create that, so that folk can be taught from one another
• There’s numerous distinctive information, and founders have loads to be taught from one another. The truth is, many of the finest new methods and strategies aren’t written down. And issues are at all times altering. Founders need to be taught from one another. And in case you are in a selected trade, just like the intersection of video games and tech, then the information and relationships are sometimes much more obscure — from selecting recreation engines to launching on Twitch to Discord, to what’s leading edge in AI — there’s only a lot. So there’s a possibility to deliver individuals collectively.
• It’s nice to help a big, numerous, set of first-time founders. After we see 1000s of startup concepts annually (and sure, it truly is that many), you inevitably find yourself making an attempt to again the tried-and-true founders which might be beginning their second or third firm. Or await traction. But a lot innovation comes from individuals making an attempt for the primary time. They’ve distinctive challenges — specifically quitting their job 🙂 — and likewise discovering cofounders, selecting the concept, and so on. By doing an accelerator the place there’s a bigger batch of corporations, you inevitably are capable of construct extra.
• Elevating cash is tough, however significantly so people constructing a brand new recreation. There’s usually fewer angel buyers and seed funds to be the primary greenback into the Video games x Tech intersection. And founders might not be as acquainted both — though very useful corporations like Roblox, Supercell, Riot, and so on have been began, the trade has largely targeted on recreation publishers doing income shares and minimal ensures to finance improvement. (Form of like music, or films). Enterprise capital isn’t as nicely understood or identified, and founders usually have a troublesome time connecting with angels and seed corporations. And for tech corporations that intersect with video games (like a subsequent gen Twitch, Discord, Unity, or that sort of factor) you usually discovered your self educating buyers, who won’t have the relationships and community contained in the trade.

From the founders’ perspective, the above challenges introduced main obstacles to constructing new startups. I’ve usually remarked that it feels a bit like 2005 the place there aren’t a whole bunch of angel buyers and dozens of seed buyers to get these new corporations off the bottom. There aren’t games-specific GPs at each main fund (whereas there are for SaaS!). And though Video games have unimaginable cultural impression, it’s not nicely understood as an funding space.

Nevertheless, in 2020 gaming was only one sector of a number of that I lined within the a16z client enterprise fund, and we couldn’t do a lot. Nevertheless, with the creation of GAMES FUND ONE final yr, we had been ready to consider these issues from scratch, and with it, we determined to run the experiment to resolve a few of these points, by constructing an accelerator that mixes schooling, group, capital and extra.

We rallied the group inside a16z to start placing collectively the concept, then introduced it earlier this yr. The consequence: 1600+ corporations utilized. Whoa. I ended up ending an electronic mail to the entire group saying, hey, that is all we’re going to be engaged on now 🙂 and it’s going to take a lot work we would all endure some burnout. However it’s going to be enjoyable. After which we began cranking.

An accelerator overview
Let me take y’all by some slides on how we describe SPEEDRUN to our founders.

First, we discuss SPEEDRUN as an accelerator as a result of we need to goal startups in the meanwhile of formation, actually pre-seed or seed. This has a ton of benefits, beginning with the truth that $500k goes a great distance. And we will bundle it with schooling, a group, and mentorship, so that individuals have a terrific expertise. It additionally permits us to share the businesses with a large set of angels and seed buyers, to construct the ecosystem.

After we ran the primary SPEEDRUN batch, it appeared like this:

The provide is sort of a slam dunk to new startups. It’s little bit of capital for a brand new group — $500k — and also you don’t want a product launched and even constructed. The worth prop is as a lot in regards to the capital as fixing the opposite issues I discussed earlier on connecting with a founder group, studying the leading edge, and so on. In order that was nice, and we had been happy by what number of corporations utilized.

One of many large classes from the primary batch was — oh man, it’s numerous work. We ended up taking your entire group and we principally all labored on SPEEDRUN for your entire two months we had been placing it on. If any of you’ve got been concerned in organizing particular person advertising occasions, this was like organizing 20+ in a row. This included speaker talks, social occasions, workplace hours, a kickoff and shutting program, a demo day with a whole bunch of attendees, and extra. It was numerous work, but additionally very rewarding.

Above: SPEEDRUN ended up focusing on founders who had labored both at video games corporations or in adjoining tech corporations. We had 1600+ apply for SPEEDRUN 1 (and we’re at 2000+ for SPEEDRUN 2) and we ended up deciding on a couple of dozen — so the conversion fee is nicely under 2%, extra selective than a prime college. However it wasn’t all primarily based on resume, we additionally had very attention-grabbing individuals who simply constructed actually cool merchandise with nice traction, and we funded them primarily based on their progress.

The best way it really works is fairly easy — somebody has to really undergo hundreds of functions 🙂 After which you choose out a subset to interview (in all probability <5-10% of the general), after which you choose down once more till you’re <2% of the full quantity. This clearly means a loopy variety of 15 minute interviews, and it’s a must to be very selective, but it surely’s additionally extremely enjoyable to listen to so many concepts and meet nice people.

Above: One of many main attracts was the superb audio system we had been capable of deliver into the combination. This included interviews and lectures from the creators/founders of Zynga, Valorant, Twitch, Supercell, King (aka the creators of sweet crush!), and far more. We additionally had a bunch of improbable lunches with people like Ben Horowitz and Marc Andreessen right here at a16z, which was enjoyable for all of the founders.

Above: This system we designed emphasised a structured program. This included frequent lectures on each side of making a brand new startup, from fundraising to selecting an thought to the whole lot else. We layered on social occasions and a ton of time to attach with different founders and workplace hours with the a16z group.

Above: The finale was a Demo Day in entrance of lots of an important and influential corporations and VCs within the trade. Over 80% of the startups had been capable of elevate further cash, and we helped coach them, gave them recommendations on the follow-on course of, and we ended up with a ton of nice co-investors.

Finish to finish, this system was slightly below two months, and by the top of it, the startups in this system had extra capital, had constructed a group, and realized a ton of latest abilities for the subsequent part of their journey.

Above: Finally, we declared SPEEDRUN 1 a hit and doubled down with a brand new program for 2024. We made a bunch of modifications, together with placing a full-time group to give attention to it. We elevated the size of this system, dedicated $75M of our video games fund in the direction of supporting the businesses, and made a ton of modifications each large and small to make SPEEDRUN 2 much more of a hit.

The aftermath
It was a blast to take an thought from 2020 that got here up throughout a brainstorm, and switch it into an actual factor a couple of years later as soon as we had the sources. The previous few quarters have felt probably the most like launching a brand new product as I’ve had within enterprise capital. It jogs my memory of the nice outdated days after I really designed and launched merchandise for a dwelling 🙂

As you may inform from my writeup on this, general we contemplate this complete effort a hit and it’s been a blast to place collectively. We’ll be doing this many extra occasions, and including this as one in every of our main investing motions — along with our common large checks into Sequence A and B corporations, in addition to later stage corporations, we’re now going to be working an accelerator! Kudos to your entire a16z video games group for making it occur, it was an enormous group effort.

Anticipate extra updates on this (and different enjoyable new initiatives at a16z) over time on this weblog. I’d like to share, as a lot as I can, my considering as we navigate the concept maze of beginning a brand new fund contained in the video games trade. Tremendous enjoyable. And eventually, in case you are a founder and to use to a future SPEEDRUN program, right here is the hyperlink to try this.

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