Seeing the game industry which actually grew during the pandemic, it is no wonder that investors are still interested in investing in gaming companies. According to an InvestGame report, throughout 2020, there were 665 investments and Merger & Acquisition agreements throughout 2020. Meanwhile, the total investment value last year reached US $ 33.6 billion.
Investments for Game Companies
Throughout 2020, game developers and publishers received 107 early-stage funding, aka early-stage funding from venture capital. In total, the value of all this funding is US $ 426 million. About 70% of the total funding round is an investment in the pre-seed and seed rounds. Meanwhile, 42 of the total investment is aimed at companies engaged in the mobile game segment, with a total investment value of US $ 123 million.
According to an InvestGame report, most game startups that received early-stage funding last year came from the United States. A total of 40 investment rounds – with a total value of US $ 154 million – are aimed at US-based gaming companies. Meanwhile, in Japan, there are only five funding provided to local startups. Even so, the total investment value in Sakura Country reached US $ 110 million or around 26% of the total investment throughout 2020.
Apart from early-stage investments, InvestGame also tracks data on Late-stage investments in the gaming industry. In total, there will be 48 final stages of funding occurring in 2020, with a total investment value of US $ 2.9 billion. It’s just that, the final stage of investment in the game industry experienced a decline in Q2 2020. However, in Q3 2020, there were several large funds that made the total investment value throughout 2020 skyrocket. One of them is an investment of US $ 1.78 billion received by Epic Games, a developer and publisher from Fortnite. Apart from Epic Games, Roblox also received a large enough investment. In the Series G funding round, Roblox raised US $ 150 million.
During the first six months of 2020, there were 59 Merger & Acquisitions (M&A) transactions with a total value of US $ 3.5 billion. Meanwhile, in the second semester of 2020, two large M&A transactions took place. First, Zynga Inc. spent US $ 2 billion to acquire a casual mobile game developer from Istanbul. Second, the acquisition of Leyou Technologies by Tencent. To acquire the PC and console game developer from Hong Kong, Tencent is willing to spend US $ 1.4 billion. Thanks to the acquisition of Tencent and Zynga, the total valuation of M&A transactions during the second half of 2020 increased by 100% when compared to the first semester.
The fact that the gaming industry continues to grow amid the pandemic makes investors not bothered to invest in gaming companies in 2020. In fact, in the past year, there were 11 game companies that successfully conducted an initial public offering (IPO), with the total investment value reaching US $ 900 million.
In addition, last year, NetEase also managed to raise US $ 2.7 billion by conducting a Secondary Public Offering (SPO). According to Investopedia, SPO is a sale of shares made by a company that has conducted an IPO. Meanwhile, Blizzard Activsion can raise US $ 2 billion by doing a Senior Notes Offering.
In recent years, there have been more and more venture capitals interested in investing in gaming companies. In 2020, there are several venture capitals that will stand out. One of them is BITKRAFT. This venture capital company participates in at least 50% of the funding round in the gaming world, making them the most active venture capitalist in 2020. Regarding investing in gaming companies, Galaxy Interactive is the second most active venture capitalist after BITKRAFT. The third position is filled by Andreessen Horowitz, who leads the Series G funding for Roblox.
Investing in the Esports World
The pandemic is the blessing behind the disaster for the game industry players. However, for esports industry players, the pandemic is a double-edged sword. Indeed, the viewership of esports tournaments in 2020 will increase, but a number of esports competitions have to be postponed or canceled. Even so, venture capitalists are still interested in participating in early stage funding for esports industry players.
In total, there are 59 initial stage investments in 2020, with total investment funds reaching US $ 152 million. Last year, one of the investments in the world of esports that caught people’s attention was the Series A funding round for Guild Esports. At that time, the esports organization owned by David Beckham received an investment of US $ 25.7 million.
Meanwhile, there are 24 final rounds of funding in the esports industry throughout 2020. When compared to the number of funding rounds in the early stages, the amount of investment in the final stage is indeed less. However, from a valuation perspective, the total investment value for the final stage is much larger, reaching US $ 669 million. One investment that was widely reported last year was the Series B funding obtained by VSPN. The esports company from China received US $ 100 million in an investment round led by Tencent.
Throughout 2020, esports players are still quite active in conducting Mergers & Acquisitions (M&A). The proof, there were about 37 M&A transactions last year. The total value of merger and acquisition transactions during the past year reached US $ 500 million. According to InvestGame’s analysis, one of the main reasons companies engaged in the esports sector conduct M&A is to become the majority shareholder and control the companies they acquire. The proof is, in 35 M&A transactions, the acquiring company ended up being the majority shareholder.