Comment & Opinion

LVP's Harry Hamer on helping to scale truly transformational companies

“We look to provide our portfolio with an unfair advantage, by being more than just an investor.”

LVP's Harry Hamer on helping to scale truly transformational companies

Harry Hamer is an associate at LVP, a seed venture capital fund that focuses solely on the games and interactive entertainment space, and has been going for the past decade.

They are among the earliest investors in Supercell, Unity, Playfish, NaturalMotion and a host of other amazing games companies that have created over $42bn in value.

Hamer joins us for Investor Connector at this month's Pocket Gamer Connects Digital #6, a fringe event which pairs pre-selected developers who are seeking funding with investors.

We caught up with Hamer ahead of the event for his thoughts on investment and how the current pandemic has affected anyone seeking investment. What kind of companies/projects are you interested in?

Harry Hamer: We invest into anything within the gaming ecosystem, so that can range from the developers and publishers of the games themselves, to the platforms that connect and empower users, to the technologies that underlie gaming.

It isn’t really too early for us – we’ve invested into founders where all they have is an idea and a pitch deck to their name. We love coming in pre-product or pre-metrics and getting our hands dirty: if anything, we believe that a lot of the value of a company is crystallised during these early stages. We’re looking for amazing and ambitious teams who have the capacity to change the industry.

What are the key advantages for founders when they raise investment from your company?

I think it’s important to note that founders should seek more than just money when approaching a VC, especially at the early stage where product, company strategy, hiring and future fundraising are all less certain.

A pitch deck is usually helpful but not always necessary. I would use it as a launchpad for discussion.
Harry Hamer

That’s where we look to provide our portfolio with an unfair advantage, by being more than just an investor. LVP is a team of industry veterans with over 56 years of operational experience. As entrepreneurs and operators we have been part of building and selling companies such as EA, Playfish and Criterion, and delivered repeat hit franchises spanning generations of platforms and industry transitions (and have shipped hundreds of games collectively before pivoting into investing).

Drawing from that background, we look to leverage our extensive network and operational expertise to help scale truly transformational companies. Arguably, one of our greatest assets is our portfolio. I think in the same way that VCs do reference checks on businesses, I recommend founders do reference checks on VCs. We’re also looking at other ways of leveraging our portfolio community, including a platform to share institutionalised knowledge (currently in beta).

Do you need a pitch deck, and if so, what information should a founder be sure to include to interest you enough to want to know more and have a meeting?

A pitch deck is usually helpful but not always necessary. I would use it as a launchpad for discussion, and for the first meeting, I always try to cover the team’s background in detail. Ultimately, we’re expecting (by probability) that the first game or product will fail and therefore, it’s as much a team bet as anything else. Therefore, what are you trying to build that can stand the test of time?

Then more holistically, we tend to use five main pillars of evaluation:

  • LVP Fit (Is it a seed or earlier round into a gaming company that has sufficient ambition?)
  • Market Opportunity (What’s the thesis? How do you view the market and do you have any key insights or points of differentiation?)
  • Team (What is your background? What is your team composition and required domain knowledge for your product? Are you prepared to run lean and wear many hats early on?)
  • Product (What’s your process in creating and validating your product? How are you planning to monetise it?)
  • Financial Opportunity (How are you planning to scale and how much are you budgeting for that? What is the prize if you do succeed?)

So the more you can do to clarify the points above, the better.

What do you expect to learn from a founder at the first meeting?

This relates to the question above, but I think the main two points I want to clarify are always:

  • why this company/strategy; and
  • why you/your team?

All of the supporting information needs to serve those two main queries. In general, I’m looking for a clear and compelling pitch that exposes a big opportunity in the sector that leaves us wanting to hear more.

Could you give any advice for developers or teams for pitching over video calls?

I would say good hygiene as per usual: be prompt, have your materials ready but also try and liven up the experience, as we're all staring at screens for 10 hours straight.

Aside from that, the main skillset is the same as pitching in person: knowledge of the product and market, clarity of thought and salesmanship (though avoid straying into immodesty).

How has the investment cycle changed as a result of the Covid-19 pandemic, typically, how long is it taking to close deals?

I think we saw a brief pause early on, as many investors were uncertain about how COVID might affect their funds and portfolio companies; then, discussions jump-started at the start of last summer, with the time between first meetings and term sheet reducing significantly.

I don’t think we’ve been as affected as later stage investments in the speed of deals closing, but there’s definitely been increased VC interest in gaming in general. Where possible, we like to build up a relationship with the founders over a few calls but when necessary, we are able to act quickly; one of our investments during the pandemic only took a week between the first meeting and term sheet.

What trends do you see emerging in games over the pandemic that are likely to persist post-pandemic? Conversely, what trends do you think are short term?

I think that the cat’s out of the bag when it comes to games becoming mainstream: not only in terms of reaching an inflection point of cultural relevance, but also as a canvas for social interactions. People are hanging out on Roblox, Fortnite and Warzone and I expect that to continue even after things start to open up.

It seems logical that games will augment and become more deeply ingrained in real-life activities such as live events.
Harry Hamer

For us, it’s seeking companies that can enable new social experiences for games. From this, it only seems logical that games will augment and become more deeply ingrained in real-life activities such as live events as well as other verticals like ecommerce and education.

As for more ephemeral trends, I expect engagement and overall gaming revenue to fall back slightly or at least, decelerate in its rate of change. This is to be expected when people aren’t at home 24/7 in various forms of lockdown.

Similarly, I wouldn’t be surprised if a number of non-gaming investors are burnt as they attempt to understand and gain exposure to the games industry. I hope this trend doesn’t play out – as more capital flowing into the industry is always preferred – but this has happened before (for example during the early growth days of F2P mobile games).

Want to meet Harry Hamer at Pocket Gamer Connects Digital #6?

You could meet Hamer and many more investors online next month by signing up for Investor Connector at Pocket Gamer Connects Digital #6. So if you’re seeking funding, sign up here.

Please note you can only sign up for the Investor Connector if you’re a registered attendee of Pocket Gamer Connects Digital #6. Book your tickets now and you could save $220 with our Mid-Term offer.

We’re also allocating a limited amount of free passes solely for small indie developers, enabling them to meet investors and publishers, and learn from the industry’s biggest names. If you think you qualify, sign up here.