Korean game companies have been widely welcomed in China since The Legend of Mir 2 was released in 2001. The game was the most popular MMORPG (Massively Multiplayer Online Role Playing Game) in China in 2002 and 2003, with over 250,000 simultaneous users being reported, with claims of 120 million players worldwide. Following this pioneering effort, more Korean companies entered the Chinese market, introducing online and mobile games.
This trend was continued by internet giant Tencent as the company started to publish Korean-based games in China. In fact, with Tencent investing in overseas companies, Korean games were a dominant part of the list with many of the most popular games on Tencent’s QQ platform coming from Korean. CrossFire, one of the first free first-person shooters (FPS) released in China in 2008, recorded a peak 4 mio. concurrent users in 2012, with Tencent its exclusive agent service company. In an effort to retain its position as the dominant publisher of Korean games, Tencent established a partnership with Capstone Partners in 2010 to co-invest in Korean gaming companies.
Capstone Partners and Tencent
Capstone Partners LLC positions itself as one of the best ways for Korean startups to reach out to China, and boasts the largest fund for investing in early stage startups. Since its establishment in 2008, Capstone Partners has created four US$30-million sized funds with Tencent and Korea Fund of Funds, with a total fund size of US$200 million. Cutting the starting line by co-investing in seven Korean gaming companies, Studio Hon, Reloaded Studios, Topping, Nextplay, Redduck, Eyedentity and GH Hope Island, there are now more than 20 companies in the China market through the help of Tencent.
“We appreciate our collaboration with Tencent and are trying to provide promising Korean game companies to be introduced to China market,” general partner Eunkang Song said.
The VC also runs open seminars to provide Korean game companies as well as internally running a seminar for its portfolio companies to provide a China market overview. The company led a mobile gaming seminar in Korea on June 2014, inviting 30 Korean startups interested in entering the Chinese market. The VC also claims to have gained a better grasp of the U.S. market by collaborating with global accelerator Sparklabs, as the two occupy the same Maru180 building.
It is not easy to tell from the early stage if a game will gain real interest from a Chinese audience. However, the VC has regularly successfully estimated a team’s capacity and future prospects. “Out of several dozen game companies in Korea, some companies stand out with a different approach to the market. When a company pitches and presents the demo, we can tell if the team is skilled, which is closely bound up with the future success of the game.”
Half of Capstone’s portfolio companies are game companies, while they also invest in IoT, big data and mobile commerce companies. Promising game companies include FLINT, the maker of mobile game ‘Be a Star’ for Korea’s dominant messaging app Kakao, and Gamevil, the maker of ‘Kritika‘ that gained strong attraction from China following its release three months ago. BLUEPIN, a mobile app book solution specializing company, achieved some success by co-developing education app KidsWorld with Tencent. Other mobile startups include VCNC, the maker of couples app Between, and Drama & Company, the maker of business card app Remember.
“The Korean startups’ strong point is that they optimize the culture code to spread out across Asian countries,” Song pointed out. “As you look into a Korean startup scene, you can find out a company that can be actively embraced by a Chinese audience.”
Image Credit: ShutterStock, Capstone Partners
Editing by Mike Cormack (@bucketoftongues)