CRV’s Saar Gur wants to invest in a new wave of games built for VR, Twitch and Zoom

Saar Gur is adept at identifying the next big consumer trends earlier than most: The San Francisco-based general partner at CRV has led investments into leading consumer internet companies like Niantic, DoorDash, Bird, Dropbox, Patreon, Kapwing and ClassPass.

His own experience stuck at home during the COVID-19 pandemic spurred his interest in three new investment themes focused on the next generation of games: those built for VR, those built on top of Twitch and those built for video chat environments as a socializing tool.

TechCrunch: We’ve been in a “VR winter,” as it’s been called in the industry, following the 2014-2017 wave of VC funding into VR drying up as the market failed to gain massive consumer adoption. You think VR could soon be hot again. Why?

Saar Gur: If you track revenues of third-party games on Oculus, the numbers are getting interesting. And we think the Quest is not quite the Xbox moment for Facebook, but the device and market response to the Quest have been great. So we are more engaged in looking at VR gaming startups than ever before.

What do you mean by “the Xbox moment,” and what will that look like for VR? Facebook hasn’t been able to keep up with demand for Oculus Quest headsets, and most VR headsets seem to have sold out during this pandemic as people seek entertainment at home. This seems like progress. When will we cross the threshold?

As a product-oriented investor, Facebook did build a mass-market headset with the Quest. I think the hardware is there. When the content options are a bit more robust, I think Facebook will have a meaningful business on their hands. That is what I mean by the “Xbox moment.” I think the content is coming. And obviously it is a bummer that the Quest supply shortages have limited the sales and growth of the category during COVID.

Are you looking to invest in VR-focused gaming studios, or only software layers around the games?

We are looking at a number of VR-focused studios.

Where do you see interesting innovation in the creation of VR games?

Similar to other platforms, we can expect branded games to do well, but those aren’t really investment opportunities for us (e.g. Alyx, Valve’s release). As such, we are looking for studios that can develop unique hits that uniquely take advantage of VR but stand out in fun and retention. When consumers buy a new device, they buy content to explore/enjoy the device. But few games that we have seen to date have had staying power in terms of ongoing fun and engagement.

Twitch viewership was rapidly growing before COVID-19 and has soared during it. The company has been working to expand its platform — which has many features for audience interaction — beyond just esports viewing. What opportunity do you see in Twitch’s growth for a new type of game?

In this environment, Twitch has been growing and expanding outside of games. We are looking at a number of companies in and around the ecosystem and would roughly put them in the bucket of “Twitch as a platform.” We don’t see Twitch engaging the ecosystem to build a platform… so I use those words lightly. But I do find the ecosystem rich with a lot of unmet needs and opportunities. As an example, we think that there will be some streamer-games — not built by Twitch — that may break out and become meaningful. By this, I mean games that streamers can play with their audiences, and some of these may become fun standalone games. Many folks have failed at this, but we think the market has evolved and continues to grow.

How worried are you about platform dependency for a gaming startup whose games are all on Twitch?

We are always nervous about building companies on other platforms. But the distribution from these platforms sometimes enable companies to grow very quickly and become standalone venture-scale businesses. As you know, Zynga started on Facebook, then evolved into mobile and desktop. Zynga’s dependence today on Facebook is a fraction of what it was in their early years. I don’t have the conviction in Twitch as a platform as I did in the social games era, but I am curious enough to meet with companies.  

How did the COVID-19 crisis highlight new opportunities for you around entertainment within group video calls?

Folks are looking for ways to connect with others. Kids in particular are not great at conversation and need games as a way to interact with other kids and adults. If you look at the games on the Facebook Portal for example, this is a great example of giving kids a way to interact with their grandparents. I think this area is intriguing. Think distributed escape rooms or something.

Do you think the startup opportunity there is to build games on top of existing video-calling platforms like Portal or Zoom, or to build a new platform specifically for this use case?

We live in a different world today with COVID than we did a few months ago. For game designers, I think this creates a lot of new opportunities. Customer acquisition will always remain a challenge and so we are always looking out for teams that can leverage fast-growing services like Zoom.

Which games within these three themes — VR, Twitch, video-calling platforms — have you enjoyed most thus far?

I would love to say VR. But in a COVID world, I think our need for personal connection using technology is higher than ever before. Most of the VR experiences don’t connect us with our close friends and family. I hope that we can have some hits that drive more headset purchases and let us build more meaningful connections and memories in VR. Until then, I think it is old tech that is winning. My favorite experiences have actually been playing traditional games like poker, Pictionary, etc. over Zoom.

I realize that was not a gamer answer, but it is COVID-specific.