In the 1998 film Shakespeare in LoveIn The 40 Years of Business, Geoffrey Rush plays the troubled owner of the Globe Theatre. In one scene, he memorably fails to explain to creditors why his business seems to be heading for ruin again and again.
“Let me tell you something about the theater business,” he says. “The natural conditions are full of insurmountable obstacles on the road to imminent disaster.”
The creditor is an unreasonable person who asks a reasonable question: So what do we do?
“Nothing,” Rush says quickly. “Strangely enough, everything turned out well.”
I thought of this when I looked at Crunchbase’s half-year report on the media, entertainment and gaming industry, which by and large always seems to be heading for disaster. But MEG, as Crunchbase abbreviates the merged sector, is actually on the upswing in terms of funding and deal-making. I was quite surprised.
I would say the numbers look pretty good, but they are not unassailable.
For example, in the first half of 2024, global venture capital funding in MEG reached $7.1 billion, according to Crunchbase data, up 58% from the second half of last year. That’s also up about 4% year-on-year. Disney’s $1.5 billion investment in Fortnite maker Epic Games plays a big role in that increase, but Crunchbase also sees other positive signals, such as a 15% increase in venture capital MEG activity in Asia compared to the second half of 2023.
Next, let’s look at M&A activity: Globally, M&A volume across the MEG is up 100% year-over-year and has doubled since the first half of 2023. Much of this is due to privatizations, at least on the billion-dollar deal side, including Silver Lake’s $25 billion acquisition of Ari Emmanuel-led Endeavor and EQT’s $2.8 billion purchase of Keywords Studios. Permira’s nearly $7 billion privatization of Squarespace also falls into this category. I’m not going to sit here and tell you that I consider privatization a great sign of the health of a sector, but when deals get done, the assets still matter.
I never know what to think or what to make of these Frankenstein sectors. (That’s not just Crunchbase’s MEG, by the way—TMT has always struck me as a suboptimal grouping, too.) Lumping Disney in with sports deals or, er, news companies has always struck me as simultaneously incongruous and apt. After all, Disney has made some of the most famous sports deals of all time (I’m looking at you, ESPN), and a big part of Warner Brothers Discovery’s history was CNN. But do all media, entertainment, and gaming companies face the same challenges? Should they all be lumped together? I guess it depends how you look at it. I’m perhaps just reminded of how we sometimes talk about sectors as monoliths without considering the enormous differences within.
And regardless, it’s hard to deny that the data for this year looked rather bleak across the MEG sector. Looking back at Crunchbase’s 2023-focused report, the data firm calculated that of the 191,000 tech layoffs in 2023, 45,000 of those lost jobs were at MEG companies. The report at the time also showed that global venture funding in the sector fell 62% in 2023, after declining 22% in 2022.
All in all, things seem to be looking up for MEG. That has always been the nature of the business – at least when Shakespeare in Love is to be believed.
In the film, the frenetic theater owner, played by Geoffrey Rush, assures his tempestuous creditor that everything will turn out well, and the creditor again has a very reasonable question: How?
“I don’t know,” says Rush. “It’s a mystery.”
See you in the morning,
Allie Garfinkle
Twitter: @agarfinks
E-mail: [email protected]
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Nina Ajemian curated the “Offers” section of today’s newsletter.
VENTURE OFFERS
– Lettucea San Francisco, California-based automated tax and accounting system, received $15 million in Series A funding from Zeev Ventures.
– Efficient capital laboratoriesa New York City-based investor in B2B SaaS companies, has raised $11 million in its Series A funding round. QED investors And 645 activities led the round and was accompanied by FJLabs, Eudemian Venturesand existing investors riverside And Generalist.
– Network statusa Chicago, Illinois-based power grid data and analytics platform, has raised $8 million in funding. Activate capital led the round and was accompanied by NFDG Ventures, Rayburn Electric Cooperative, Evergreen climate innovationsand other.
– GenLayeran AI-powered blockchain platform based in Lewes, Delaware, has raised $7.5 million in seed funding. North Island Ventures led the round and was accompanied by Node capital, Arrington Capital, ZK Venturesand other.
– Cairn Surgerya Lebanon, NH-based developer of breast cancer surgery technologies, received $4.5 million in Series A2 funding from Morningside Ventures.
– Optimuma Zurich, Switzerland-based real estate investment and renovation planning platform, has raised $4 million in a pre-seed expansion. BitStone Capital led the round and was accompanied by KOMPAS VC, Innovation efforts, Planet A Venturesand existing investors.
Private equity
– LawnPRO Partnerssupported by HCI Equity Partneracquired Fairway lawn and tree carea Cape Cod, Massachusetts-based lawn care and tree, shrub and pest control service. Financial terms were not disclosed.
– SPATCO Energy Solutionssupported by Kian Capitalacquired Blue1 Energy Systemsa Greenville, South Carolina-based provider of storage and dispensing equipment. Financial terms were not disclosed.
OUTPUTS
– QualiTecha portfolio company of MidOcean Partnersacquired Ellison Bakerya Fort Wayne, Indiana-based manufacturer of baked goods, Tilia HoldingsFinancial details were not disclosed.
OTHER
– JT Group has agreed to acquire Vector groupa tobacco company based in Miami, Florida, for $2.4 billion.
– Thomson Reuters acquired Secure sign technologiesa Cambridge, England-based developer of LLM law programs. Financial details were not disclosed.
IPO
– Brazil Potasha Toronto, Canada-based operator of a potash mining project in the Brazilian Amazon region, has filed an application to list on the New York Stock Exchange. CD capital, SentientAnd Forbes and Manhattan support the company.
PEOPLE
– Piva Capitala venture capital firm based in San Francisco, California, commissioned Lee Larson as an investor. Previously, he worked at TPG Rise Climate.
– Tour of the capitala venture capital firm based in San Francisco, California, added Ray Cao And Abhishek Kumar as a partner. Previously Cao was at Agora brands. Kumar was at Microsoft.
– Water Street Healthcare Partnersa Chicago, Illinois-based private equity firm, appointed Christine Shtepani as Vice President. Previously, she was The Sterling Group.
