Gaming Startup Funding Drops Sharply in 2025
Despite strong industry demand and major acquisitions, 2025 is on track to be the weakest year for gaming startup investment.
2025 is proving to be a tough year for the gaming startup sector. So far, global venture funding for companies in the gaming space has reached only around $627 million. If this trend continues, it could mark the lowest annual total in years.
Funding has been steadily declining over recent quarters. As the second quarter wraps up, it looks like this may be the weakest period for gaming startup investment in a long time.
Strong Demand, Weak Funding
Despite the drop in funding, the gaming industry remains strong in terms of user engagement and spending. In 2024, over 190 million Americans played video games, and total spending on games, consoles, and accessories topped $57 billion.
Publicly traded gaming giants are also thriving. Companies like Roblox, Nintendo, and Take-Two Interactive have seen their stock prices rise in 2025, showing continued market interest and confidence in the industry.
Major Acquisitions Continue
The merger and acquisition space tells a more positive story. In March, Scopely acquired Niantic’s gaming division—the studio behind Pokémon GO—for $3.5 billion. In May, CVC Capital Partners made a $2.5 billion investment in Turkey’s Dream Games, the maker of Royal Match and Royal Kingdom. The deal involved both debt and equity, and existing venture investors exited the company.
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Few Big Rounds for Startups
While major companies are thriving, actual gaming startup funding has been limited. There have been no funding rounds of $100 million or more so far this year, a significant change from previous years.
Still, a few notable deals have taken place. Brooklyn-based Underdog Fantasy, a fantasy sports platform, raised $70 million in a Series C round led by Spark Capital—the largest gaming startup funding round so far in 2025.
Istanbul has emerged as a key hub for mobile game development. Grand Games raised $30 million in a Series A round for its animated mobile titles, while Bigger Games secured $25 million for its puzzle game, Kitchen Masters. Together, these deals highlight Turkey’s growing importance in the global gaming ecosystem.
Challenges Facing the Industry
The slow pace of gaming startup funding comes at a difficult time for workers in the industry. A recent survey from the Game Developers Conference showed that 1 in 11 game developers lost their jobs over the past year. Major companies such as Microsoft, Sony, and Electronic Arts have all implemented significant layoffs and canceled several high-profile projects.
One reason for the funding slowdown may be the flood of investment into generative AI companies. While these firms aren’t classified as part of the gaming sector, their tools are increasingly used by developers for creating content, dialogue, and visual design.
Looking Ahead
With so many skilled developers affected by layoffs, there is an opportunity for the gaming startup scene to absorb this talent. Increased investment in new ventures could help unlock fresh ideas and create jobs in a still-growing market.
While 2025 has been slow so far, the demand for games remains strong. A rebound in gaming startup funding could help bridge the gap between industry talent and new innovation.