Chinese VC: Mobile game investments still in early stage of a boom

Above: DCM general partner David Chao (left), WestSummit Capital managing director Raymond Yang (center), and Bertelsmann China Corporate Center CEO Annabelle Yu Long talk about mobile games at the China 2.0 startup conference today.

Image Credit: Dean Takahashi/GamesBeat

PALO ALTO, Calif. ¬†— For the past couple of years, investments in mobile game companies have been hot. But a slowdown in exits and Zynga’s weakness in the stock market hurt the pace of acquisitions in the market.

But Raymond Yang, the managing director at China-focused WestSummit Capital, said today that he believes that mobile gaming startups and investments are still in an early stage, particularly in China.

“The big boom trend is in the game space,” Yang said at the China 2.0 startup conference at Stanford University today. “It’s crazy. There are so many companies coming out in this space.”

Yang said he is still evaluating whether market is too much of a bubble. On that front, on a scale of one to 10, he said it’s about a three. That means that it is still a ripe area where VCs can invest and get a favorable outcome.

“I still believe this is relatively early,” Yang said.

Yang’s company invested in Twitch, a game livestreaming company based in San Francisco, this week as part of Twitch’s $20 million round. WestSummit has also invested in Unity Technologies, maker of a popular cross-platform game engine that works for both home game consoles and mobile devices.

One of the most interesting areas is for games on social messaging networks. China’s Tencent has gained more than 400 million users for its social mobile messaging network in the past two years, and it recently introduced games on that network. The enthusiasm for games on that platform parallels the popularity of games on mobile messaging networks Kakao in South Korea and Line in Japan, said David Chao, the general partner at DCM.

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