DeNA, the Japanese mobile social gaming company, announced yesterday its contribution of $27.5 million towards a new venture capital fund called Incubate Fund No. 1 Limited Partnership. With its investment, DeNA holds an 83% stake in the fund.
Based in Tokyo, the fund is designed to find and invest in companies working in open social media, with a preference for social gaming startups. According to the press release, DeNA will invest in game developers that can be included in their mobile gaming platform, Mobage-Town. The company says it is targeting app developers who are interested in both domestic and global markets, and the fund will be aimed largely at those gaming companies at the seed round.
“With this fund we plan to support the growth and development of the social gaming industry,” says DeNA CEO Tomoko Namba. “This will help to incubate and grow social games, a thriving market in Japan and America.”
What’s interesting about DeNA’s announcement is not merely the additional early stage funding opportunity for the growing social gaming market. DeNA’s press release makes it clear that its actions are a response to – and a way to differentiate itself from – its competitor Zynga. Describing its investment fund as part of an “epic battle of ‘Godzilla’ proportions,” DeNA goes to great lengths to compare itself to Zynga – in terms of its revenue stream, its market-share, and its lack of reliance on the Facebook platform.
DeNA contends that while Zynga has been using some of its major investment dollars to acquire social gaming startups (most recently Challenge Games), this new venture fund will help innovation in the industry-at-large, by emphasizing investment, not acquisition.
