Wednesday, May 22, 2024

Irish VCs signal interest in budding gaming sector amid investment into fledgling firm Jamango!

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Two leading venture capitalist firms have backed fledgling gaming start-up Jamango! in a funding round that raised approximately €2.3m, signalling some interest among investors in Ireland’s budding sector despite a period of volatility.

Elkstone, a leading Irish investment house, and venture capital firm that invests in early stage startups in Ireland Delta Partners co-led the pre-seed funding round for the browser-based player-led game development company co-founded by Adam Dalton, Richard Whelan and Jeremy Klarenbeek. 

The founders have experience working on games including FIFA, The Sims, and Star Wars Battlefront.

Rich Barnwell, investor at Delta Partners and founder of Digit, acquired by Scopely said Jamango!’s “new unique proposition” for developers and gamers is “inspired by platforms such as Roblox and games like Minecraft. Mr Barnwell previously led Digit in developing the popular game Star Trek Fleet Command.

The cash injection will be used to speed up development ahead of the companies planned global launch later this year.

Ahead of entering markets, the pre-seed funding round also attracted several angel investors including Brian Caulfield, chair of Scale Ireland, Brendan O’Driscoll, vice president of product at Figma, and Conor Sheahan, founder of CKS Finance who also joined Jamango! as its chairman.

“We see a major opportunity to bring user-generated content to the browser at a time when the market is signalling a surge in demand for the browser game category,” said Mr Dalton, who co-founded Robotify which was acquired by Imagine Learning in 2021.

The gaming sector was caught in the crosshairs of the tech slowdown which led to large firms cutting staff to become leaner amid inflationary pressures and an e-commerce slump post-pandemic.

Microsoft was among the Big Tech firms that decided to slim down its gaming division Activision Blizzard by announcing plans at the start of the year to cut nearly 2,000 staff. Around 130 jobs in Ireland were affected by the layoffs.

Meanwhile, promising indigenous game developer War Ducks went into liquidation at the start of the year.

However, at the end of 2022 government launched a long-awaited tax relief for digital game development which may prompt further investment amid a challenging economic background.

The credit, which is similar to the Section 481 relief for movie and television makers, is a form of a refundable corporation tax credit available to digital games development companies for qualifying expenditure incurred on the design, production and testing of a digital game.

Eligible companies can claim up to 32% of expenditure in these areas or up to a maximum limit of €25m per project. There is also be a per project minimum spend requirement of €100,000.

Many investors continue to keep their cash closely guarded though in a high interest rate environment as the level of private investment deals into Irish firms plummeted in the first three months of the year.

There were 17 venture capital investment deals in the period, worth around €31.7m, plunging 80% from €166m across 24 deals a year earlier, according to the latest Venture Pulse report published by professional services firm KPMG.

The leading areas of interest for investment this year are medtech, AI, and cleantech companies, according to the report.

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