In the competitive world of video game development, the strength of a founding team often determines a startup’s ability to secure investment. This principle is especially evident in the gaming industry, where alumni from major studios like Riot Games have created a ripple effect, leading to the formation of numerous new companies.

With the recent announcement of Spectre Divide by Mountaintop Studios, founded by former employees from industry giants like Naughty Dog, Blizzard, and Riot Games, there's renewed interest in exploring the influence of these alumni-led startups on the broader market. In this article, we unpack recent data from a report published by GDEV and InvestGame.

Riot Games Alumni Secure Over $450 Million

Over $450 Million Secured

This write-up focuses on the role of ex-Riot Games employees in shaping the gaming startup ecosystem. With nearly $450 million invested in 25 companies founded by ex-Rioters across 35 funding rounds between 2020 and 2024, the question arises: How do these alumni-driven companies compare to the broader industry in terms of investment and success? Out of the 25 companies that secured funding, the majority demonstrate a strong focus on the PC and Console gaming sectors.

• 17 companies are developing PC and Console games, with 6 of these also extending their efforts to mobile platforms.
• 6 companies are centered around web3 gaming projects, primarily content creation, with 5 involved in gaming and 1 in esports.
• 1 company is a mobile game developer: Aglet, known for location-based AR games, which has since ceased operations.
• 1 platform, VENN, which branded itself as the "MTV for gaming and entertainment."
• 1 tech company, Pragma, a backend game development engine.

Interestingly, several funded projects are isometric RPG games, including Theorycraft Games’ MOBA and Battle-Royale hybrid Supervive, Elodie Games’ co-op RPG Seekers of Skyveil, Studio Sai’s RPG Eternights, Vela Games’ co-op Rogue-like Evercore Heroes, and Pahdo Labs’ co-op Action-RPG Halcyon Zero.

Among the 35 funding rounds, 3 were Late-stage transactions (Pragma, Theorycraft Games, and Singularity Six), while the remainder were Early-stage VC rounds, including 21 Seed rounds and 11 Series A rounds.

Top Six Companies by Total Invests with Ex-Rioters on the Team

Investment Trends: Ex-Riot vs. Industry Average

Riot Games, known for its hit titles like League of Legends and Valorant, has been a major force in the gaming industry. The expertise developed at Riot, particularly in maintaining popular games and expanding intellectual properties, has made former employees highly attractive to venture capitalists.

Between 2020 and 2024, ex-Riot founders launched 25 startups, securing $450 million in disclosed investments across 35 rounds. These investments spiked during the 2021-2022 period, mirroring broader industry trends, before declining in 2023. Despite this decline, the investment levels remain higher than pre-pandemic figures.

A closer look at these investments reveals that 17 of the 25 companies are focused on developing PC and console games, with some also targeting mobile platforms. Web3 projects and other specialized sectors, such as backend game development engines, are also represented among these startups. Notably, the average deal size for early-stage rounds involving ex-Riot founders is $11.1 million, significantly higher than the industry average of $7.3 million.

Number of Investments in Studios Founded by Ex-Rioters by Segment

Follow-Up Funding and Investor Confidence

The data indicates that ex-Riot founders are not only successful in attracting initial funding but also in securing follow-up rounds. A cohort analysis of companies founded between 2020 and 2023 shows that ex-Riot teams are nearly twice as likely to obtain subsequent funding compared to the broader industry average.

This trend underscores the confidence investors place in these alumni, likely due to their proven track record at Riot Games. Leading venture capital firms, including a16z, have been particularly active in backing these startups, further bolstering their potential for long-term success.

Share of VC-backed Companies That Raised Funds After the First Round of Financing

Product Development: Successes and Challenges

While ex-Riot founders have demonstrated a strong ability to raise funds, their success in delivering products has been mixed. Most projects are still in development, with only seven companies having released products to date. Among these, none have achieved widespread industry recognition.

One of the early success stories is Wonderstorm, founded in 2016 by former Riot Games creative director Aaron Ehasz. The company is best known for producing the animated Netflix series The Dragon Prince, which has completed six seasons. However, Wonderstorm has yet to make a significant impact in the gaming world, as it is still developing a game based on the show.

Another notable company is Pragma, a backend game development engine founded in 2020 by Chris Cobb, a former Riot Games lead engineer. Pragma has raised $38.2 million across three funding rounds and has successfully released its product, gaining partners such as People Can Fly and Omeda Studios.

Most Active VC Funds Investing in Ex-Rioters' Studios (2020—2024 YTD)

Case Studies: Successes and Failures

The story of Singularity Six exemplifies the challenges these alumni-led startups face. Founded in 2018 by Riot veterans Aidan Karabaich and Anthony Leung, the company launched its debut MMO, Palia, in 2024 after five years of development. The game initially received criticism for technical issues and expensive in-game cosmetics, leading to layoffs and an eventual acquisition by Daybreak. Despite these setbacks, Palia managed to recover, stabilizing its player base and earning mostly positive reviews.

On the other hand, some ex-Riot ventures have faced more severe challenges. VENN, dubbed the “MTV for gaming and pop culture,” was founded in 2019 by Ariel Horn, a former Riot Games head of esports content. Despite raising $43 million, VENN was shut down in 2022 due to its inability to retain viewers. Similarly, Aglet, a mobile AR gaming studio, failed to find its audience and was liquidated in 2024.

Top-6 Ex-Riots Companies by Total Funds Raised

Conclusion: A Promising Yet Uncertain Future

The influence of ex-Riot Games employees on the gaming startup ecosystem is undeniable. These alumni-led companies have been remarkably successful in securing larger-than-average investments and follow-up funding rounds. However, the true measure of their success—delivering hit products—remains uncertain.

Most of these startups are still in the early stages of product development, making it too soon to definitively judge their impact on the industry. The cooling of the market and the end of the "easy money" era from 2021-2022 have also made it clear that a strong background, even from a prestigious company like Riot Games, is no longer sufficient to guarantee success.

As these startups continue to develop their products, the next few years will be crucial in determining whether the investment in ex-Riot founders will pay off. Until then, the industry will be watching closely to see if these alumni-led ventures can deliver on their potential. You can read the full report here.