Gigi Levy-Weiss: “Funds that used to visit Israel every month haven’t been here for a year and a half”
Gigi Levy-Weiss: “Funds that used to visit Israel every month haven’t been here for a year and a half”
Levy-Weiss, General Partner at NFX and considered one of the leading entrepreneurs and investors in the gaming industry, spoke at Calcalist’s Gaming Conference about the struggles facing local startups in the sector.
AI is set to transform the gaming industry, says Gigi Levy-Weiss, General Partner at NFX and one of the leading entrepreneurs and investors in the field, in conversation with Calcalist’s Roy Bergman at Calcalist’s Gaming Conference in collaboration with Google and Playtika.
“Before Playtika was founded in 2010, there weren’t many success stories,” Levy-Weiss said. “Today, the industry is far more mature. The successes we saw in the past, which came quickly and easily, are now much harder to achieve, especially in the mobile space. We have several significant companies in the industry, like Playtika, MoonActive, SuperPlay, and Papaya, and that’s an incredible achievement. Only the cybersecurity sector is comparable in this regard.”
He added that in the future “it will be very hard to succeed and that affects everything. It all started with what’s happening in the public markets and the world of acquisitions. The cost of acquiring players is skyrocketing. Large companies are investing heavily in acquiring players, creating barriers for smaller companies, and haven’t purchased mobile companies in a long time, which trickles down. When it’s hard to succeed and there are no IPOs or acquisitions, investors pull back. To succeed today, you need something different.”
What is something different?
“Investing $2–3 million used to be enough to achieve very good results. Today, that’s not sufficient. There are fewer investors in gaming. As investment activity decreases or shifts elsewhere, the tourist investors disappear. Globally, there are about 20 funds investing in gaming. This means that investors in gaming companies now want more readiness and experience than were required in the past. They want a solid plan they can believe in. Instead of investing $2–3 million, they’re willing to invest $10 million to give companies a real chance to succeed.”
Are there such investors in Israel?
“There are more investors here, not just me. All the major gaming funds have representation in Israel. I get calls from these funds every day. While the state of the industry isn’t ideal, it's no worse in Israel than elsewhere. In the past, there weren’t many investors here, which is why I ended up founding or investing in many companies. It’s funny, SuperPlay was sold to Playtika, and I founded both.”
Levy-Weiss said it was “an excellent deal for both sides with significant long-term rewards.” He noted, “There were other offers for SuperPlay, but Playtika was the best and most serious, mainly because Gilad Almog (SuperPlay’s founder) came from Playtika.”
Is the state of the industry connected to Israel’s current situation?
“Of course, it’s connected. I spoke with a gaming fund that hasn’t visited Israel in a year and a half but used to come every month. The war certainly doesn’t help. The lack of flights or their high cost is a big obstacle. The past two years have hit the entire high-tech and gaming industries hard.”
In April, NFX held an investment marathon for Israeli startups. “We received 1,000 applications,” Levy-Weiss said. “This showed the desperation for funding. We invested in four companies, including several gaming startups, but many came too early, with little proof or ability to show success.”
On AI’s penetration into gaming, Levy-Weiss said: “Ultimately, this industry won’t look the same in a few years because of AI. Some games will stay the same but require fewer people and less money. AI allows things to be done faster; a small team of ten people can now accomplish what 30-40 workers used to. We have a Silicon Valley company that saves 70% of content production costs using AI. The workforce composition has shifted to a few expert artists and many AI specialists.
“We are now deeply immersed in AI, and I believe every new company must integrate it early. Looking ahead, we need to understand how games will evolve in the AI era. We’re entering an age where games can change dynamically as you play, altering the story in real time. AI will enable open-world games that adapt based on player behavior. Characters can evolve during gameplay. Such games have no beginning or end - they last forever. This is a huge opportunity and the real buzz transforming the gaming world.”
