Megadeals in Gaming Represent Talent Boon for Startups, VC Says

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Posted on May 30 , 2024 By TPO Admin

Consolidation in the gaming industry will yield a bonanza of talent for startups–especially those in the blockchain sector of gaming, says Paul Hsu, founder and chief executive of venture firm Decasonic.

This month, Microsoft Corp. said it would buy Activision Blizzard Inc., in a deal valued at $75 billion, while Take-Two Interactive Software Inc. announced a deal worth roughly $11 billion to acquire Zynga Inc., where Mr. Hsu worked from 2009 to 2015. In the first three quarters of last year alone, the value of acquisitions in the sector totaled $35.1 billion, beating annual levels over the past decade, according to DDM Game Industry Services LLC, which tracks market data.

“I’m so excited about how much creative product talent will spin off,” Mr. Hsu said of employees at big companies whom he expects to bolt post-acquisition.

Mr. Hsu said he has already started talking with people he knows who are considering career moves. Those who jump ship are likely to go into blockchain-based gaming, a sub-sector that is taking off among developers, venture investors and gamers, he said.

Mr. Hsu also expects to see large companies do more “acqui-hires,” or purchases of startups in order to get hold of their founders and employees in the bargain. That trend makes a decision to invest in a quality team that much easier. “If the acqui-hire value is far above your entry value, it’s a very attractive risk-reward,” he said.

Both trends work for venture capital, he noted.

Decasonic, which is based in Chicago, just closed its first fund with $48.8 million to invest in blockchain startups. Since the fund held its first close in August, the firm has made a dozen investments. The fund closed with capital from 88 investors, including the Pritzker Organization, Drive Capital and others.

The many “eights” in that fundraising, Mr. Hsu said, are a nod to his Chinese immigrant parents, who believe in numerology; the number eight is considered particularly lucky.