Abstract

I use deal-level data from StepStone to perform the first ever analysis of private video game investment using 566 private video game investment deals, most of which come in the form of venture capital. Using these deals, I analyze private video game companies as a source of value accretion and as investment opportunities. Video game companies that receive private equity investment generally outgrow public markets, software private equity, entertainment private equity, and general private equity deals in their multiples and home run rates. Simulated video game funds demonstrate that at the fund level, private video game funds are attractive investments in terms of absolute return, relative to the public market, and relative to similar private investments, both in multiples and rates of return. A novel public video game equities index demonstrates that private video game investment substantially outperforms public video game investment, and public video game investment is generally unimpressive relative to the public equity market and especially relative to public software equities, albeit with relatively little risk factor exposure.

Authors

William Volckmann, Institute for Private Capital