Gaming VC fund Konvoy Ventures has released its latest report on the state of industry funding. The survey found that venture capital funding overall was up about 1% quarter-over-quarter, but growth-stage funding was up. The total number of transactions also decreased compared to the previous quarter.
Konvoy’s research shows that the gaming industry is expected to become a $188 billion market by 2024 and $223 billion by 2029. Private financing for games totaled $811 million in the third quarter of 2024, up 15% from the previous quarter. Private funding totals for the three quarters to date are higher than the total for the entire fourth quarter of 2023. However, this is mostly due to Disney’s $1.5 billion investment in Epic Games.
The total number of VC deals in the gaming sector this quarter was 92, a 14% decrease from the previous quarter. Growth stage funding (Series BD funding) was $262 million, compared to the 2023 average of $159 million. On the other hand, early-stage funding through pre-seed through Series A is at its lowest level since the first quarter of 2020.
Jason Chapman, Managing Partner at Konvoy, said in an interview with GamesBeat: “Despite macroeconomic challenges, we are seeing encouraging signs of a normalization of gaming VC funding over the past six quarters. The gaming industry continues to command and demand people’s time and prove its resilience. But while the volume of AI-related gaming deals is increasing, traditional content studios are under pressure to raise VC funding. Content alone doesn’t seem to be a good fit for venture capital at this stage.”
Konvoy’s Report: AI-Driven Fundraising
One of the insights from the Konvoy report is that investment in gaming companies related to or referencing AI is increasing. In the third quarter, 22% of funds, or $113 million, were sent to the company. This is an increase of 10%, or $52 million, from the previous quarter. According to the report, the two largest investments in AI companies occurred in the third quarter. Volley’s $55 million fundraising round and Series Entertainment’s $28 million Series A funding round.
Chapman told GamesBeat: “We are seeing strong VC interest in AI-based gaming startups, especially those focused on virtual characters that enhance the player experience. There is significant funding available for startups that help game studios create and edit content faster, especially in fields like art and video production, which account for a significant portion of production costs. These AI-based tools are streamlining game development and attracting more attention from investors.”
Konvoy’s full gaming industry report includes regional insights and is now available on the company’s website.
