Why $830M Bitkraft Gaming Fund Is Bullish In Asia

With $830 million in assets under management, Bitkraft Ventures has made a name for itself by supporting early to mid-stage web3 gaming 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 smart mobile gamers and the nascent web3 gaming space.

Bitkraft, which has a portfolio of over 100 startups, announced today that it will expand into Asia with the addition of two new members: jin ohbefore president of Riot Games and CEO of Garena, will take the helm as partner; Johnathan Huang, a former director of Temasek, will serve as director.

Bitkraft currently invests 15% outside of the Western market, with the majority in Asia. Over time, the firm aims to develop a dedicated strategy for the continent with the goal of increasing investments in Asia to 20-25%.

Despite being a small team of two in the region, the fact that Bitkraft has experience in Asia gives it a huge advantage over many other Western gaming funds, Singapore-based Huang told TechCrunch in an interview.

The team also benefits from the complementary experiences of investors in the gaming industry. Oh, “he really knows the space very well as an operator… He’s very well connected and knows the ins and outs of creating a game and a platform and all the adjacencies with games,” Huang said.

“My experience is very investor-focused,” added the investor, who has been a lifelong player. “I spent two years in banking and made investments for the last seven years…Having that combination of trader and investor is a very, very powerful thing that we don’t see in a lot of funds.”

Oh and Huang will look to mainstream game projects in Asia, but will also allocate a large portion of their time to high-potential blockchain games. The typical company check size for initial investments in traditional stocks is $2-10 million; the checks are a bit smaller for web3 projects, ranging from $1 million to $5 million.

Investors are going after a sector that remains largely niche. Despite billions of dollars invested in web3 games, the genre mostly attracts crypto users for now.

Investments for blockchain games reached $7.6 billion in 2022, more than double the sum of a year ago, according to a research firm. radardapp; However, on average, just over a million unique active wallets connected to gaming dApps (decentralized applications) daily last year (crypto wallets are channels for gamers to access and exchange their in-game assets).

The gaming industry as a whole, by comparison, is nearing three billion users by 2023, research firm Newzoo forecasted.

However, Huang is bullish on blockchain-based gaming, arguing that over the past few decades, advancements in hardware have ushered in new innovation cycles, from arcade, console, PC to mobile gaming. The next innovation may not come from hardware but from the blockchain, which is essentially a database, he said.

“If you use the existing mental model of hardware driving innovation, then this doesn’t work. So at one point, I was thinking to myself… maybe we don’t need hardware to drive new models of consumption… The fact of the matter is: Is this new platform the one that will drive the next wave of innovation?

Given Bitkraft’s focus on web3, it makes perfect sense for the company to establish itself in Asia, where consumer appetite for blockchain gaming is huge. The success of playing to win Axie Infinity, for example, was made in Vietnam and amassed a loyal user base in Asian countries like the Philippines.

While purists and hardcore gamers may dismiss Axie as meaningless work with little creative value, Huang noted that it is “basically a card game” with a niche audience. “If you’re someone who enjoys Hearthstone, or Legends of Runeterra, or any of those strategic card games, then you’ll like it,” she said.

Most importantly, he recognized that Asia is fundamentally different from the West in that its Internet users are much more “open-minded.”

They are much more understanding [towards] new monetization models, new ways to play. This is where gotcha games originated, something the West was very much against. Us [Asian] they are very good at monetizing our players, and people are okay with pay-to-win, up to a point,” the investor said.

“I think the open mind basically makes the Eastern market a bit more receptive to Web3 games. In essence, there’s no immediate backlash, and people don’t feel like publishers are monetizing them, which seems to be the narrative playing out in the West.”