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  • Writer's pictureShanti Bergel

Goodbye 2023, Hello 2024

Considering the topsy turvy financial climate of the last year, the Transcend team is proud not only to have closed our second fund in 2023 but also to have substantially progressed our firm goals and methodology behind the scenes. Our first fund was in the top IRR decile for all 2020 vintage venture funds according to Pitchbook. Transcend has led every deal we have done over the past 18 months, all of which were oversubscribed or exclusive. We held our first Summit and CxO events to resounding approval and our founders amassed an impressive array of awards, revenue, recognition, up rounds, and even a few world records. With the Transcend approach and value proposition battle-hardened and validated, our continued aim is to level up as the preferred partner of the industry’s most ambitious and accomplished entrepreneurs working to transcend the boundaries of video games and digital media to deliver against the colossal market potential of the space. 

Against the backdrop of an unsteady economy and global political tensions, 2023 was also a year marked by layoffs in the game industry with approximately 10,000 jobs lost globally across the ecosystem. The impact of inflation and interest rates rippled out, contributing to the collapse of Silicon Valley Bank, a frozen IPO window, and fresh uncertainty in private markets. Paired with a marketing environment in turmoil, particularly on mobile, venture investment slowed considerably. Still, the games audience continued to grow - hitting almost 3.4B players worldwide. It was also the best year in gaming quality in decades according to critics with double the average number of titles scoring a 90+ Metacritic rating. Until it was dethroned by Barbie, the Super Mario Bros. movie was the top grossing film of 2023 at both the domestic and international box offices. It is also the biggest video game adaptation in movie history and enjoyed above average box office sustain - underlining its broad audience and word-of-mouth appeal. The long term value of gaming IP continues to compound as gaming-first, digital native generations engage with their favorite content across a multitude of services and devices. 

We at Transcend continue to be deeply optimistic about the future of gaming. The dynamics underpinning the decades-long expansion of the industry remain intact despite recent macroeconomic headwinds. Gaming continues to be advantaged by every modern digital growth vector, at scale. As computing has evolved, costs have dropped, and access has broadened, the creative and commercial space for gaming has exploded around the world. AI and UGC add considerable new fuel. Demographically, the preferred form of socializing and entertainment for Gen Z are video games. The gaming carrier wave is ubiquitous and its place in popular culture is pivotal. Transcend is positioned at the forefront of this vibrant industry. The most bullish analysts estimate the video game industry will generate over $665B by 2030 and recent reports from McKinsey and Goldman Sachs note the key role of games in the next multi-trillion dollar evolution of computing. This is well understood by the world's biggest tech firms as evidenced by Microsoft’s record-breaking acquisition of Activision Blizzard for $68.7 billion. Amazon, Google, Apple, Meta, Netflix, Tencent, Sony, and Microsoft have over $229 billion in combined cash on their balance sheets and are evaluating additional deals in gaming.

Animated by this thesis and in partnership with our founders, it is a privilege to celebrate this year’s achievements around the portfolio. Here are a few notable moments from 2023.

Key Portfolio Updates

🌳 Gardens, whose oversubscribed Seed round we led in 2021, raised a blockbuster $31.3M Series A in July led by Lightspeed and Krafton with support from execs from Microsoft, Sony, Tencent, Bandai Namco, Atlantic Records, TikTok, Blizzard, Oculus, and many more. The news received coverage across 50+ media outlets. A few months later in October, Gardens went on to win Best Game Studio at inaugural Game Changers Awards earning a near-perfect score from the judges. 

🕊️ thatgamecompany, our first unicorn, was awarded a Webby for its groundbreaking in-game concert with singer Aurora in May. A few months later, the team won Best Mobile Game at Gamescom 2023 and broke not one but two Guinness World Records with their game, Sky: Children of Light. Sky has been downloaded over 160M times and an animated series based on the world and lore of Sky is coming in 2024.

💀 BONELAB and BONEWORKS from Stress Level Zero were once again awarded Platinum on Steam, marking  five years in a row the studio has achieved this honor - this time with multiple titles. The company is very profitable and Transcend is the only investor. 

⭐ In April, Transcend announced our oversubscribed lead investment in Cosmic Lounge, a mobile game studio that is innovating in the immense free-to-play puzzle game category by fusing deep domain expertise with a proprietary AI-enhanced engine and development methodology. In November at RovioCon, Founding CEO Tomi Huttula pulled back the curtain to illustrate their practical, no nonsense approach to leveraging AI to boost production by 10x. 

🎬 Trioscope was honored at the IMAGE Film Awards Gala alongside President Jimmy Carter (accepted on his behalf by Francis Ford Coppola) and Game of Thrones creator, George RR Martin.

💯 Polygon was recognized as one of TIME magazine’s 100 Most Influential Companies of 2023. 

🏄 Treehouse Games announced Voyagers of Nera, their flagship cooperative survival game. 

🏔️ After much anticipation, Singularity 6 launched their debut game Palia on PC and the Nintendo Switch. In just two weeks, players logged over 7 million hours of playtime, 3 million hours watched on Twitch, and the Palia Discord hit well over 250K members.

🚀 Transcend held our first ever Summit event in the beautiful California wine country with attendance from our founders, LPs, and senior industry figures from Microsoft, Sony, Epic, Roblox, and many others. Transcend also held our first ever CxO event at GDC in San Francisco, bringing together over 150 senior leaders and C-level executives from key public and private companies shaping the digital entertainment landscape.

If you would like to connect with us in the coming months, our preliminary conference schedule includes:

🇬🇧 Pocket Gamer, January

🇺🇸 D.I.C.E. Summit, February

🇺🇸 Game Developer Conference, March

🇩🇪 Gamescom, August

🇫🇮 SLUSH, November

See you in 2024!

About Transcend Fund

Transcend is a top performing early stage venture capital firm that partners with the boldest founders in the industry to collaboratively build the future of interactive entertainment.

Founded in San Francisco by gaming veterans, the Transcend portfolio features a preeminent group of high growth digital entertainment companies around the world.

More information about Transcend can be found on our website. Follow us on LinkedIn for the latest news from around the Transcend ecosystem.

About Shanti Bergel

Shanti is the founding partner of Transcend and a 30 year game industry veteran.

His global operating experience spans every major platform and business model transition of the last several decades and is animated by a career-long fascination with how changes in technology and distribution affect products, services, and communities.

Shanti is a recognized member of the Techcrunch List, speaks fluent Japanese, and is a frequent speaker on early stage investment, M&A, and strategic partnerships in digital entertainment.


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