Fundraising status for gaming startups in Feb 2023 🧵

1/ Gaming is big, and it's getting bigger every year. But finding success isn't any easier. Macro events have caused VCs to be more cautious at deploying.

2/ Valuations are still high and mighty, whereas correction has started in other tech. Not sure if we will go back to 500K at 3M, but there's probably a middle ground (i.e. 2018 valuations)

3/ More gaming VCs on the scene has meant that more startups will get funded. But at the same time, proving things post-investment as become de-facto procedure.

4/ Big shift already happened: there's less appetite to make the second investment (Seed after Pre-seed) without KPIs. It might take years, or a new bubble, to raise the second round pre-numbers.

5/ In the 2000s, when I was raising VC funding for my first company, there was a complaint that it's hard to get funding. It made sense because there were a few European VCs doing early stage. Now the complaint "it's hard to get funding" has changed to "VC didn't believe in me."

6/ I believe that shifting risk more to the entrepreneurs, proving things to an extent, ahead of capital raise, will make more successful companies.

I wrote a piece about the current state: elitegamedevelopers.com/egd-news-167-2023-predictions-for-gaming-startups/