Japan-based social network provider Gree has become a cornerstone investor in a $100m venture capital (VC) fund that will invest in companies focused on the Android mobile phone operating system and acquired an online games network for $104m.
US-based VC firm DCM, which has a strategic partnership with China-based corporate venturing unit Legend Capital, will manage the A-Fund. Other limited partners in the fund beyond Gree include Japanese mobile operator KDDI and Chinese internet services provider Tencent with a US-based semiconductor firm expected to commit within weeks.
Yoshikazu Tanaka, 33-year old founder and chief executive of Gree with 25 million users of its games, said: "The A-Fund will give start-ups the ability to take advantage of Android’s inherent international potential and access to top investors and strategic partners across the world."
Makoto Takahashi, senior vice president of KDDI, added: "Leveraging our years of experience in mobile innovation and leadership in Japan, this new fund can help foster the next generation of disruptive mobile businesses around the world."
David Chao, co-founder and general partner of DCM, said: "The rise of Android is a rare and massive opportunity — one that comes only once in a major tech cycle.
"The A-Fund will seek out the most promising companies enhancing and extending the open Android ecosystem — in mobile and beyond — including applications, services, and enabling technologies."
DCM said the A-Fund "is open to start-ups and developers from around the world, at any stage and size, whose products will shape the future of the Android ecosystem".
In the past 12 months, the number of Android-enabled devices has grown 861% and there are more than 250,000 applications to use on the operating system developed by search engine provider Google.
Separately, Gree has agreed to buy corporate venturing-backed OpenFeint, a US-based mobile social gaming network developer with 75 million users, for $104m in its biggest acquisition.
The OpenFeint platform provides 5,000 games to smartphone users. There are expected to be more smartphones than personal computers by next year, according to investment bank Morgan Stanley, which advised Gree through its Mitsubishi UFJ Morgan Stanley joint venture.
Gree, whose name is derived from the concept people are only six degrees of separation from anyone else, aims to expand its overseas operation by opening offices in Beijing, Singapore and London.
In a presentation after the purchase of OpenFeint, Gree said its global strategy was to "expand a social gaming network business and monetize through social games developed in Japan and internationally for the global smartphone market".
Gree has also set up shared platform specifications with China-based Tencent, which has 650 million users, and Project Goth that operates a mobile community, mig33, with about 47 million users mainly in south east Asia.
In October, OpenFeint raised an undisclosed round of funding from Intel Capital, the corporate venturing division of semiconductor company Intel, in return for selling 10.7%.
Intel Capital joined Japan-based gaming group DeNA, which owned 18.3% of OpenFeint and subsequently set up a corporate venturing fund, and China-based game developer The9 (14.3%) as an investor.
The9, which is listed on the Nasdaq stock exchange, was reported by news provider VentureWire as having paid $5m for its minority stake.
OpenFeint was set up by Jason Citron in 2008 after starting with backing by Peter Relan’s YouWeb incubator, which retained 24.8% of the company at the time of its sale to Gree, the acquirer said.