AC Ventures and SOFTBANK Venture Capital Announce GameChange

Event Summary

GameChange calls itself the first next generation business incubator, able to provide market, money, brains and bodies. With only one of the planned incubators in operation, it remains to be seen if the rollout and execution will be the success they hope for in the current market climate.

GameChange's claim to uniqueness as a seed capital and incubator company is in knowing how to effectively take an idea from presentation slides to an operating company. AC Ventures, the venture capital unit of Andersen Consulting, and SOFTBANK Venture Capital believe that startups need five strengths to survive; somewhat in order of importance they are:

• Market
  
  
• Business Plan
  
  
• Management Team
  
  
• Money
  
  
• Technology

However, the companies had a hole in their venture support sides in regard to high-risk initial startups. By combining their money, talents and assets, and by opening their business portfolios to new startups, they have formed GameChange, an incubator with potentially ready-made markets for the right entrepreneurial enterprise.

GameChange practices what it calls "customer-driven incubation," involving potential customers very early in a start-up's life. According to Paul Walker, who is with AC Ventures and is the interim head of corporate development for GameChange, the difference is that GameChange prefers to "start with customer problems and customers rather than end with customers [our] ability to involve customers very, very early on in the development of a company is a tremendous advantage. Finding the first customers is often the most difficult task of all We think we can break that one."

These potential customers are drawn from the extensive portfolio of companies in the AC Ventures / Andersen Consulting, and SOFTBANK network. GameChange will be a global network of seed round venture capital and business-creation centers that will focus on high-growth, enterprise-centric market segments. Together, the firms have committed $100 million to building GameChange's global network.

The $100 million will enable GameChange to provide the physical offices, equipment, tools, and infrastructure to take a company from an idea to actually supplying customers. The centers will be located in entrepreneurial hot spots around the world, and may or may not be close to AC and SOFTBANK offices. The first center in Palo Alto, California is already up and running. Both SOFTBANK Venture Capital and AC Ventures will be contributing equally to making this happen. They anticipate that GameChange will reduce the time a company spends in the incubator stage from nine months to six months.

Among the value-added services GameChange will provide through internal capabilities are alliances are recruiting, marketing, public relations, web design, prototype development, finance, and accounting. Most important, the GameChange business creation centers will employ a unique methodology that leverages Andersen Consulting's and SOFTBANK Venture Capital's proven processes and tools. These methods have been successfully employed in SOFTBANK's Hotbank incubators, as well as through Andersen Consulting's work with more than 350 start-ups.

One element of this approach involves tapping into the insights and ideas of professionals with experience in such diverse areas as venture capital investing, technology development and implementation, entrepreneurial business creation, and the design of strategic industry solutions. As a result, GameChange's portfolio companies will be better able to build revenue-generating start-ups that become eventual market leaders.

Jackson L. Wilson, managing general partner of AC Ventures stated, "There's been a lot of activity in the incubator space, but Andersen Consulting and SOFTBANK bring something unique to entrepreneurs. Collectively, we represent an unmatched global network of brand-name clients and portfolio companies. As a result, entrepreneurs working with GameChange will benefit from access to and input from a broad array of potential customers, many of whom are searching for just the sort of innovative technology solutions and new business ideas GameChange intends to incubate."

Gary Rieschel, executive managing directory of SOFTBANK added, "Our combined knowledge, business savvy and experience provide a quicker route to markets, profits and success. GameChange is unlike any other incubator. We are excited about its potential to 'change the game' by quickly turning good business ideas into great companies. GameChange will provide the resources, talent and connections that will dramatically boost entrepreneurs' chances for enduring success."

Market Impact

This announcement is important for entrepreneurs as it provides a potential beeline to the resources of Andersen Consulting and SOFTBANK, without having to deal with two large-scale organizations on their own, and for Andersen and SOFTBANK, it is an added sales channel for their services. For the global market, it is another incubator, but one that potentially enables the incubating company the chance to prove itself and what it can deliver. For entrepreneurs looking for seed capital and support, GameChange offers both capital and access to a large network of potential customers.

GameChange fills a gap in Andersen Consulting's movement into the world of entrepreneurs. AC Ventures is more of(though not exclusively) an accelerator company, usually providing second round financing - and sometimes first round financing - and support for established companies with money to pay the bills.

SOFTBANK Venture Capital, which claims a track record of bringing companies "from napkin-drawings to global leadership," will contribute expertise to support the financial viability aspects of startups, while GameChange personnel provide the budding company with an infrastructure, management expertise and resources to get started. Andersen Consulting brings strategic technical expertise to overcome the technology and operational hurdles new companies have to clear.

With all this expertise available, GameChange will be able to thoroughly vet business plans and thus populate their incubator with a group of companies that quickly move from startup to success. Success for GameChange companies will likely be measured by their ability to move from an incubator to an accelerator. This is not a small accomplishment.

User Recommendations

If you are an experienced entrepreneur with an idea it is certainly worthwhile to look at what GameChange has to offer. The GameChange business-creation centers will focus on high-growth, enterprise-centric market segments, including supply chain management, customer relationship management, financial management, human resource management, e-commerce management and product development. This will include e-businesses, software makers, ASPs, and technology companies.

Be prepared to pay for the help in equity - as with many VC's, you can expect 35%-40% of the equity stake to be taken by the VC, and this amount can depend on their perception of the risk/opportunity characteristics of the proposed enterprise.

Editor's Note:
This article has been modified from its original form since the original publication date.