Any good XR startup needs someone to

invest in their world-changing idea before they can start changing

the world. The GFR Fund is one such investor group, and this one in

particular has cultivated an impressive portfolio of XR

up-and-comers. Managing partner Teppei Tsutsui drops by to share some

of his investing strategies.

Alan: Welcome to The XR for

Business podcast with your host Alan Smithson. Today's guest is

Teppei Tsutsui. For the past decade, Teppei has been the managing

partner of the GFR Fund, and he's led several key investments in

acquisitions in Tokyo, including GREE's acquisitions of open feet and

Funzio. Teppei is currently leading the GFR Fund in San Francisco.

You can learn more about the GFR Fund by visiting gfrfund.com.

Teppei, welcome to the show, my friend.

Teppei: Oh yeah. Thank you for

having me here.

Alan: It's my absolute pleasure.

You guys were one of the very first companies to start investing in

the virtual and augmented and mixed reality space. You come from a

gaming background. Maybe just give us a little overview of the GFR

Fund, and how this came to be that you're investing in some of the

name brands in virtual reality.

Teppei: Sure. Yeah, absolutely. So the GFR Fund is a seed stage fund that's investing technology companies, disrupting the digital media and entertainment space, including VR and AR. We have about 40 million under management and we invest in primarily in North America, but also in Asia and Europe, too. And we are backed by ALEC Japanese... more like a strategic investor from Japan and Asia, including GREE, which is a publicly-traded company, a mobile gaming company out of Tokyo, and they also help us investing in companies and altogether. Before launching this fund back in 2016, I was working for a company called GREE. -- that's the same company that I was kind of explaining -- and I was the head of the corporate development team based in Tokyo, and also here in San Francisco, so that I was kind of working together with them, just looking for lot of the venture companies in the gaming -- and VR and AR -- space, as well. So that's how we got started, this GFR Fund, and that's the relationship.

Alan: GREE is a fairly large

company, is it not?

Teppei: It is. So they have

about 1.5 billion market cap and they've got about a thousand

employees across the globe and they've got 2,000 billion US dollar

revenues. So it's I feel like a decent company, decent size company.

Alan: That's awesome. I would

assume because -- it's social media and gaming -- you would be a

direct competitor or something like Tencent. Would that be the case?

Teppei: Yeah. In a way. But the

GREE's more built upon the mobile games, whereas the Tencent sell--

they do both PC games and some sort of consoles, too.

Alan: Got it. I'm looking at your portfolio here under the GFR Fund. You've got VRChat, Spaces, the WaveVR, Littlstar, InsiteVR, Streem, Torch. Let's go through these -- if you don't mind -- and kind of talk about each one one at a time, and why you guys chose to invest it. But first I want to know: you talked about your fund being $40-million, when did that fund start?

Teppei: The first fund was

launched in April 2016, so it's almost like a four, three and a half

years ago. And then we also launched a second fund, beginning of this

year.

Alan: Great. And then, so you've got-- that's $40-million total under management?

Teppei: Yes. Yeah. Well, $20-million, the first one is still $20-million. And the second fund is also another $20-million.

Alan: So you've got 40 million to play with. You've made