"It has become much more difficult to attract money. Valuations and risk appetite among investors have fallen, requirements have increased," Ilya Eremeev from The Games Fund about the main thing for 2022

We continue to sum up the results of 2022 together with top managers and experts of the gaming industry. Next up is an interview with Ilya Eremeev, co—founder and General partner The Games Fund (TGF).

What was the year for you personally, where are you now, were there any things that you finally managed to realize and are proud of?

The year 2022 began beautifully: Masha and I (Maria Kochmola, co—founder and general partner of The Games Fund, – approx.ed) we took platinum in League of Legends and were happy about how cool last year closed for us — instead of the planned $30 million, we raised a fund for $ 50 million! We made plans and there was a complete feeling that everything was going uphill and it would only get better in the future.

Then February, the war and the decision not to return. Really, for the first time in my life I had a shock and confusion when you sit on the bed and don’t know what to do. Not at all, not right now.

It passed quickly.

An important event for me was moving to the USA, which I dreamed about since school and systematically went to the goal. Turn out. I plan to be based there in the near future, and then we’ll see. I’m not making a wish right now.

If we talk about personal achievements, then for me one of the most important was that we managed to preserve our community of founders and top managers of The Game Biz gaming industry and not let it disintegrate due to the conflict.

Moreover, this year we have grown almost one and a half times to more than three thousand people, while maintaining a constructive and cozy atmosphere. For me, a project is an important part of life, and I am pleased to see that the chosen model of development and management is working.

I am finishing this year with my family in Cape Town. South Africa is another discovery for me. Absolutely amazing country, incredibly beautiful, unusual, unexpected and diverse.

I hope next year will be calmer in every sense and I will finally be able to unpack my suitcase.

I don’t expect that it will be dramatically better or as before. I plan a big boost and contribution to the development of business and myself.

What was the year for the foundation? What have you done, what in general would I like to highlight in terms of achievements?

For the foundation, the year was surprisingly not as stressful as it could have been. Financially, I would say, excellent. Despite a pause of several months, we are fulfilling our investment plan, our portfolio is actively growing.

None of our companies closed down during the crisis, none carried out mass layoffs. In front of. This year, the first new rounds with the participation of external investors took place. We have already announced something, something else is yet to come.

For us and our investors, this is an indicator that our strategy is working. This confirms our skills in finding cool companies and helping them with development. For first-time-fund-managers, this is very important.

I would also note the expansion of our strategy.

Initially, our focus was on companies from Eastern Europe. Therefore, when potential investors asked us about our competitive advantage, we called it “networking in the region”.

Our network has grown a lot. Now, having retained a huge advantage in Eastern Europe, we have reached Europe as a whole, as well as the UK, Latin America, Turkey and the Middle East. Today we are already playing seriously in the “highest international league”. At the same time, we remain a “boutique fund”, do not chase the number of transactions, develop partnerships with other funds and try to be really useful.

The challenge can be called the need to help our companies and founders with solving the crisis that began because of the war. Everyone found themselves in different situations: someone’s accounts were blocked, someone’s employees panicked, and someone’s office was bombed. Someone needed to help practically, someone financially, someone with advice, and someone just needed to talk to someone calmly in a human way.

I don’t know what will happen next, but we have passed this chapter very well, thanks to the founders of our companies and investors who continue to believe in our strategy and support us.

How has the market changed directly for venture gaming companies over the year (a la, has it become more comfortable for them to work or, for example, increased risks)?

The risks have increased, but the potential has also grown. There is a global, systemic crisis, economic downturn, recession in the world. At the same time, funds that have invested in crises have historically shown the best results. Especially early stage funds. Especially at the beginning of the fund cycle.

Valuations of public gaming companies have fallen, dragging the entire ecosystem along the chain. It has become more difficult to attract new rounds with an increase in valuation to our portfolio companies, we see a lot of extension and downrounds even for quite good companies. Investors who have cash are focused on helping their companies (primarily on extending their runway).

In short, then:

• it has become harder for investors with a large portfolio;
• young growing funds have a unique time of opportunity;
• it is very difficult for those who are just raising the fund (and it will continue to be more difficult).

We try to use the opportunities that have appeared, but at the same time we do not squeeze out any funders or partner funds. For us, this is a long game, we value relationships.

What has changed in terms of venture capital from the perspective of gaming companies that are looking for investments?

It has become much more difficult to attract money. Valuations and risk appetite among investors have fallen, requirements have increased.

On the other hand, the situation with the personnel crisis has greatly improved and, paradoxically, now is the ideal time to build a company. It can be done cheaper, with more motivated partners and employees, by finding investors who understand the current market and the specifics of games.

The experience of our companies and founders says that if you have a cool vision of the product and business, if you have a strong team, and you are also ready to work without smoothies until the first results, then everything is more than possible for you.

If you are used to greenhouse conditions, are not ready to change and adapt (or change and adapt), then, alas, this time has passed. The good times will definitely come again, but while waiting for them, you can miss the most interesting and productive time in your life.

What would you single out as new promising areas in gaming venture or closely related to it?

Cross—platform games (mobile + PC/console, mobile + web) are one of the main trends.

A significant increase in interest in PCs and consoles in general. Many large game developers and funds that previously specialized exclusively in the mobile market are actively investing in large platforms.

GaAs, AA, co-op, innovative gameplay are as always interesting.

Rejection of publishers and, in general, dependence on any third parties — everything is inhouse from IP to marketing.

Some disappointment of investors and players in Web3. More precisely, in the current generation of Web3. It is connected with the performance of the companies where investments were attracted last year and with the crypto currency in general.

The only emerging big trend is, of course, AI, generative algorithms and their applications in the production of games. Globally and long—term is a game changer, which means:

• a leap in the number and variety of content;
• average quality drop;
• the demise of professions and entire businesses (for example, mid-level outsourcing);
• the growth of personalized content.

But this is a separate topic for conversation.

What are the foundation’s plans for next year?

First of all — to invest actively, as well as to help your companies attract new rounds and launch games.

We plan to conduct activities based on TGF. We are still deciding which ones specifically (these may be hackathons, demo days, collabs with conferences and partner funds).

We managed to assemble an excellent team, which consists of a core and external professionals, whom we attract to project work, consultations and one-time tasks for the benefit of the fund and portfolio companies.

We have created a network of partnerships from outsourcing to marketing companies and from recruiters to analytical companies that provide services to our companies on more interesting terms than outside — we will continue to develop this direction.

Next year we will also expand the core team: at the beginning of the year we will open positions of scouts and investment analysts.

With a very small team, we managed to achieve objectively cool results, we are constantly in the top of the ratings of international gaming funds. But so far everything is too much tied to specific people and direct management, and the possibilities of any person are limited. With the growth of the portfolio, we will inevitably run into a limit. We understand where to go and what needs to be done. We will try to convert this into a scalable system without losing the soul and spirit of TGF.

We have recovered from the crisis, have become even stronger and are ready to make the most of the opportunities that have opened up. I repeat that the main thing we will be busy with is the search for new investment opportunities. If you’ve been waiting for a sign, here it is.