A decline in venture capital funding levels is expected to continue into 2024, with PitchBook forecasting levels to be 72% lower than the previous year at $4.3 billion.
According to PitchBook, startups and investment sources are undergoing changes, with content developers receiving 56% (294) of closed funding deals in the past year. The largest subsegment has been publishers, developers, and studios, with content dominating in terms of closed deals, while development startups hold an advantage in building enterprise value.
PitchBook’s data indicates that the median pre-money valuation of development startups stood at $35 million, followed by access startups at $32.2 million. On the other hand, content had the second lowest median valuation at $17.5 million. Despite this, technology services had the highest median pre-money valuation at $475 million, although this total was somewhat inflated by a few high-value deals within the subsegment.
The recent valuation data shows that startups are facing downward pressure, with many sub-categories experiencing lower step-ups in valuation compared to the previous year. PitchBook also expects the fundraising gap between content and development startups to narrow due to changes in the investor landscape, with non-gaming investors potentially shifting towards more familiar business models like SaaS.
As for corporate VC investment in gaming, although it performed slightly better than the overall gaming VC market in the past year, historically active firms faced regulatory and geopolitical challenges. With decreased funding and a challenging outlook for public listings, PitchBook predicts a slight increase in M&A and CVC activity in 2024.
