Mastering the Gaming Industry: A Step By Step Guide with Daniel Blomquist (Creandum)
These masterclass insights have been written and compiled by Shauna Jin, Amiran Yaghout and Margaret Zhang.
During the Included VC Summit, Daniel Blomquist, Operating Partner at Creandum, shared his insights on how he entered a new industry and became an expert in gaming.
Before we begin, some highlights:
- 👾 Creandum’s gaming thesis
- 🔨 Building expertise in an unfamiliar industry
- 💜 Benefits of an industry focus
- 🤔 Factors to consider for investors entering a new industry
👾 Creandum’s gaming thesis
Creandum’s gaming thesis is built around Daniel’s unique experience and position operating out of the Nordics. The Nordics is home to game developers that have produced billion dollar grossing mobile games such as Angry Birds, Subway Surfers, Candy Crush, Clash of Clans, and Minecraft, to name a few.
Though gaming was then, and continues to be, a large and growing market, there were barriers for VCs to invest. For example, gaming is a “hit” business, that can be hard to sustain over time. With more than 1 million apps in app stores, gaming platforms are crowded. It can be hard to stand out or be able to “pick” the next winner.
Thus, Daniel had to develop Creandum’s gaming thesis tailored to the industry. Creandum’s gaming strategy covers five interrelated and overlapping points:
- Look for untapped opportunities — Find clear or less crowded areas to invest in. For example, when he was just entering the space, the Apple App Store made it possible for game developers to reach large audiences directly for the first time.
- Invest in stellar teams and company builders — It can take awhile to develop the hit game. Daniel’s approach is to bet on teams that can effectively combine creative talent with building great companies.
- Source proactively through the gaming community — Because the community is small and tight-knit, the best way to find up and coming teams and games is by proactively sourcing pipeline through the existing gaming community.
- Make small investments pre-traction — Once there are signals of success, it is too late to get in with companies. Thus, it is important to get in early pre-traction.
- Select a portfolio of high-potential investments — In addition to investing in stellar teams with company building potential, it is also important to be able to identify the games that can attract users or generate value or revenue. This validation can come from, e.g. feedback from early releases to the market.
“Usually, the first game that the team is working on when we make the investment will not be their most successful one. Rather, often it’s the 2nd, 3rd or 4th one they are developing.”
By combining these tactics with his knowledge, experience, and network, Daniel became known as “one of the few VCs that knows about games” and trusted advisor investor for some of the best game development brands.
🔨 Building expertise in an unfamiliar industry
Daniel doesn’t have a background in gaming and had to build his credibility by building his network from scratch. He started out by attending conferences like Slush to proactively reach out to the community. He also expanded his knowledge by deep-diving into the industry through extensive reading and spending time with gaming entrepreneurs. By doing so, he developed his expertise in, for example, key metrics in gaming and was able to engage to support founders in improving their games.
Having an industry focus allowed him to specialize, build trust, and act quickly on investment opportunities because he knows what good looks like. Throughout the years he has developed an eye for teams that are both stellar game developers as well as company builders. Games tend to be hits driven and consistency is key in order for teams to ultimately develop multiple hit games. He adds value by supporting the founder with company building. He doesn’t mess with their creative product, and lets them do what they do best: building engaging games.
His gaming focus also allows him to clearly position himself as the go-to investor when it comes to games and to build a strong network within a close-knit community. There are however downsides to having an industry focus. It can be pretty lonely, especially when starting out in an up- and coming sector like Daniel did with gaming. The feedback loop is long, so it might take a decade or more to see bets pay off and whether or not an industry as a whole will grow significantly. Finally, one can get a “sector fatigue” by spending years in the same industry as an investor.
💜 Benefits of an industry focus
Daniel shared that his sector knowledge gives him the advantage of “speed to conviction”. Daniel knows what good looks like in gaming. He can typically tell within a first interaction whether or not to invest. This is especially important when it comes to approaching companies pre launch. Similarly, his deep knowledge in gaming gives him an upper hand against other investors. He has built up his strong brand and positioning, and he is thus in place to benefit from the network effects of his industry expertise. Finally, an industry focus in multiple sectors means that Daniel can transfer his knowledge from gaming to his non gaming portfolio companies such as around metrics, mobile ads, and retention.
🤔 Factors to consider for investors entering a new industry
For investors considering entering a new space, the key is to consider the following:
- 🤔 Ponder the market opportunity — Is it really the next big thing, or is it like Cleantech in the mid-2000s? Beyond thinking about reasons not to enter an industry, it is also important to reframe the question and ask why not?
- ❤️ Examine your passion — Is this an industry you have a passion for? Is this an industry that you can stay curious about? The road can be long and lonely before you get feedback that your hard work has paid off.
- 🤝 Consider your approach — Can you develop a position to get the best deals? Daniel got his in by being curious and doing the work. He did extensive reading, went to industry events, and got to deeply know the community.
Entering a new industry can be daunting, but there are also benefits for having focus. Across his investing career, Daniel has built up a track record within the gaming industry. Though it was not easy, he has reaped the benefits of his industry knowledge and unique position.
About Daniel
Prior to being Operating Partner, Daniel focused on SaaS and mobile gaming companies as a Partner at Creandum. He’s currently working with Magmatic, Favro, Resolution Games and Futureplay and previous engagements include Peak, Neo4j, Small Giant Games, Omniata, PlayRaven, Armada Interactive, Nonstop Games, and Opbeat. Creandum is a cross-tech, generalist, early stage VC, known for being the first investor in Spotify.
About Creandum
Creandum is a leading European early-stage venture capital firm. Since 2003, Creandum has backed Europe’s most ambitious tech companies from seed to exit across a wide range of industries. Creandum’s advisory teams are based in Stockholm, Berlin, and San Francisco.
