Goodbye 2024, Hello 2025

With a gritty 2024 behind us, I think it is fair to characterize the outgoing year as complex in both the business and wine tasting senses of the word. It unfolded against a backdrop of high interest rates, global tensions, economic uncertainty, and a high-stakes US election. Yet, amidst this intricate interplay, inflation stabilized and global GDP managed moderate growth.

The digital entertainment sector, while fundamentally strong, felt turbulent to many. The long-established power law of game revenue distribution intensified in response to market maturation and shifting audience dynamics, leading to unprecedented levels of dislocation and change. Games remained a massive, undeniable force but the prevailing opportunity spaces showed signs of ossification and the classic hallmarks of a maturing market were on display. These included slower growth, less product differentiation, stable competition among established players, and a wave of consolidation. Focus shifted noticeably towards cash flow, efficiency, and price competition, with innovation becoming more incremental in nature.

Unsurprisingly, venture investment in the space slowed, with risk tolerance up and down the startup ladder reverting to more conservative levels and returning the Series A Crunch dynamics to force. This is arguably the native state of play in a power law business like games where venture investors are necessarily focused on a small number of exceptional outcomes. In these flight to quality moments, we are collectively reminded of the critical importance of domain expertise and execution quality. Digital entertainment is a deep and specific domain that demands a corresponding depth of experience to invest in successfully.

At Transcend. , we purpose-built our firm to map to these realities. Despite the macro environment, Ruckus raised the largest content Series A in Q4 2024. Gardens was the largest in Q2 2023. Transcend led both Seed rounds, working extensively with the founders in each case. These "exceptions" are crucial to understand for anyone hoping to parse the complexity of a massive, bespoke category like gaming - particularly at the early stage. While the sector remains as enormous and vibrant as ever, recent growing pains underscore its unforgiving competitive edges. Against this backdrop, our first fund continues to perform exceptionally well, ranking in the top IRR decile for all 2020 vintage venture funds according to Pitchbook.

The games industry has evolved into a diverse ecosystem encompassing a wide array of franchises, play patterns, audience types, platforms, business models, and discovery channels. Historically, these fiefdoms developed relatively independently, resulting in a landscape that simultaneously harbored both mature and nascent opportunities. The console space, for instance, marches to the beat of its hardware release cycle, while social and mobile gaming burst onto the scene with their own momentum and best practices. Blockbusters like Grand Theft Auto exert their own gravitational pull.

The unsynchronized maturation of various opportunity spaces within gaming is a driving force of the industry's overall growth and innovation. The current moment, where we are witnessing a rare synchronization of subsector maturity, is more the exception than the rule. Change, as always, is on the horizon, driven by generational, behavioral, and technological shifts. Against that, AI is poised to accelerate this transformation in ways that will affect product and company lifecycles from creation to growth and beyond.

One of the great privileges of my role at Transcend is the opportunity to work with some of the most brilliant entrepreneurs of our time to distill the churn of change and complexity into the next generation of category-defining companies in digital entertainment. We strongly believe that exceptional teams create extraordinary value particularly under challenging conditions and are excited to invest accordingly in 2025.

Speaking of which, here are some of the notable achievements we are celebrating across the Transcend portfolio in 2024:

AWARDS & RECOGNITION

?? Stress Level Zero?| Platinum on Steam 6 years in a row

BONELAB was once again ranked Platinum on Steam, marking six consecutive years of this achievement.

?? Gardens Interactive?| Judge at Game Changers 2024

Returned as a judge after winning Best Game Studio in 2023. The company also secured investment from premier firms including Index, Sequoia, and Accel via Stanford dy/dx.

?? Cosmic Lounge ?| Most Innovative Gaming & Media Startup

Named one of the Most Innovative Gaming & Media Startups at the Game Changers 2025 Awards and recognized as a Top Finnish Startup to Watch. The founding CEO also delivered the keynote at Google’s Think Games, titled The Future of Gaming is AI.

?? Eggscape Entertainment Inc ?| Game Changers 2025 Winner, Extended Reality

Recognized for innovation in mixed reality, Eggscape blends humor, world-building, and social features to push the boundaries of immersive gaming.

FUNDRAISING

?? Ruckus Games ?| $19M Series A Round

Raised a $19M Series A round with participation from BITKRAFT and Hypergryph, fueling the next stage of company growth.

?? Brain Jar Games ?| $6.7M Seed Round

Oversubscribed seed round co-led by Transcend and Menlo Ventures, with backing from a standout syndicate of influencers and executives across gaming and music.

?? Midsummer Studios ?| $6M Seed Round

Oversubscribed seed round led by Transcend, bringing together veterans from XCOM, Civilization, and The Sims.

?? Live Aware Labs ?| $4.8M Seed Round

Seed round led by Transcend with support from a16z, Lifelike Capital, and top gaming CxOs.

?? Kratos Studios ?| $10M Funding Round, $500M Valuation

Achieved profitability throughout 2024 while reaching $18M ARR and expanding its user base to over 11M.

?? dotplay ?| $1M Pre-Seed Round

Secured early-stage funding led by Transcend to reimagine the mobile distribution model.

GROWTH & MILESTONES

?? Singularity 6 ?| Acquired By Daybreak Game Company

As Palia?surpassed 4M players and 100K daily active users, the company was acquired by Daybreak, strengthening its long-term vision.

?? Kings of Games ?| 10M Downloads for Chess Universe

Chess Universe?reached a major milestone, surpassing 10 million downloads worldwide.

?? XPLA ?| Investment + 9 New Games

Secured additional funding from Play Ventures, Builder Capital, Unanimous Capital, 32 Bit, and Caladan, while expanding its platform with nine new blockchain gaming apps.

?? Treehouse Games ?| Voyagers of Nera?Early Access

Launched Voyagers of Nera?in Early Access, earning a featured spot on Steam's top free demos list.

??? Venly ?| Selected for PwC & Mastercard Programs

Chosen from over 700 applicants for the PwC Scale Tokenization & Digital Assets program and joined Mastercard’s Start Path Blockchain initiative.

? thatgamecompany ?| Sky’s?5th Anniversary Celebration

Hosted SkyFest, a global event uniting the community through online and in-person experiences.

If you would like to connect with the Transcend team in the coming months, our preliminary conference schedule for the year includes:

???? World Economic Forum | January | Davos, Switzerland

???? Pocket Gamer | January | London, UK

???? LEAP Conference | February | Riyadh, Saudi Arabia

???? D.I.C.E. Summit | February | Las Vegas, USA

???? Devcom Leadership Summit | February | Lisbon, Portugal

???? Game Developer Conference | March | San Francisco, USA

???? Milken Global | May | Los Angeles, USA

???? ChinaJoy | July | Shanghai, China

???? Gamescom | August | Cologne, Germany

???? Tokyo Games Show | September | Tokyo, Japan

???? Web Summit | November | Lisbon, Portugal

???? G-STAR | November | Busan, South Korea

???? SLUSH | November | Helsinki, Finland

Please feel free to reach out via our website or on Linkedin. We look forward to connecting with you in 2025!

About Transcend

Transcend is a top performing early stage venture capital firm that partners with the boldest founders in the industry to collaboratively build the future of interactive entertainment.

Founded in San Francisco by gaming veterans, the Transcend portfolio features a preeminent group of high growth digital entertainment companies around the world.

More information about Transcend can be found on our website. Follow us on LinkedIn?for the latest news from around the Transcend ecosystem.

About Shanti Bergel

Shanti is the founding partner of Transcend and a 30 year game industry veteran.

His global operating experience spans every major platform and business model transition of the last several decades and is animated by a career-long fascination with how changes in technology and distribution affect products, services, and communities.

Shanti is a recognized member of the Techcrunch List, speaks fluent Japanese, and is a frequent speaker on early stage investment, M&A, and strategic partnerships in digital entertainment.