Hiro Capital launches new gaming and metaverse fund

Hiro Capital II will invest in segments such as gamified fitness, esports and creator platforms, according to a press release.

The new fund has more than double the size of its predecessor and a similar LP base, consisting of strategic and institutional investors and family offices, according to founding partner Luke Alvarez.

Both Fund I and II have an 8-year life span with commitment periods of 4 years. Hiro I is almost fully deployed after two years, and Alvarez said the same is expected for Hiro II.

The VC, which was founded in 2018, has made 21 Series A and B round investments in the games and metaverse space.

Speaking to Unquote, Alvarez said: "Our deal pipeline is strong. We have got about 10 deals in progress and we look at about 4,000 deals a year but invest in less than 1%. We will be announcing the first few deals in April."

The firm has a UK, Europe and Israel bias, Alvarez said, adding that a third of deals are expected to be made in the US and 10-15% in other markets such as India.

Hiro Capital deploys initial tickets of around EUR 750,000-EUR 10m, with follow-on investments of around EUR 10m, totalling close to EUR 20m in a single business. In seed rounds the firm invests around EUR 750,000-2m; in Series A rounds, close to EUR 2m-6m; and EUR 7m-EUR 15m in Series B. Alvarez explained that seed stage targets will be pre-revenue; Series A ones will be live with their techmnlogy; and at Series B stage they should have 7-8 figure revenues.

The firm is open to co-investing, Alvarez said, adding that: "As a specialist fund we are a good partner to have alongside the more generalist VCs. We bring specialism in video games and games technology." The VC has previously invested alongside Blackstone and Axcel.

The announcement of the new fund follows the launch of Hiro Metaverse Acquisitions 1, which the firm claims to be Europe's first Games and Metaverse SPAC. The blank cheque company, in which Hiro Capital is the lead sponsor, raised GBP 115m to acquire and merge with a GBP 450m-GBP 2bn business, Alvarez said.

Previous fund
Hiro Capital I held a first close on an undisclosed amount in October 2019 with a target of EUR 100m and a hard-cap of EUR 150m, according to Unquote Data. Alvarez told Unquote the fund held a final close in 2021 on EUR 115m and has made 20 deals to date. At the time of the first close, 25 LPs consisting of family offices, high net worth individuals, strategic and institutional investors backed the fund.

Alvarez said that Fund I will make its 21st deal next month in a gaming technology business. The vehicle is now 80% deployed.

The VC has an AUM total of USD 650m. Its team comprises individuals with a tech or games background; it has 14 employees in the investment team.

People
Hiro Capital - Luke Alvarez, Cherry Freeman, Sir Ian Livingstone (founding partners).

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