With $830 million in assets under management, Bitkraft Ventures has built a name for supporting early and mid-stage web3 games and other immersive technologies. After eight years of investing primarily in the West, the company is expanding its footprint into Asia to capture the continent’s savvy mobile gamers and fledgling web3 gaming space.
Bitkraft, which has a portfolio of more than 100 startups, today announced it is expanding into Asia by recruiting two new members: Jin Ohearlier president of Riot Games and CEO of Garena, will take over as partner; Jonathan Huang, former director at Temasek, will serve as principal.
Currently, Bitkraft invests 15% outside the Western market, most of it in Asia. Over time, the company aims to develop a specific strategy for the continent with the aim of increasing investments in Asia to 20-25%.
Despite being a small team of two in the region, the fact that Bitkraft has boots on the ground in Asia gives it a big advantage over many other Western gambling funds, Huang, who is based in Singapore, told in an interview todaybusinessupdates.com.
The team also benefits from the complementary experiences of the game industry investors. Oh “really knows the space really well as an operator… He is very well connected and knows the ins and outs of building a game and a platform and all things related to gaming,” Huang said.
“My background is very investor-oriented,” added the investor, who has been a lifelong gamer himself. “I’ve been in banking for two years and I’ve invested for the past six years… That operator-plus-investor combination is something that’s very, very powerful that we don’t see in many of the funds.”
Oh and Huang will hunt down conventional gaming projects in Asia, but will also spend much of their time on high-potential blockchain games. The typical company check size for traditional equity seed investment is $2-10 million; the checks are slightly smaller for web3 projects, ranging from $1 million to $5 million.
The investors are targeting a sector that is still a niche. Despite the billions of dollars poured into web3 gaming, for now the genre mostly attracts crypto-native users.
Blockchain gaming investment to reach $7.6 billion by 2022, more than double what it was a year ago, according to analytics firm DappRadar; however, on average last year just over a million unique active wallets were connected to game dApps (decentralized apps) (crypto wallets are channels for gamers to access and trade their in-game assets).
In comparison, the gaming industry in general is approaching three billion users by 2023, research firm Newzoo reports. predicted.
Huang is nonetheless optimistic about blockchain-powered games, arguing that hardware breakthroughs over the past few decades have led to new cycles of innovation – from arcade, console, PC to mobile games. The next innovation may not come from hardware, but from blockchain, which is essentially a database, he said.
“If you use the existing mental model of hardware driving innovation, this won’t work. So at one point I thought to myself… maybe we don’t need hardware to power new consumption models… The bottom line is, is this new platform going to power the next wave of innovation?”
Given Bitkraft’s focus on web3, it makes perfect sense for the company to base itself in Asia, where consumer appetite for blockchain games is huge. For example, the play-to-earn hit Axie Infinity was made in Vietnam and built a loyal user base in Asian countries like the Philippines.
While hardcore, purist gamers might dismiss Axie as a piece of mindless work with little creative value, Huang pointed out that it’s “essentially a card game” with a niche audience. “If you’re someone who likes Hearthstone, or Legends of Runeterra, or any of those strategic card games, you’ll like it,” he said.
Most importantly, he said, Asia is fundamentally different from the West in that its internet users are much more “open-minded”.
“They embrace a lot more [towards] new monetization models, new ways to play games. This is where gacha games came from, something the West was very against. We [Asian] are very good at monetizing our players, and people are okay with pay-to-win to some extent,” the investor said.
“I think open-mindedness actually makes the eastern market a little bit more receptive to Web3 gaming. Essentially, there’s no immediate backlash, and people don’t feel like they’re just making money through the publishers, which seems to be the story playing out in the West.