Venture capitalists often use a system known as accelerators to invest in very early business startups. The idea is to fund those companies in exchange for providing an environment where they can quickly grow. Game developer Epoch Media is in one of these programs: ReaktorX in Poland. On this week’s episode of How Games Make Money, I talked to Epoch cofounder Jeffery Thompson, Jr. about how the accelerator works. Thompson also speaks about operating a company as a Black American in the venture-capitalist system.
You can listen to that conversation by clicking play or following the links below:
I wanted to talk to Thompson because I have no idea how accelerators work. He and his team are also working on projects that come from a distinctly Black perspective. And while that’s rare, it’s also something that is demonstrably appealing. Diverse pop-culture products like the Fast and the Furious films are global superhits. But Epoch Media is just a startup, so how is that team going to get from here to the top? Well, Thompson has a vision. And it starts with the ReaktorX accelerator.
“I’m hoping to be the first black entrepreneur in history to get venture-capitalist funding in Poland,” Thompson told GamesBeat. “I believe that’s going to happen.”
How does a venture-capitalist accelerator work for a game-dev startup?
ReaktorX is based in Warsaw. Thompson is from St. Louis. He’s made the move to Poland to partake in the accelerator. But what does that mean? Well, Thompson explained.
“When you’re accepted in, you don’t necessarily get money,” said Thomspon. “They do get some equity in your company.”
Instead of funding, ReaktorX is connecting Thompson with mentors and other investors. Mentors get a tiny bit of equity for providing their insights. But even more than the lessons, the accelerator — like almost everything in life — is about the relationships.
“I’ve been blessed and fortunate enough to meet with [my mentors] and speak with them and pick their brains or bug them to death,” said Thompson. “And not only talk about the business side of things, but to also talk about life. Because when you’re getting investment at this early stage, it’s more or less about relationships. They’re investing in you as a person more than a company. I like to use the example of George Lucas. Alan Ladd didn’t believe in Star Wars, but he did believe in George Lucas. And that’s why he invested in him.”
And that means that, for now, that Thompson is getting by on savings and bootstrapping.
“That passion and ambition is what’s keeping me going,” said Thompson. “Because I truly believe in this with all my heart, soul, and desire, and nobody’s going to stop me …. There’s a saying that I want to work a 100-hour week so I don’t have to work 40 hours a week, right?”
Is there an alternative to the VC system?
Thompson believes in the entrepreneurial spirit. But I asked him if pursuing a risky business is easier in a country like Poland, which has strong social programs such as free health care. After all, for many Americans, starting a business would often mean giving up their employer-sponsored insurance.
“You know when you’re an entrepreneur, if you’re not able to have your rich family members [fund you], then you have to ask for outside funds, and there’s more outside funds in America,” said Thompson. “In Poland, it’s still a young ecosystem.”
But for as much as Thompson sees VC funding as his path forward, he also sees its faults.
“I’ve had a VC guy tell me he would never fund a Black entrepreneur before,” Thompson said. “I’ve had that happen, and it was very disheartening. It was very hurtful.”
Then the question is why should someone like Thompson have to rely on the VC system in the first place. Alternative systems exist. In our conversation, I pointed to the Canada Media Fund that uses public tax funds to directly invest in the creation of television shows and video games. But Thompson wants to try to change private investing from the inside.
“I don’t prefer [the VC system] as it is right now because it does create a lot of biases,” said Thompson. “And I think a lot of VCs may not even realize it, right. Hopefully, I’ll grow to a point where I can influence some politicians where there should be a system in place where the VCs get sort of some write-offs if they invest in Black entrepreneurs.”
Thompson said this could act as a stand-in for reparations for slavery, Jim Crow, and red-lining. And it must be stressful to carry the weigh of that history around while knowing that he’s under a microscope as a Black entrepreneur. But that’s not holding him back.
“I thrive on the pressure,” he said. “I love it.”