Games VC funding down 68% YoY per PitchBook Q3 report

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The games venture capital market continues to contract according to PitchBook’s Q3 gaming report. Last quarter, VC firms closed 113 deals for a disclosed $857.0 million.

Both the number of deals and deal value fell compared to the previous quarter and Q3 of 2022. The number of deals saw a more modest contraction, falling 10% QoQ and 50% YoY. Perhaps more worryingly, disclosed deal value fell 35% compared to Q2 and 68% from Q3 2022’s total.

Additionally, the first three quarters of 2023 saw a severe decline compared to the same period last year. Deal count is down 54% for the year to date, while disclosed deal value is down 76%.

Currently, 2023 is on pace to narrowly outperform 2019’s $3.7 billion funding total with $3.1 billion invested in the first three quarters. The last four quarters have ranged between $800 million and $1.1 billion in disclosed investments.

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Unlike the previous two quarters, early stage deals accounted for the largest portion of VC investment according to Pitchbook data. In total, early stage companies accounted for $353 million (41%) of disclosed funding. Previously, late-stage companies led in all categories, but closely followed early stage startups this quarter, attracting $299 million (35%) of allocated funding.

Early-stage and seed/pre-seed companies closed over 70% of VC placements in 2023, however these companies attracted a slightly smaller proportion of allocated capital — 48.1% —