Funding gaming startups is a lot like gaming itself. Sometimes players find yourself at the top or bottom because of things like skill, practice, and persistence. Other times, it’s just dumb luck.
Gaming startup investments are like that too. Sometimes funding fluctuates for specific reasons, like the quality of the startup pipeline or the overall investment trend. Other times, there’s no obvious reason.
The second quarter appears to be one of those times. Crunchbase dataGlobal funding for gaming startups totaled $579 million in the second quarter, down 33% from the first quarter and roughly in line with the same period last 12 months.
For comparison, here’s a breakdown of investments in gaming startups over the past six quarters:
There aren’t many really big rounds
It doesn’t appear like anything has modified dramatically in the outlook for gaming startups or the industry in general over the past few months. People are still as hooked on gaming as ever. And the stocks of the industry’s biggest public firms, resembling Take-Two Interactive Software, Electronic Art, Sony AND Nintendomostly increased or remained relatively stable.
However, one factor dragging down the latest quarterly results was the lack of very large funding. In Q1 2024, two firms closed on funding of $100 million or more: immersive gaming platform Build a rocket boy; and game creator Second Dinner StudiosIn the second quarter, the largest rounds were half as large.
Despite this, we saw interesting firms raise significant amounts of financing in the second quarter.
One of them was based in Istanbul. Spyke Gamescreator of casual games for mobile devices, who reportedly he took it $50 million in financing in May, led by Active moon. Its hottest titles include the puzzle game Tile Busters and the 3D matching game Blitz Busters.
Another was based in Singapore kidwhich focuses on kid’s safety in games and raised $45 million in a June Series A led by Andreessen HorowitzThe year-old startup is developing tools that may mechanically configure a game to be age-appropriate for younger users.
For a broader perspective, we have created a list of 12 gaming startups that raised funding rounds value $10 million or more in the last quarter.
Where are we in the cycle
When it involves gaming funding, we’re clearly nowhere near the top. Gaming startups raised greater than $12 billion in 2021, a record 12 months for the industry. This 12 months is on track to be lower than a quarter of that.
One of the aspects causing the slowdown is the higher level of rates of interest, which is cited Robin Guopartner at gaming firm Andreessen Horowitz, who said potential investors have grow to be more risk-averse.
“Because the baking of games takes so long and not many signals are obtained during the process, the capital in the game is considered quite risky and illiquid over a long period of time,” Guo said. he wrote in a recent post. Just creating a mobile game can take at least a 12 months and cost several million dollars. And there is no guarantee that it should be popular.
Still, there’s loads of enthusiasm for pockets of the gaming industry that are seen as poised for future growth. While investment in startups at the intersection of AI and gaming is limited today, the likes of a16z and others are betting that may eventually change.
For now, nevertheless, investors appear to be cautious in their gaming strategy. Often, it is not a mindset that produces a winning hand, but limits the risk of giant losses.