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Veteran game investor Jon Goldman has raised a $50 million venture capital fund dubbed Tower 26 to invest in extended reality startups.

The firm will invest in virtual reality games and related areas like the metaverse, metaverse, the universe of virtual worlds that are all interconnected, like in novels such as Snow Crash and Ready Player One.

The fund is named after the Tower 26 lifeguard tower in Venice, California. Goldman went there frequently during the pandemic to make calls and work while the tower was out of service. It’s where he got to do some thinking. (Goldman is going to moderate a panel on VR gaming at our GamesBeat Summit 2022 event on April 26 to April 28).

“I got to do calls there all day long, and it was pleasant part of the experience,” he said.

Goldman is still managing director (actually Formagio Grande) at Skybound, the maker of The Walking Dead franchise and other entertainment. He is also a board partner at Greycroft and runs the GC Tracker Fund, his earlier fund that is now in its late stages. That position gives him visibility across multiple industries, but he uses the smaller funds to focus on passions like VR.


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Before going into investing, Goldman was a founder, chairman, and CEO of Foundation 9 Entertainment, the largest independent videogame developer in the world at the time with 11 studios and 1,000 employees. He sold the company in 2006. Foundation 9’s studios created hundreds of video games based on top-tier global brands such as Star Wars, The Matrix, The Simpsons, and Lord of the Rings. 

“I’ve got a lot of different things going on, which can help me be an effective venture partner or a partner to portfolio companies. I’m still active in entertainment and still active in video games,” he said.

He sees the performance of VR titles at Skybound and has a lot of connections for his CEOs and their teams.

“It turns out that when you help people early in their careers, it turns out that it is good for you too,” he said. “Supporting entrepreneurs for 20 years or so has been like a pay-it-forward thing.”

Jon Goldman is founder of Tower 26 and a board partner at Greycroft.

The GC Tracker Fund was a $15 million fund for seed investments in gaming VR and AR. He noted that about 30% of the fund is still viable despite the fact many VR companies went out of business during the trough of disillusionment that follow the bumpy launch of the VR headsets in 2016.

Goldman found some companies that grew in valuation like Wave XR, Sliver TV, and Applied VR. Goldman stopped doing investments in VR and stopped after a while because the installed base of VR headsets wasn’t there yet. While it wasn’t a standout success with unicorns in the portfolio, the fund validated the investment approach of focusing gon themes such as VR, Goldman said. And it enabled him to raise a second fund.

The new fund will focus on some larger investments, with a focus on seed as well as follow-through investments. And with more than 10 million VR headsets sold to date, Goldman believes VR is getting closer to a critical mass of consumers.

“We’re going to focus on VR gaming and the metaverse, but mostly VR gaming,” he said. “Now there are more seasoned entrepreneurs and game makers getting into the field, whereas back in 2015 it was a lot of newbies who maybe had never finished a game. We’re getting real game makers doing things now.”

VR game makers still face a grind in terms of selling enough games to keep going. But they’re doing better in terms of sales for games.

“I see royalty reports and so I know the growth is real,” he said.

Goldman still reviews traditional games for investment as well, and noted he invested in Flavourworks, an interactive movie studio led by Jack Attridge.

As for what he is looking for, Goldman said, “The main thing I’m looking for is entrepreneurs who have closed off games before, and ideally, at least critically acclaimed games, if not commercially successful. Somebody who has delivered a game with a good Metacritic rating and shows that they know how to speak to the fans.”

He added, “You can always figure out how to make money. But you can’t always figure out how to make something good. And I’d say in my last portfolio, for better for worse, the newbies had trouble closing off games. If you haven’t been in the fire of production, and really made the hard decisions about whether it’s ready to ship or not, it doesn’t necessarily come to you the first time out the gate.”

That means that Goldman looks for strong technical leaders on a founding team, as well as a good CEO. Good CEOs realize they have to be good leaders and deal with a lot of details in hiring great people, pitching publishing deals, setting up payroll and finance, reporting to investors, and recruiting people.

“On top of that, you have to make a great game that is a great experience,” he said.

Goldman believes that Meta is going to expand its installed base for the Meta Quest 2 and follow up with a lighter and better headset. He believes Sony will do great with its PlayStation VR headset, and new entrants like Pico and Apple could also cause a stir in the market. Even if Apple’s device doesn’t sell extremely high numbers, it will push the industry forward, Goldman said.

Goldman said he believes blockchain games will be interesting, but it’s not going to be his focus. He is aiming for investments all over the world.

As for the boom in gaming, with so many game-focused funds out there, Goldman feels good about focusing on VR.

“If you have to have venture-style returns, I think it’s a really tough market,” he said. “I want to focus on a place where I think I can succeed.”

He warned that some companies may feel great about getting a $30 million valuation, but they may find that they can’t raise any more money after that because their milestones were too ambitious and they couldn’t hit them.

“The current structure of venture financing and games is reaching that point where it’s a very competitive environment for entrepreneurs and great teams,” he said. “And what that means, ironically, is that you can’t make a mistake as an entrepreneur. I’m looking to compete in a little more forgiving environment so that the companies have a chance to make some mistakes and still succeed.”

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