Gaming startups have seen a sharp fall in venture capital dealmaking, but the outlook for 2024 is looking more optimistic.
Only 882 VC deals worth a combined $3.5 billion were completed last year in the gaming vertical, according to PitchBook data, down from 1,476 rounds totaling $12.3 billion the year before. Slowing demand post-pandemic and a general pullback in VC dealmaking caused both deal count and value to drop.
But gaming may be set for a resurgence this year as several new funds have launched targeting the sector in the past month.
Among them, Colorado-based Bitkraft Ventures raised $275 million for its third fund in early April to back gaming studios and platforms; Amsterdam-based gaming-focused VC firm Laton Ventures launched with a $35 million vehicle; and India’s Centre Court Capital secured roughly $42 million for its fund aimed at sports tech and gaming.
Despite the slowdown in VC funding, the gaming industry is still seeing significant growth. According to a report from Konvoy Ventures, the market currently stands at $184 billion and is expected to reach $226 billion by 2029.
Swaths of layoffs that swept across the sector last year have calmed and offer opportunities for new startups to be created. Advancements in AI—while still in the early stages—have the potential to reduce time to market and costs, making gaming startups more attractive to VCs as they prioritize profitability over hypergrowth.
So far this year, VC deals for gaming startups have remained small, with esports startup True Gamers’ $45 million round and card game platform Parallel Studio’s $35 million investment among the largest.
But investors remain optimistic about the sector, according to PitchBook’s analyst note on the 2024 Game Developers Conference, with the possibility of an uptick in investments toward the second half of the year.
Featured image by Juan Moyano/Getty Images
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