First, some background. In Q2, 2016, I started thinking about some theories for our investment strategy here at LVP:
- Experienced Teams: The thought here being that a) teams of early employees will leave very successful startups together and look to start a new company or b) founders who have had a successful exit will look to start a new company because they want to prove they can do it bigger and better next time around. This was an expansion of our thinking on backing great founders starting companies in the game ecosystem.
- Influencer Marketing: The whole Creator category was growing quickly in importance and influence in driving user acquisition in the game sector. My thesis was there was a real opportunity for the right team to build a company in this category. Our team at LVP is very aware of the billions being spent on user acquisition every year and this is growing year on year with the growth of the mobile game sector.
So with that in mind, I was researching the Influencer category to understand what was happening and to identify potential investment targets. Then in mid June 2016, I looked at one of the posts our firm had posted recently on our Facebook page. I saw a name that I did not recognise, Andrew Allison. So I clicked through to his profile and saw that he was a cofounder of Discovry. Then I clicked through to the website for Discovry and saw that they were doing influencer marketing for mobile game developers. Then I went to Andrew’s linkedin page (he is the company CRO) and saw that he had worked at Vungle for a few years. From there I clicked to Chris Brownridge’s linkedin page (Chris is a cofounder and the CEO) and saw that he had also worked at Vungle for a few years around the same timing as Andrew. This was interesting because I knew that that Vungle was the largest independent mobile video ad business at that time (turns out they made their revenue number of $300m public earlier this year with this press release).
I sent Andrew a message on Facebook messenger and we connected and our discussion started. Through the early conversations we had, I learned that they were in discussions with another ex-Vungle employee, Tony Chong, who ended up joining as their third cofounder and CTO.
They were revenue generating already which validated some of the potential but they were running campaigns in a manual way to build their customer relations and learning while their tech platform was being built. The early vision then was to build an automated platform to make it easier for advertisers to spend more on UA with influencers and measure it easier.
After many calls with the team, reference calls on each team member plus also with current and potential clients and most importantly meeting the team in person, we were confident that the team was very strong. They knew what they needed to do and they knew what they did not know plus they had experience working together at Vungle. Each team member brought different strengths to the table which complemented each other. The team had history together as they all worked together at Vungle and knew each other well. They already had close and trusted relationships with a few live customers and also with many potential customers who they already knew.
In December, 2016, the company closed their seed round led by LVP (I joined the board) with some angel investors including Jon Zweig, the founding CEO of AdColony and AppOnboard (LVP is an investor there too thanks to the intro from Andrew at Gawkbox in early 2017). The key part of our decision to invest was the team. The combination of their:
- experience working together at Vungle which was a very successful company in the adtech category
- existing relationships with game developers
- passion & determination to win
- speed of decision making
convinced us this team would be able to figure something out and find a way to win. It was very early and there were a lot of unknowns particularly around what their platform would be but this was the right team in the right category at the right time.
Five weeks after closing the funding round, we had the first board meeting and the team presented their idea to pivot a bit to a sponsored tipping platform for creators. My initial thought was that this was an amazing idea but where did it come from and wow that was quick. Now I was really impressed with the team! Turns out they had basically locked themselves in the office until they came up with the right platform business model.
It was this idea that became Gawkbox which is now the company name. Gawkbox is a monetization platform for live streamers. Fans can tip streamers by downloading an app or game and reaching new milestones within the game, such as levelling up a character or completing an in-app challenge. The app and game developers will then tip streamers on the fans’ behalf, allowing fans to show their loyalty for the streamer for free. GawkBox enables app and game developers to reach and engage with a receptive audience with the ability to measure the results while also enabling streamers to develop a new source of income that will make a material difference. The video below explains best about Gawkbox and sponsored tipping:
So why does this matter? The chart below from Kleiner Perkins says it all. China is leading the world in innovation in live streaming and this is driving revenues. Live streaming in China is driving more revenue per hour than all other types of entertainment combined!
Connie Chan, a Partner at Andreessen Horowitz wrote an insightful post on live streaming in China. There are now more than 150 live streaming apps just in China and half of the population are using at least one app. The really interesting estimate is that 5% of viewers are contributing 70% of virtual gift revenue. Gawkbox could enable the other 95% of viewers to sponsor tip their favorite streamers.
On Aug 10th, 2017, Gawkbox announced their Series A round led by Madrona Venture Group which includes follow-on participation from LVP as well as funding from Erlend Christofferson (Erlend was one of the first hires at Supercell where we were also invested in the seed round) and others. Daniel Li from Madrona joined the Board and here is his post on why they invested.
The Gawkbox team has achieved a lot quickly thanks to support from a growing number of streamers, fans and app & game developers. But this is just the first stage of a grand plan.