Games VC funding is stabilizing, but growth-stage funding is up | Konvoy

Gaming VC fund Konvoy Ventures released its latest report on the state of funding in the industry. According to its findings, venture capital funding is overall up about 1% quarter-over-quarter, but growth-stage funding has increased. The overall number of deals has also gone down QoQ.

Konvoy’s findings show that the games industry is expected to be $188 billion market in 2024, and a $223 billion market by 2029. Private funding for games in Q3 2024 totals $811 million, a 15% increase from the previous quarter. The total amount of private funding for three-quarters of the year so far is higher than 2023’s overall total for four quarters — however, this is mostly due to Disney’s $1.5 billion investment in Epic Games.

The total number of VC deals in gaming was 92 for this quarter, a 14% QoQ decrease. Growth-stage funding — funding for Series B-D — was $262 million, higher than 2023’s average of $159 million. Early-stage funding, on the other hand — pre-seed through Series A — is the lowest its been since Q1 2020.

Jason Chapman, Konvoy’s managing partner, told GamesBeat in an interview, “We’re seeing encouraging signs of normalization in gaming VC funding over the past six quarters, despite macroeconomic challenges. The gaming industry continues to command and demand people’s time, proving its resilience. However, while the volume of AI-related gaming deals have grown, traditional content studios are facing compression in VC funding. Content alone doesn’t seem to be a strong fit for venture capital at this stage.”

Konvoy’s report: AI-based funding

One of the insights from Konvoy’s report is the increase of investment in gaming companies related to or referencing AI. 22% of funding for Q3 went to such companies, or $113 million. That’s up from 10% and $52 million in the previous quarter. According to the report, two of the largest investments in AI companies happened in Q3: Volley’s $55 million fundraise and Series Entertainment’s $28 million Series A funding round.

Chapman told GamesBeat, “We’re seeing strong VC interest in AI-powered gaming startups, particularly those focused on virtual characters that enhance the player experiences. There’s significant funding traction in startups that help game studios produce and edit content faster, especially in areas like art and video creation, which represent a large portion of production costs. These AI-driven tools are streamlining game development and attracting more attention from investors.”

Konvoy’s complete Gaming Industry Report includes regional insights and is now available on the company’s website.