Video games, is the investment spark still there?

Integral service around a transaction
BY : Diego GutiérrezJune Tue, 2013

venture capital isIn the wake of an investment boom, there is a growing body of opinion that the video games sector is unattractive due to a lack of corporate takeover candidates, while others venture capital is are active in seeking new opportunities.

Venture funding versus publisher funding

According to Kristian Segerstrale of Initial CapitalMany have tried to finance themselves through publishers, but few have shown success in doing so. This is because publisher value through funding, marketing, technology and distribution through retail channels does not work well in the digital world. It speaks volumes that not a single project in the current iOS top-25 has been 'published' by a third party."

Does it make sense to invest in the video games sector?

"The sector has been characterised by rapid growth and occasional rapid decline of new entrants, such as Zynga. The limited presence of corporate takeover candidates and the tough market for IPOS is deterring many investors. Developers need to focus on building a video game factory and not just a video game to be attractive enough for venture capital," says Diego Gutierrez (ABRA INVEST) expert in SME financing and growth.

And in Spain?

In Spain, there have been several investments in the video games sector in 2012. "The degree of maturity is not yet defined because we have seen both LBO-type operations and start-up financing. An example of this is Social Pointowned by Nauta Capital and BBVA in a €6 million transaction for an LBO. At the other extreme, participated in a seed operation in PlaceChallenge." analyses Diego Gutierrez.

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