The 10+ Best Gaming VCs Investing in 2024

Mar 1, 2024

Angelina Graumann

Gaming Now and In The Future Business Implications of AI in Gaming AI for Game Design & Player Experience Gaming Essentials to Include in Your Pitch Deck Resources & Good Reads VC Firms Investing in Gaming Companies Looking for Investors? Try Visible Today!

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As we advance into a technologically-driven future, gaming has evolved beyond mere entertainment. It converges art, technology, and commerce.

For founders in the gaming industry, understanding the intricacies of current technological advancements, especially in AI, is not just beneficial—it’s crucial.

AI’s transformative impact promises to shape the very fabric of gaming experiences, ensuring that they remain dynamic, engaging, and continuously evolving

The investment landscape for gaming in 2023 is still very strong. Key trends spurring VC interest in gaming include:

The rise of mobile gaming: Mobile gaming is the fastest-growing segment of the gaming market. In 2021, mobile gaming accounted for 52% of the global gaming market, and this number is expected to grow to 60% by 2026. This growth is being driven by the increasing popularity of smartphones and tablets, as well as the development of new mobile gaming platforms like Apple Arcade and Google Stadia.

“Revenue in the Mobile Games market is projected to reach US$286bn in 2023. Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 7.08%, resulting in a projected market volume of US$377bn by 2027. The average revenue per user (ARPU) in the Mobile Games market is projected to amount to US$148.80 in 2023.” Statista

The increasing popularity of esports: Esports is a competitive video gaming industry that has seen significant growth in recent years, driven by the increasing popularity of live-streaming platforms like Twitch and YouTube, as well as the growing number of professional esports leagues and tournaments.

Statista Report:

Revenue in the Esports market is projected to reach US$3.75bn in 2023.
Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 9.54%, resulting in a projected market volume of US$5.40bn by 2027.
The largest market is Esports Betting with a market volume of US$2.13bn in 2023.
With a projected market volume of US$871.00m in 2023, most revenue is generated in the United States.
In the Esports market, the number of users is expected to amount to 720.8m users by 2027.
User penetration will be 7.5% in 2023 and is expected to hit 9.1% by 2027.
The average revenue per user (ARPU) is expected to amount to US$6.47.
The development of new technologies: New technologies like AI, virtual reality (VR), and augmented reality (AR) are also driving investment in the gaming industry. These technologies have the potential to create new and immersive gaming experiences that have never been possible before.

Gaming Now and In The Future

“Gaming is a massive market that will only continue growing. The growth is easy to see: In 2019, the global gaming market was $152 billion. By 2021, it reached $214 billion and is on track to generate over $300 billion in 2026. Bigger than all other forms of entertainment.” NFX

The gaming industry is one of the fastest-growing industries in the world, with a market size of over $200 billion. The industry’s future will be heavily influenced by advancements in AI, Virtual Reality (VR) and Augmented Reality (AR). These technologies are shaping immersive gaming experiences and will continue to hold a significant role. However, the real game-changer will be the effective application of AI technologies.

The five key areas where AI is having an impact on gaming: generative agents, personalization, AI storytelling, dynamic worlds, and AI copilots. By harnessing AI, games can become “neverending”, maintaining their appeal indefinitely through personalized experiences, AI storytelling, and dynamic, evolving worlds.

The rise of social elements in games, powered by AI copilots and intelligent chat functions,.will drive engagement and longevity in the player base, heralding the future of social gaming

Business Implications of AI in Gaming

AI’s integration into the sector offers a transformative experience not just for players but also for gaming businesses. From enhancing player engagement to providing advanced monetization avenues, AI is in fact game-changing.

Monetization Models Enhanced by AI

Optimized In-Game Purchases: AI can monitor player behavior and preferences, offering real-time personalized suggestions for in-game purchases. For instance, if a player frequently struggles at a specific game level, AI might suggest a power-up or equipment purchase that can assist them. This not only increases potential sales but also enhances the gaming experience for the player.
Dynamic Subscription Models: Instead of a one-size-fits-all subscription model, AI enables gaming platforms to offer tailored subscription packages. By analyzing a player’s gaming habits, frequency, and genre preferences, AI can suggest a subscription model that offers the best value, encouraging higher subscription rates.
Smarter Advertisements: AI’s predictive analysis can forecast when a player is most likely to be receptive to advertisements, thereby reducing ad fatigue and increasing click-through rates. Furthermore, AI can customize ad content based on player preferences, ensuring higher engagement and conversion.

Market Analysis and Forecasting

Predicting Market Trends: AI can analyze vast amounts of data from forums, social media, and other platforms to spot emerging trends. By identifying what players are discussing or showing increased interest in, developers can prioritize certain game features, genres, or mechanics that are gaining traction.
Player Retention Forecasting: AI can predict when players are likely to stop playing, allowing developers to introduce timely interventions, whether it’s through in-game events, updates, or other engagement tactics. This leads to increased player longevity and, consequently, higher lifetime value.
Adjusting Game Development Strategies: By monitoring real-time feedback and player behavior within a game, AI can help developers understand which aspects of the game are most loved or which areas need improvement. This feedback loop can be invaluable, especially during beta testing, ensuring that the final product is better aligned with market demands.

AI for Game Design & Player Experience

The infusion of Artificial Intelligence (AI) into the gaming industry is not merely about adding smarter enemies or more realistic visuals. At its core, AI has the potential to revolutionize how games are designed and how players experience them. The intricate dance between game mechanics and player response is more sophisticated than ever, thanks to AI. Let’s dive deep into its multifaceted impact.

AI Integration in Game Design

AI in Procedural Content Generation: No longer are game worlds static or bounded by the limitations of manual design. With AI, games can generate levels, terrains, and even entire universes on-the-fly. This not only ensures each gameplay is fresh but also vastly enhances the replayability of games. Imagine embarking on a new adventure each time you play, with unpredictable terrains and challenges.
AI in Game Testing: Quality assurance in gaming is paramount. However, with expansive game worlds and intricate mechanics, manual testing can be labor-intensive and might not cover all potential scenarios. Enter AI bots, which can simulate countless hours of gameplay, identifying glitches, and ensuring a seamless player experience.
Dynamic Difficulty Adjustment (DDA): One-size-fits-all is a passé concept in modern gaming. AI can continuously monitor a player’s performance and adapt the game’s difficulty in real-time. This ensures that games remain engaging and challenging but stop short of being overly frustrating. It’s about striking the right balance to keep players invested.

AI in Player Experience

Player Behavior Analysis: Each player is unique, and AI recognizes that. By studying patterns, preferences, and behaviors, AI can modify game environments or suggest personalized paths, ensuring an immersive experience tailored for each gamer.
Customized Game Narratives: Story-driven games have always been popular, but what if the narrative changed based on every choice you made? AI can weave intricate storylines that diverge and converge based on player decisions, ensuring that each gameplay tells a distinct tale. Your choices matter more than ever, and the narrative payoff is genuinely your own.
AI in Multiplayer: The multiplayer realm benefits immensely from AI. Beyond crafting smarter Non-Player Characters (NPCs) that challenge even the most seasoned gamers, AI can step in when human players drop out, ensuring the game continues without a hitch. This seamless blend of AI and human intelligence creates dynamic multiplayer arenas that are unpredictable and exhilarating.

Incorporating AI into game design and player experience has shown it’s not about replacing the human touch but enhancing it. It’s about crafting expansive, responsive, and deeply personal gaming worlds where every player feels seen, challenged, and, most importantly, immersed.

Gaming Essentials to Include in Your Pitch Deck

Overview of Your Game:

Type/Category
Supported Devices
Revenue models, Key Performance Metrics (if known)
Current progress stage
Primary technology (like game engine)
Consider incorporating a demo video, early versions, or visual snapshots.

General Info:

Brief game concept overview (1-2 sections)
Titles that inspire you
Fundamental gameplay elements
Intended player demographic
Game universe/background

(Divide this into 2 or 3 slides for clarity)

Distinguishing Features / Selling Points:

What makes your game unique from competitors?
Why players will be drawn to it
Basic gameplay and overarching game narrative
Primary game cycle
Secondary game narratives
Highlighted characteristics

(Organize this info across 2-3 slides for visual appeal)

Monetization Strategy:

Free or Paid model?
Plan for in-game purchases, advertisements, or both? Types of in-game offerings envisioned? If it’s a paid model, potential pricing?

Artistic Direction:

Showcase visual inspirations, preliminary designs, prototypes, animated sequences.

(Recommendation: Integrate visuals from the actual game not just here, but throughout the presentation for consistency and immersion)

Projected Development Journey and Funding Needs:

Duration of current production time?
Anticipated project milestones?
Financial projections and needs?
Beneficial to include: Visual representation of the development journey, manpower allocation, and post-release content strategy.

Team:

Your base location?
Team size and roles?
Competencies and strengths?
Any previous successful launches?
Your overarching mission and goals?

Resources & Good Reads

Communities

The International Game Developers Association (IGDA) is the world’s largest nonprofit membership organization serving all individuals who create games.
The Game Developers Conference (GDC) is the world’s largest annual gathering of game developers.

VC Firms Investing in Gaming Companies

Wonder Ventures

About: Wonder Ventures invests in entrepreneurs who build the world’s most innovative technology companies.

Thesis: Our mission is to invest earlier than anyone in Southern California’s best founders.

Check out their profile here.

Lumikai

About: We are India’s first gaming & interactive entertainment venture fund. We catalyse game-changing, early stage founders building the future of gaming and interactive media.

Thesis: We are curating and supporting a select tribe of India’s most forward thinking, creative and talented founders. Our vision is to find and fund game-changing early stage founders with a bold vision for the future and to help them achieve outlier success. We bring decades of sector strategic experience and knowledge, while leveraging our all-star local and global networks to help propel our founders to success.