Weekly News Digest #10

Hi all,

We’re thrilled to share an update before delving into our latest digest. Our team is in the final stages of compiling a curated list of over 50 gaming-focused investment funds. This tool, designed for ease of use, will enable you to filter investors by investment stage, region, and sector. Expect to hear more from us shortly!

Two More Local Funds for Saudi Arabia

Saudi Arabia-based National Development Fund (NDF) and Social Development Bank (SDB) have announced a $120m agreement to establish two venture funds, with Merak Capital and IMPACT 46 overseeing their management.

This initiative is part of the Gaming and Esports Financing Program, which is aimed at supporting the development of local gaming and esports enterprises in collaboration with the Saudi Esports Federation. It also aligns with the broader objectives outlined in the National Gaming and Esports Strategy and the Digital Content Program (Ignite), with the goal of positioning Saudi Arabia as a global gaming hub by 2030.

Technology investment firm Merak Capital will manage the first $80m (SAR 300m) fund, creating a gaming accelerator and dealing with venture investments in the local gaming companies, facilitating their growth.

Asset management company IMPACT46 will manage the second $40m (SAR 150m) fund, focusing on the local gaming and esports industry and aiming to attract international companies to Saudi Arabia.

The two more funds confirm that the Saudi Arabian government treats gaming as one of the strategic industries for development. We have already heard a lot about the activity of the Saudi Arabian Public Investment Fund, which suddenly became one of the key investors in the global market. Since 2020, PIF and its subsidiaries Savvy Games Group and Scopely have allocated more than $17B throughout 19 deals. We’ve gathered all the deals in the picture below:

All the disclosed gaming investments by PIF. Source: InvestGame

Though most deals are about diversifying the investment portfolio and gaining market knowledge, the PIF’s activity has already seriously changed the esports scene. ESL and FACEIT acquisition, combined with heavy investment into the market, allowed Saudi Arabia to become the esports capital for some disciplines, especially Dota 2 — Riyadh Masters 2023 was the first time when some other tournament rather than The International had the largest prize pool of the year ($15m vs ~$3.3m of The International 2023). But this is just the beginning. In Oct’23, Saudi Arabia’s Crown Prince and Prime Minister Mohammed bin Salman bin Abdulaziz announced the Esports World Cup held by the country’s government. The future will show how this will influence the market. After all, esports uses a hard-to-execute business model, and even the governmental funds might not be enough.

From a VC financing perspective, Saudi Arabia was traditionally associated with large-cap M&A deals in the gaming industry. However, there has been a limited presence of Early-stage gaming-centric investment firms and little activity from global VCs in the region. The establishment of new funds holds the potential to boost Early-stage activity in Saudi Arabia and the MENA region. This could increase opportunities for local gaming companies, with local investors playing a pivotal role in providing additional support. If you’ve missed it, check the VC activity and the Private Investment market dynamic in our Global Gaming Deals Activity Report 2023.

VENTURE FINANCING

US-based games developer Brain Jar Games has raised $6.7m in a Seed funding round co-led by Transcend Fund and Menlo Ventures, with participation from 1UP Ventures, former Harmonix COO Chris Rigopulos, Oculus co-founder Nate Mitchell, Pragma CEO Eden Chen, Xsolla president David Stelzer, and influencers CohhCarnage and Sacriel, and others. Founded by experienced game developers, the studio is currently developing its debut rhythm-based action title, Dead As Disco, which is set to launch in 2025. Brain Jar Games emphasizes audio components and replayability of its future game, but specific information about the game has yet to be disclosed.

US-based game engine developer Jabali has raised $5m in a Seed funding round led by BITKRAFT Ventures, with participation from Sapphire Sport, Sony Innovation Fund, Canonical Crypto, and other investors. The company is developing a generative AI game engine to make game creation easier for developers. The funding will fuel the expansion of Jabali’s team, refinement of proprietary models, and acceleration of product development.

Canada-based web3 esports platform Moxy.io has raised an undisclosed sum from Canada-based web3 and gaming investment organization GDA Capital, with GDA Capital’s CEO Michael Gord joining Moxy as a Head of web3. The funding will be used to elaborate further on web3 technology in the gaming industry. Moxy.io is an esports tournament platform where gamers compete against each other for rewards created from entry fees. The platform offers up to 15 mobile and PC & console games, varying from FPS to racing. In Mar’23, the platform raised $10m in a funding round led by Shima Capital, Polygon, MetaTope, and GSR Markets.

Turkey-based web3 competitive gaming platform Gamer Arena has raised an undisclosed sum from DOMiNO Ventures, valuing the platform at $6m. This investment will enhance Gamer Arena’s blockchain-based GAU Token ecosystem and develop new AI-based products. The platform hosts over 30 popular games, including titles like FIFA, Clash Royale, and PUBG, with a user base of more than 500,000 members. Platform users can earn GAU tokens by participating in tournaments and playing self-developed games that are accessible via web and mobile platforms. The investment will enhance the blockchain-based GAU Token ecosystem, expanding its utility and offerings.