Video Game IB/VC/PE

Does anyone have any thoughts on this as to what firms have a group for video games? Is it just handled within the tech groups?

It's going to be a huge industry in the future, and I want to know more about it. Would also love to be pointed towards resources on both news/social media that talk about activity and trends in the space.

Yes, I'm a gamer working in finance, and I would love to do something like this for the long term.

Comments (35)

  • Prospect in IB-M&A
Sep 9, 2021 - 3:52pm

One of the directors at liontree also owns a gaming only VC fund, consequently I believe liontree does a good bit of deals in the space

  • Prospect in IB-M&A
Sep 9, 2021 - 3:52pm

One of the directors at liontree also owns a gaming only VC fund, consequently I believe liontree does a good bit of deals in the space

Sep 10, 2021 - 8:23pm

Nope the G in REGAL is specific to casinos and the likes, not video games. Most places who bank video game guys will bucket that coverage into TMT.

Sep 9, 2021 - 4:26pm

Love love love the space, especially outside of the majors. There is a huge push to acquire smaller/independent devs, a lot of whom are doing really cool things.

It's often ignored but mobile gaming is the space to be. You'd be surprised how much dough these pay to win mobile games generate. Plus the audience is much much MUCH larger than console / PC.

  • Prospect in IB - Gen
Sep 9, 2021 - 5:14pm

Obviously from the economics angle of it mobile is the place to be, but to most people who considers themselves "gamers" that would be a pretty soul-sucking experience all things considered lmao. Terrible game after terrible game, all focused on extracting money from middle aged women and young kids with dubious ethics, etc.

That said @OP if you're looking to get into gaming IB/VC/PE you should be forewarned that you will be touching the mobile side of things a lot more, and probably not dealing all that much with what you'd consider good or interesting games.

  • Analyst 1 in IB-M&A
Sep 9, 2021 - 5:23pm

Bookmarking because I love the space as well. Heard that Lazard LA just added a Digital gaming MD, although it's a primarily A&D focused office. Gaming is going to continue to skyrocket and really bleed into all of the different entertainment/tech industries. Dream career: Digital Gaming/ Media IB > Gaming GE/VC > B School maybe > Game developer Corp dev

Sep 10, 2021 - 12:26pm

Lol your dream career is lasting 2 years in IB and VC / GE and then forking it all up for business school for Corp. dev? Kinda a strange dream path. Why wouldn't it be crushing it as a IB or senior PE pro or going straight to Corp. dev? There's nothing sexy about just doing 2 years as a PE associate 

Sep 10, 2021 - 12:37pm

Some corp dev jobs prefer a PE background.

Will say pre-IPO corp dev at companies that are either unicorn or unique tech is quite underrated (200-300K comp but super interesting work and the potential of a 7 figure payday if you get in early enough for equity).

Most Helpful
  • VP in IB-M&A
Sep 9, 2021 - 8:43pm

Video game is quite a unique vertical from a banking/investing coverage perspective so I thought I could provide some additional colors. The broad video game vertical mainly includes a large number of game studios plus a few large platform players. For this post, I will just focus on gaming studios (PC/Console/Mobile) which is at the core of the vertical.

The industry itself has already made more money than movie and music combined but is still considered niche from mainstream investors and bankers (at least before the pandemic). The key fundamental shift is the massive and growing engagement hours from all demographics in gaming now vs other media/entertainment channels. These years it has slowly become one of the most active sectors for investment and M&A. Many new startups trying to create the next Fortnite, Candy Crush or Among Us attract billions of dollars while established and new companies found great exits through M&A (and to a much less extent through IPO/SPAC). All factors above combined make it a great vertical for young bankers/investors to focus on if you are passionate about the industry.

Video game M&A tends to be private, smaller than large-cap TMT (a few billion+ deals per year) but very active in the $100-$1bn EV range. From a business perspective, you will focus a lot on BD/positioning given young bankers usually know the product and trend better. From a technical perspective, it tends to be heavily P&L and operating model (metrics, cohort, etc.) focused vs. balance sheet/cashflow/debt /merger math. 

Bulge brackets and well-known EBs historically have not focused on this vertical so you won't be able to focus on this vertical (deal flow is not stable even though every bank has a global head of gaming these days). The top boutqiue banks in this space are Aream (exclusively gaming-focused bank in London and SF), LionTree (dedicate gaming team in SF), and Raine (NYC, SF, Shanghai).

A number of gaming-only VCs also got created last few years (almost zero gaming only VC 5 years ago). The top ones are Makers, Galaxy interactive, Griffin (related to LionTree), London Venture Partners, BitKraft, and a few others. A few tier 1 VCs like Index, A16Z, and Lightspeed also have dedicated gaming teams. All major growth equity or private equity firms claim they have huge interests in this vertical now but only a few have actual experiences - KKR, Blackstone, Insight, to name a few.

  • Analyst 1 in IB-M&A
Sep 10, 2021 - 9:42am

Mind enlightening us on the distinction he's missing instead of just charging him with the omission? would be helpful to the rest of reading, trying to understand the industry nuances better

  • VP in IB-M&A
Sep 10, 2021 - 10:50am

You just gonna forget about the distinction between studios and publishers? 

You got a point. Probably I should use the word content provider vs studio to be more precise but in reality it doesn't matter that much from a banking/investing perspective. Most bankable companies these days have development capabilities and own IP (either developer or developer/publisher hybrid, most likely latter). Pure publishers are rare and less interesting. Pure work-for-hire studios are good targets for cashflow hungry PE but not really growth assets (and with a very different business model).

Sep 11, 2021 - 2:28pm

I have some gaming investments in my PA. However, as someone else said the good investments make some of the worst games with predatory business models from a gamer point of view. Good games have a long history of being unprofitable.

  • Analyst 1 in IB-M&A
Sep 12, 2021 - 1:07pm

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