Per data, seed- through growth-stage investment in companies tied to the gaming industry hit a multiyear low last year. Large, pre-IPO rounds all but disappeared, and early-stage action remained muted.

For perspective, we charted out global investment for the past six calendar years below. It shows that funding in 2023 was down 79% from the prior year.

U.S. investment, charted below, posted an even steeper decline. Funding fell a whopping 86% year over year in 2023.

Not an industry in decline

Although startup funding nosedived, the broader gaming industry didn’t have a particularly bad year.

The largest publicly traded gaming companies, including , , and , all ended 2023 with share prices well above where they began. And in October, finally consummated the largest acquisition in industry history, snapping up for $68.7 billion.

Hit games also piled up, including (Nintendo), (EA), and (). For Nintendo, profits from its Mario and Zelda brands added up to one of its .

Notably, however, the largest success stories go to well-known, large-cap players in the gaming space. Given the stickiness of established franchises, perhaps it’s a tough environment for newcomers to compete.

Large round pullback

Venture investors’ recent lack of interest in gaming deals is particularly apparent at the late stage and for jumbo-sized rounds.

In 2023, there were no late-stage venture rounds of $100 million or more for digital gaming companies, per Crunchbase data. IPO filings weren’t happening either, nor were public market debuts.

In 2022, by contrast, capital flowed more freely. , which remains a private company although it is aging out of the startup label, picked up $2 billion in a financing co-led by Sony.  of Santa Monica, California, landed $160 million in Series D financing co-led by .

Newer companies also shared in the largesse. , a metaverse gaming platform, and , which combines Web3 technology, NFTs and games, each landed $200 million in 2022. Both were less than 2 years old at the time.

For last year, changing spending habits likely had an impact. During the depths of the pandemic, homebound consumers spent more time and money on video games. More recently, however, consumption has increasingly shifted to activities outside the home.

The downturn in funding for adjacent categories — in particular Web3 and metaverse — has also spilled into gaming. Startups plugging offerings such as NFT integration in gaming or metaverse games were hot in 2021 and 2022. Now, not so much.

Better fortunes in 2024?

Looking ahead, optimists can point to a few factors that could result in a more favorable 2024 investment climate.

For one, the 2023 funding tallies are so low that even a historically subpar year will show a marked improvement. The quiet funding environment of 2023 also doesn’t mean investors were sitting out deal vetting.

In this notoriously hits-driven business, there are always new titles coming out with potential to go viral. And historically, quite a few of those result from the creative energies of startups.

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Last year, Tiger took part in 288 deals, with those deals totaling a mind-blowing $23.2 billion, . (It is important to note that the total amount of deals is not Tiger’s stake but the total amount invested by all investors. Individual stakes by VC firms in a single round usually are not announced.)

With only weeks remaining in 2023, the firm has taken part in only 27 deals, totaling less than $2 billion. In fact, Tiger has only one announced deal thus far in Q4 for an undisclosed amount.

While the biggest round Tiger participated in this year was ’ massive $500 million-plus Series I led by funds and accounts advised by , the biggest round it led was a much smaller Series B worth approximately $61 million for Brazil-based fintech startup .

Last year, Tiger co-led a $768 million Series E for London-based on-demand delivery startup .

Different time

However, 2022 was a very different time for Tiger, especially early in the year when it took part in more than 240 deals.

The second half of last year saw the venture market recoil, as interest rates rose, inflation crept in and the public markets became wobbly.

The result was a significant venture capital pullback — especially in late-stage growth rounds, where Tiger participated — valuation drops and massive recalibration through the tech startup ecosystem.

This year Tiger has seen some of the effects of those changes.

In February, Tiger had yet again reduced the target size for its latest venture fund to $5 billion — down from a $6 billion target it set last fall and down even more from the $8 billion the firm had anticipated raising earlier.

Just last month Tiger Global told investors that venture head was stepping down from his role and transitioning to a senior adviser position.

After that announcement, investors in Tiger’s were facing an 18% paper loss at the end of September — after the firm cut valuations on some of its portfolio companies.

Per that report, Tiger marked down AI-powered workflow company by 45% and search engine platform by 72%.

It also marked down a couple of its NFT-related companies — was down by 69% and NFT marketplace by 94%.

WSJ previously reported Tiger in its venture funds last year by about 33%, erasing $23 billion in value.

Earlier in the year, several notable mark downs from the firm’s PIP fund, including its entire $38 million investment in the now bankrupt and , as well as other crypto and Web3 investments such as , decentralized wireless network company , and a significant writedown on its largest holding, .

It seems clear some of those markdowns may have made even a tiger a little timid in this market.

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Related reading:

• Tiger Catnapped As 2022 Wore On
• Tiger Global’s $12.7B Venture Fund Down 20% — Report

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