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The Emerging Gaming VC Landscape with Marvin Liao

If you are scanning the top charts in mobile gaming, chances are a decent number of these games are published by studios in Eastern Europe. Top tier development expertise and a passion for making great games are key factors in driving rapid expansion and revenue growth across the region.

Once known as a market where studios outsourced work for hire projects, developers have steadily shifted, over the last several years, to self-publishing their own games. In this episode of The Hive — our podcast, hosted by Peggy Anne Salz, that zooms in on growth, UA, and monetization —  Marvin Liao, board member and partner at GAMEGROOVE Capital talks about the opportunities and challenges of this up and coming geo.

For many years, game publishers turned to Eastern European developers to help on their development projects. These deals helped develop a wealth of talent in the region, allowing developers to grow their skills while not assuming any of the financial risk. But eventually, the freelance talent doing all the hard work realized it was time to seek some of the glory and go it alone — self-publishing their own games.

Teams are a top priority for investors

Eastern Europe is an exciting market with plenty of opportunities, but it’s important to know what to look for before pouring money into a new region. And Marvin should know — GAMEGROOVE, based in Kiev, “is a holding company. So we are an operating company where we do some investments off the balance sheet, but we also have a lot of different little IP assets in different studios.” In other words, sometimes the company is fundraising for its own studios, and at other times they are investing on their own. So what does the GAMEGROOVE team look for?

Marvin says, “Teams are really, really important.”

“So, for example, we're pretty strong on the mid-core area, but honestly, one area we're looking very closely at is hypercasual.” Marvin says. “It’s one of the fastest-growing areas, we don't yet have a play in the hypercasual area. So we're looking at that as do we go build a studio ourselves? Or maybe we find a studio or a team that's actually really good on the ground and we can help supercharge them.”

The importance of UA experience

If it was all about teams, though, we could talk about hiring instead of investment. So what else do Marvin and his team look for in investment opportunities?

“I actually think user acquisition is really, really critical,” he says. “So do they have good user acquisition chops or will GAMEGROOVE have to rely on their own teams?” 

He adds, “I come from the US, and user acquisition knowledge is really good over there. There is a bit of a gap in this region, but we’re catching up fast.” 

There is a lot of generalist VCs coming to this space, because they're like, ‘Oh my God, there's a big opportunity. But without really understanding the dynamics of this industry and the specifics of this industry, I think there's going to be a lot of tears shed on both sides.

Marvin Liao

But why is UA so important? Why can’t GAMEGROOVE simply inject its own expertise? 

“VC money… it's like rocket fuel, right? But not every company is a rocket ship, right? And so what ends up happening is they end up taking this rocket fuel and putting it in your car and you're like, ‘No! No!’” If you give serious VC dollars to a company that just isn’t ready to use it wisely, you can end up doing more harm than good. 

“There is a lot of generalist VCs coming to this space, because they're like, ‘Oh my God, there's a big opportunity,’” Marvin says. “But without really understanding the dynamics of this industry and the specifics of this industry, I think there's going to be a lot of tears shed on both sides.”

But there is an alternative to rocket fuel! “It's fascinating ... this idea of using ... debt to fuel user acquisition. And it's actually just better for you, right? Like, why are you going to give up your valuable equity, when you can actually take [advantage of] AR (Accounts Receivable) financing or other debt financings probably is a better mechanism.”

To learn more about Marvin’s thoughts on growth in the region, tune in to the entire conversation below. 

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