Funding to gaming startups is a lot like gaming itself. Sometimes players are up or down due to factors like skill, practice and perseverance. Other times, it’s just dumb luck.

Investment in gaming startups is like that too. Sometimes funding fluctuates for concrete reasons like the quality of the startup pipeline or how overall investment is trending. Other times, there’s no obvious cause.

The second quarter appears to be one of those other times. Per Crunchbase data, global funding to gaming-focused startups totaled $579 million in Q2 — down 33% from Q1 and roughly flat compared to the same period last year.

For perspective, we charted out gaming startup investment over the past six quarters below:

Not a lot of really big rounds

It doesn’t look like anything dramatically changed about the outlook for gaming startups or the industry overall in the past couple months. People are still as game-addicted as ever. And shares of the top public companies in the space, such as Take-Two Interactive Software, Electronic Arts, Sony and Nintendo, have mostly risen or stayed relatively flat.

One factor pushing down the latest quarterly numbers, however, was the absence of very big financings. In Q1 of 2024, two companies closed financings of $100 million or more: immersive gaming platform Build A Rocket Boy; and  game developer Second Dinner Studios. In Q2, the biggest rounds were half that size.

Still, we did see intriguing companies raising good-sized financings in the second quarter.

One was Istanbul-based Spyke Games, a developer of casual games for mobile devices that reportedly scooped up $50 million in a May financing led by Moon Active. Its top titles include puzzle game Tile Busters and 3D matching game Blitz Busters.

Another was Singapore-based k-ID, which focuses on child safety in gaming and secured $45 million in a June Series A led by Andreessen Horowitz. The year-old startup develops tools that can automatically configure a game to make it age-appropriate for younger users.

For a broader view, we put together a list of 12 gaming-related startups that raised rounds of $10 million or more in the past quarter.

Where we are in the cycle

As far as gaming-related funding goes, we’re clearly not anywhere near the peak. Gaming-related startups raised over $12 billion in 2021, a record year for the space. This year is on track to come in at less than one-fourth that level.

A higher interest-rate environment is one factor behind the slowdown, cited by Robin Guo, a gaming-focused partner at Andreessen Horowitz, who said would-be investors have become more risk-averse.

“Because games take so long to bake and there’s not a ton of signal gained during that process, the capital at stake is considered quite risky and illiquid over a long period of time,” Guo wrote in a recent post. Just building a mobile game could take at least a year and cost several million dollars. And there’s no guarantee it will be popular.

Still, there’s plenty of enthusiasm for pockets of the gaming industry seen as poised for growth ahead. While today there’s limited startup investment at the intersection of AI and gaming, for instance, a16z and others presume that will eventually change.

For now, however, investors seem to be cautious in their gaming strategy. That’s often not the mindset that produces a winning hand, but it does limit the risk of huge losses.

Related Crunchbase Pro list:

• Q2 2024 Gaming-Related Sample Financings

Illustration: Dom Guzman