GCube Ventures to invest in game companies at all stages

The $50 billion video game industry is rife with opportunities, so it only makes sense that someone is creating a venture capital firm that will focus on investing in all stages of the global game industry ecosystem.

VentureBeat has learned two high-profile veterans have created GCube Ventures, a Los Angeles investment firm that will put money into every stage of the industry from small start-ups to big public companies. Its managing directors are Shiraz Akmal, a former executive at game publisher THQ, and Jawad Ansari, a global investment manager.

The effort is going to be ambitious, touching just about every aspect of video games, Akmal said in an interview.

“The opportunity is not an industry consolidation but a transformation as online is forcing companies to change what they do,” Akmal said. “At GCube, I can help multiple companies and fuel the growth of the global industry in a way I couldn’t do at THQ.”

Online business models are taking root in video games, which traditionally have been a console-dominated business where games are sold for $50 to $60 each in retail stores. Now companies are making everything from middleware to outsourcing tools that enable customers to move to online business models.

Akmal (pictured) said that traditional investing has focused on the developers who create the games or the publishers who get them to market. Those areas are just a small part of the industry, he said. New territories for investment include digital game distribution, training schools for game creators, game development middleware tools, and the convergence of games and social networks that are helping games reach wider audiences, he said.

The company will focus on both the U.S. and Asian markets. Ansari said in an interview that the firm will have strategic partners and strategic co-investors. Those unannounced partners will include traditional venture capitalists as well as big media companies. Ansari said that the company will announce its first investment deals in the coming weeks.

Akmal has 20 years of experience in the video game industry. For the past nine years, he worked at THQ and in the last three years he focused on building global production teams. He pioneered the practice of outsourcing tasks in game development to places with lower costs or more expertise. His last position was vice president of operations and production development. He said that it’s hard to start a brand new console game development company now, but there are plenty of untapped opportunities, such as funding schools for game developers or companies that can create local game industries in places such as the Middle East.

Ansari, meanwhile, has 15 years of investment management experience. He was the founder and former general partner of Miven Venture Partners, a $100 million fund focused on media and consumer investments in the U.S., China and India. He is also the founder and former CEO of Corporate Metrix, a diversified investment firm with managing $3 billion of assets.

On each deal, Ansari said GCube may bring in a series of partners. He said the company will disclose details of its own VC fund at a later date. The whole point of the partnership between Ansari and Akmal is to put together the expertise in games and finance.

“Our investments will be stage agnostic,” said Ansari. “We focus on interactive entertainment, looking for companies with hidden value. We can go from seed stage to a roll-up that involves a massive dollar amount.”

The company is based in Los Angeles, where Akmal noted there are a lot of game entrepreneurs. It will also have an office in San Francisco. Peter Leahy has also started a game incubation company in San Francisco. But Akmal and Ansari said the sector has been ignored by the venture industry for a long time.

The industry has had its share of big financial players that came into the industry to make big investments. That includes the now-defunct Capital Entertainment Group that tried to create a new kind of Hollywood-style game production company as well as Elevation Partners, which bought the game development houses BioWare and Pandemic for $400 million and then sold them to Electronic Arts for $775 million.