Consultancies that have entered the venture capital business over the past several years have had mixed success, sometimes because they've failed to leverage their greatest asset-their own consultants. GameChange, an incubator founded by Andersen Consulting unit AC Ventures and Softbank Venture Capital, doesn't want to make that mistake.
Bankrolled with $100 million from the two VC units, GameChange started last month with an incubator center in Palo Alto, Calif. What the firm hopes will set it apart is its plan to work closely with Andersen Consulting's network of 65,000 consultants. (Andersen Consulting will rename itself Accenture on Jan. 1, 2001.)
Indeed, were it not for the Andersen Consulting connection, GameChange's chances would be less promising. Competition in the VC/incubator space is fierce, with nearly as many of them as the start-ups they look to fund.
GameChange will lean on Andersen's consultants to help navigate the toughest part of the incubator process-finding good deals, said Mark Lockareff, co-founder and managing director. "Many of our opportunities are coming out of the AC network," said Lockareff, who before starting GameChange was VP-corporate development at Excite@Home Corp.
Like other incubators, Game-Change will provide temporary office space, advice and venture capital funding, usually in $2 million seed allotments.
Lockareff said Andersen's consultants, who work with b-to-b clients on every continent, will be GameChange's key differentiator. "They've got 65,000 consultants working closely with companies on enterprise solutions. Out of their efforts we are detecting a lot of efforts to create companies," he said. The idea is that a global network of consultants can better detect opportunities than can a handful of venture capitalists working out of an office in San Francisco or New York, no matter how well-connected they are.
A piece of the action
GameChange will not only follow up on the consultants' recommended investments, but also occasionally will serve as a landing pad for consultants who wish to join one of the start-ups they have funded "A lot of people at AC want to become part of the opportunities they detect," Lockareff said. "We want GameChange to be their vehicle to do this."
Analysts said this could be one of GameChange's savviest ideas. All the major consulting firms have been hemorrhaging consultants to technology start-ups. Keeping a consultant within the firm's radar screen-in contact and dependent on its venture capital-is a clever, potentially lucrative plan.
Letting the Andersen consultants know they always have outside job prospects will likely be a good retention ploy, said Phil Ross, principal at Dynamis Solutions Inc., a Southfield, Mich.-based e-consultancy. "It provides one more outlet for their people in terms of providing opportunities," he said. "It's nice to know that it's out there."
More importantly, GameChange could turn out to be an excellent marketing tool for Andersen Consulting's core services, Ross said. "Other VC-backed companies could be more willing to approach Andersen because of it," he said.
Both AC Ventures and Softbank Venture Capital, in turn, will benefit from the flow of deals created by GameChange, said co-founder and managing director PÃ¤r Arvidsson. "This will provide a good way for AC Ventures or Softbank to put in their $10 million round," he said.
GameChange intends to launch nine more incubators in cities including New York, London and Munich. And it plans to invest in and help launch up to 20 technology companies in the next year.