Should the gaming industry be putting champagne on ice, or back in the fridge?Back to news
Earlier this month I was in London for the annual ICE conference. As usual, it was packed to the hilt. The scale of the event is testament to the burgeoning gaming industry. But given the broader macro-climate, was it all just smoke and mirrors? Or are we a real canary in the coal mine, asks GP of Yolo Investments, Tim Heath.
Half-way through Q1 of 2023, one would be forgiven for thinking that the macro-climate and the access to funding and capital looks ominous for everyone.
The borrowing costs set by the US Federal Reserve are a good barometer for global trends across the investing sector. In November, the US Fed increased the target range for the federal funds rate by 0.75% to 3.75%-4%. Across the world, the cost of capital has continued to rise rapidly to combat high inflation. This impacts the spending and investment decisions made by all households and businesses.
Over the last year, we have seen the SPAC market largely fizzle out, reducing the likelihood of large-scale M&A unless the acquiring business has significant cash on the balance sheet.
For VCs however, the outlook looks more optimistic — especially in the gaming space when viewed as a portal into web3. While outside money for regulated gaming ventures is becoming more difficult to source, some investors certainly have dry powder ready to deploy when the time is right.