A look at VC investments in Q2 2024

Konvoy has released their gaming market analysis for Q2 2024. The report highlights private and public investments, as well as general industry trends. I want to focus on just the VC investments, as these are most relevant for most typical game studios. For more details, you can read the full report here.

According to the report, Q2 2024 saw a 22% decrease in venture capital investments compared to Q1 2024, with total funding reaching $492 million across 104 deals. The second quarter of the year typically sees a decrease compared to the first quarter. Looking at the graph above, you can see that overall, the number of deals is down year over year.

If we look at the breakdown of where the money was spent, we see a continued focus on early-stage investments at the cost of growth-phase investments. About 90% of all VC investments were made in early-stage companies, which is an increase in both the number of deals and the volume of deals compared to previous quarters. Investors are actively investing in startups with lower valuations that are eager to prove product-market fit.

Growth and late-stage investments are pretty much non-existent, which is a major concern for gaming companies looking for larger cash injections to survive this bearish period in the industry. This has contributed to the mass layoffs we've been experiencing over the past two years. Check out the article I wrote about that topic here.

For VCs, this means there remains limited potential for exits in the short term. Last quarter, there were just 25 M&A deals, compared to 30 in the same quarter last year. VCs are hoping their early-stage investments made now will yield returns in the next few years, when the number of growth-stage and late-stage deals may increase.

For game developers looking for funding: it's not impossible to get a VC on board right now. You just need to be mindful of these trends. Keep your valuation realistic, build quickly, and prove product-market fit early.