The Cyprus Mail recently sat down for an interview with Roman Gurskiy and Kirill Gurskiy, managing directors of GEM Capital, to delve into their transition from EY to GEM Capital, their investment strategies, and the unique attributes that make Cyprus and the MENA region attractive for gaming and tech investments.
Founded in 2017, GEM Capital operates internationally, with offices in Paphos, Cyprus, and Dubai, UAE.
Moreover, the company boasts a diverse portfolio that spans over 25 projects originating from Europe, the US, and Israel, with a total valuation exceeding $150 million.
The company is also a member of TechIsland, Cyprus’ largest non-profit technology association.
Roman and Kirill also shared their insights into how GEM Capital supports its portfolio companies beyond financial backing, their approach to investing in PC and console gaming companies, and their vision for the evolving gaming industry.
“There’s simply no place like Cyprus for those passionate about tech and gaming.”
Kirill Gurskiy
CM: what motivated your transition from EY to GEM Capital, and how have your previous roles prepared you for your current position?
Roman: Since Kirill and I both share a similar experience transitioning from EY to GEM Capital, I will give an answer on behalf of both of us.
Our transition from a management position at EY to GEM Capital was motivated by a desire to deepen our involvement in the dynamic field of venture capital and investment management. At EY, we gained valuable experience in financial advisory and strategic consulting, working closely with diverse clients across various industries including the largest IT, games and technological companies. Our previous roles have honed our ability to navigate complex financial landscapes, understand market trends, and strengthen team management and client relationship skills. Establishing long-term partnerships with clients based on trust and mutual understanding was essential in our managerial role at EY.
Moving to GEM Capital presented an exciting opportunity to apply these skills in a new context focused on venture capital. Here, we are able to leverage our expertise to identify the most promising investment opportunities, and support portfolio companies in achieving growth and success. Similar to our client relationship experience at EY, at GEM Capital we always consider founders as our clients alongside investors and strive to establish long-term relationships with them.
Moreover, at GEM Capital, we established the games and entertainment investment arm, allowing us to align our professional endeavours with our passion for the gaming industry, and to contribute to its growth. Both me and Kirill are avid gamers, having played League of Legends since Season 1. This personal passion for gaming deeply motivates and inspires us in our current roles.
CM: GEM Capital’s portfolio includes over 25 companies valued at more than $150 million. What criteria do you use when selecting companies to invest in?
Kirill: When selecting companies to invest in, our top priority is the people and the team behind the company. Our investment philosophy is based on the belief that even the most groundbreaking ideas require strong leaders and skilled teams to bring them to fruition. We seek passionate founders and leaders with a clear and compelling vision for their company. We also evaluate the track record in the industry and the overall expertise of the whole team. We value teams with deep expertise and a history of success, whether in previous startups or relevant genres. We look for a mix of technical expertise, business acumen and operational efficiency.
Let us give a few examples of this approach. The founder and CEO of Gameram, Philipp Gladkov, previously served as CEO of Pixonic, where he led the development of War Robots, a highly successful mobile game that generated $900 million in revenue and attracted 270 million players. He left Pixonic with a passion for creating a social ecosystem for mobile gamers, representing the combination of leadership, vision and expertise that we prioritise in our investments.
Founders of our mobile-first game studio Order Of Meta, Alexey Sazonov and Sergei Koziakov, are seasoned entrepreneurs. Previously, they created the highly successful mobile top-down shooter Tacticool, which has generated over $75 million in lifetime revenue and surpassed 30 million installs. Building on this success, they are now developing an innovative mobile extraction shooter.
Robert Bagratuni, CEO and co-founder of Mundfish, is another remarkable example from our portfolio companies. Formerly a Creative Director at the global publisher MY.GAMES, Robert initially lacked experience as a founder building large AAA PC/Console games from scratch. However, he possessed deep industry knowledge, a compelling vision, and exceptional leadership skills which drove the top-talented team around him. Today, Mundfish stands as the creators of Atomic Heart one of the most successful releases in 2023 and the only studio in the world to have released an AAA game as their first title.
We especially value companies working on something innovative with the potential to shape the games and entertainment industry and the way people have fun. We are particularly excited when a company has the potential to create a new global IP, which the gaming industry needs as a breath of fresh air. Players crave something innovative amidst endless releases of remakes or sequels to old titles like Call of Duty and Assassin’s Creed. The potential to create new IPs unites all our companies. Now we can confidently state that Mundfish has successfully created a new IP and franchise following the successful release of Atomic Heart. We hope that many more will follow, such as Replaced from Sad Cat Studios, which, even before its release, has garnered significant admiration from industry experts, journalists and gamers waiting for the game and sparking extensive fan art even prior to playing it!
CM: How does GEM Capital support its portfolio companies beyond financial investment?
Roman: At GEM Capital, we are committed to providing comprehensive support to our portfolio companies beyond financial investment. As the pioneering team in the region to establish partnerships and close landmark deals with industry leaders such as Microsoft, Tencent, Krafton, Ubisoft and MY.GAMES, we have cultivated an extensive network of industry experts. These connections enable us to offer our portfolio companies possible partnerships, invaluable insights and strategic guidance from seasoned professionals from all over the world. This global reach enables our portfolio companies to establish themselves as international players on the global stage.
We actively assist our portfolio companies in securing further investment rounds, finalising publishing deals, and establishing partnerships with platforms such as Steam, Xbox, Sony, Apple, and Google. We have established strong connections with publishers worldwide. Our portfolio companies have successfully concluded publishing deals with renowned entities such as Focus Entertainment (France), Daedalic Entertainment (Germany), THQ Nordic (Austria), Thunderful (Sweden), and Knights Peak (Netherlands).
Furthermore, our extensive network includes leading games media, encompassing both consumer-focused (IGN, Eurogamer, Destructoid, Rock Paper Shotgun, etc.) and business-to-business (VentureBeat, TechCrunch, PocketGamer, and others) outlets. Leveraging these connections, we actively support our portfolio companies with PR strategies and all manner of public announcements.
Additionally, our team comprises professionals with solid consulting backgrounds and distinguished credentials such as CFA (Chartered Financial Analyst), ACCA (Association of Chartered Certified Accountants), and ASA (American Society of Appraisers). Our Advisory Board is composed of the most respected experts across our focus areas. Drawing on our expertise, we provide our portfolio companies with invaluable support on complex financial and legal matters.
CM: GEM Capital is the biggest games investor in Cyprus. What makes Cyprus an attractive location for your investments?
Kirill: There’s simply no place like Cyprus, especially for those passionate about tech and gaming, offering a community of like-minded people, a favourable climate, international connections, a supportive tax regime, and strong legal protections. All these factors make Cyprus the preferred location not only for gaming startups but for large companies like Nexters (GDEV), MY.GAMES, Wargaming, Vizor, Azur Games, and Nekki. Cyprus likely has the highest density of game companies globally, and this is no coincidence.
The island fosters a thriving community of game developers and hosts numerous international business conferences, especially in Limassol. Key startup-focused events include Reflect, a prominent festival catering to startups, investors, and tech enthusiasts, and Linq Conference, dedicated to tech entrepreneurship and backed by Google this year. Game-specific gatherings include WN Conference and GDCY Fest. Additionally, there a number of smaller-scale game-related gatherings. Only in Limassol, there are 3 weekly meetups for gaming and tech professionals: IT Party organised by Oleg Reshetnikov, GDCy established by Tim Fadeev and Andrey Ivashentsev, and The Hub founded by Sergey Tsyptsyn and Dmitry Pisarevsky. These gatherings provide an opportunity to enjoy a casual setting, and to engage in discussions about games with like-minded people.
“A community of like-minded people, a favourable climate, international connections, a supportive tax regime, and strong legal protections make Cyprus the preferred location not only for gaming startups but for large companies like Nexters (GDEV), MY.GAMES, Wargaming, Vizor, Azur Games, and Nekki.”
The Cypriot government is supporting the gaming industry, encouraging tech companies to establish headquarters on the island. With the law system based on the English Common Law principles, intellectual rights are securely protected, which is crucial for games and software companies. With a corporate tax rate of 12.5 per cent, exemptions on dividend income, and favourable tax policies for intellectual property, Cyprus is attractive for businesses seeking tax efficiency. The IP Box regime further incentivises the development of intellectual property in Cyprus by potentially reducing the tax rate on income derived from such assets by up to 2.5 per cent.
Relocating to Cyprus is relatively easy. Also, the accelerated procedure for granting Cypriot citizenship was approved by parliament in 2023. According to new rules, highly qualified specialists can apply for citizenship after living in Cyprus for three or four years, provided they have demonstrated proficiency in Greek at the A2/B2 level. This initiative aims to further attract talent to the island.
Last but not least, Cyprus is a wonderful place to live, offering a warm climate and stunning views of the sea and mountains. It’s always more pleasant to build a future next multi-billion corporation with a view on the waves!
There’s no place like Cyprus, especially for those passionate about tech and gaming. Our Cypriot portfolio companies have investors from around the world from the USA to Korea. We feel proud in our efforts to promote Cyprus as one of the global capitals for gaming within the international community.
CM: can you elaborate on GEM Capital’s strategy for investing in PC/console gaming companies in the EU and Eastern European countries?
Roman: Let’s split this question into two parts. First, the strategy for investing in the PC and console segment, and second, the regional focus on the EU and Eastern European countries.
Firstly, regarding the strategy of investing in PC/Console Segment.
From the inception of our games and entertainment investment arm in 2019, our goal has been to construct a diversified portfolio with an emphasis on PC and console platforms. In GEM Capital we believe that games are the new Marvel. From the start, we foresaw the trend that games would evolve beyond mere games content and transform into a mainstream form of entertainment. This is what is happening now with popular movies and TV series based on games IPs such as Arcane (League of Legends), The Last of Us, Super Mario Bros, Fallout. Such shows are extremely popular not only among hardcore players but among wide audience. Arcane, in particular, became Netflix’s number-one show in November 2021, setting a record as Netflix’s highest-rated series within a week of its premiere.
This strategic focus set us apart from other venture capital firms that traditionally were primarily concentrated on mobile-only game investments at that time. As of now PC and console-first companies comprise around 40 per cent of our portfolio, mobile-first companies have approximately the same share, and the rest 20 per cent is ecosystem and gametech companies.
We believe this approach positioned us well to navigate economic challenges, such as the downturn in the mobile market following the post-IDFA era. While many others were forced to adjust their strategies, we had already adapted to the new conditions. For example, CEO of Supercell, large mobile games company, in his letter to employees asks “Supercell is known today for its mobile games, but perhaps thinking exclusively about mobile is too limiting?”. Newzoo, a trusted video games data source, predicts that “Gaming companies are returning to the development of Premium (buy-to-play) games” and “Mobile developers are moving towards developing for PC and consoles” (Newzoo: Forecasts and Gaming Trends for 2024)
We have always considered the PC/Console market attractive due to the strength of its intellectual properties (IPs). There are relatively few well-known mobile game IPs that have expanded beyond the gaming world into movies, series, and music. While there are exceptions like the “Angry Birds” franchise, they remain the exception rather than the rule. Even super-hits like Royal Match grossing more than a hundred million dollars per month usually do not expand outside of the games universe. In contrast, the PC/Console games market has numerous successful titles that have evolved into robust franchises.
Due to the potential of strong IP and the ability to expand beyond games (movies, TV series, merchandise, and mobile games based on the IP), such companies have the potential for higher returns for investors. If you create a great IP, the sky is the limit.
The regional focus on the EU and Eastern European counties
Our primary focus has initially been on the EU and Eastern European countries based on understanding that the teams from these regions consistently deliver top-quality products within very competitive budgets. The concentration of talented game developers in the EU and Eastern European countries is notably dense. The region is renowned for its notable PC and console hits such as S.T.A.L.K.E.R, The Witcher, and Atomic Heart, as well as for its successful mobile games companies like Playrix, Belka Games, and MY.GAMES. During hearings on the Activision Blizzard acquisition by Microsoft, several confidential documents were leaked revealing that AAA game budgets can reach several hundred million dollars. While we acknowledge that each product is unique, we estimate that game development in Eastern Europe could be several times more cost-effective.
As of now, we think that this focus has paid off. Over time, we have gained a deep understanding of these markets, established a strong network within them and established ourselves as the leading investor in the region.
“Cyprus is attractive for businesses seeking tax efficiency. The IP Box regime further incentivises the development of intellectual property in Cyprus by potentially reducing the tax rate on income derived from such assets by up to 2.5 per cent.”
CM: How do you see the gaming industry evolving in the MENA region, and how is GEM Capital positioned to capitalise on these trends?
Kirill: The gaming industry in the MENA region is currently the fastest-growing in the world, with revenues increasing by 4.6 per cent and the number of players rising by 11 per cent in 2023, according to the Newzoo report.
The MENA region has shown significant interest in the gaming industry, with both the UAE and Saudi Arabia aiming to establish themselves as global gaming hubs. The UAE has launched the ‘Dubai Program for Gaming 2033’ an initiative to position Dubai among the world’s top gaming cities by 2033. This program aims to create 30,000 jobs and contribute over $1 billion to the GDP by focusing on talent development, content creation, and leveraging advanced technology. Dubai’s direct competitor is Abu Dhabi, which is actively attracting gaming talent through its Abu Dhabi Gaming (AD Gaming) initiatives.
Saudi Arabia, holding nearly half of the MENA’s market share, has laid out a strategic plan to invest $38 billion and generate 40,000 jobs by 2030, underscoring its commitment to becoming a dominant player in the global gaming market. At the forefront of this initiative is Savvy Games Group, with recent acquisition of Scopely for $4.9 billion and plans to invest $38 billion in total to build Saudi Arabia gaming sector.
The MENA region has been one of our regional focuses, alongside Eastern Europe and the EU. In response to this dynamic environment, we have strategically established one of our offices in Dubai. Presently, several of our portfolio companies have branches in Abu Dhabi, which enables the smooth relocation of a substantial number of employees. We foresee continued growth in the region as more companies choose to establish their presence there.
We actively participate in major regional events such as the Dubai Expo Summit and WN Abu Dhabi. Moreover, GEM Capital has been nominated for Investor of the Year at the MENA Games Industry Awards 2024 which is a significant recognition of our accomplishments in the region.
CM: GEM Capital has been nominated for Investor of the Year at the MENA Games Industry Awards 2024. What does this recognition mean for your team?
Roman: We were thrilled to be nominated for Investor of the Year at the MENA Games Industry Awards, alongside our friends and partners, including Savvy Games Group, Shorooq Partners, and the National Development Fund.
We were especially honoured to be selected through a rigorous process in which 80 industry veterans and market experts voted to determine the finalists.
This prestigious nomination highlights our hard work over recent years to contribute to the growth of the games industry in MENA, EU and Eastern European countries.
Can you share some success stories from your portfolio companies like Mundfish, Red Rover Interactive, or Eschatology Entertainment?
Kirill: Talking about Mundfish, their success story with the release of Atomic Heart last year is worthy of its own interview. Mundfish is a standout example of an independent team releasing AAA game with the original IP as their debut game. Atomic Heart received prestigious awards, including the winner of the Steam Awards for Outstanding Visual Style and a BAFTA nomination as one of the top 60 best games of 2023. Among all the releases in 2023, the game was the number 2 game on Xbox, number 9 most searched game on Google and number 7 Best Optimised PC game of 2023 by DSO Gaming. Mundfish won the prestigious award in the Rising Star category at the Deloitte Technology Fast 50 program across the Middle East & Cyprus. The game’s soundtracks topped charts and were nominated for the Hollywood Music in Media Awards for Best Original Soundtrack. The game inspired tons of fan art and merchandise. Even Elon Musk tweeted about it!
Regarding Red Rover, the company has recently secured a $15 million investment led by Krafton, South Korea’s largest games company with market capitalisation exceeding $9 billion. This funding comes less than a year after Red Rover’s initial seed funding, marking an unprecedented case in the current venture market. This significant investment underscores the extraordinary level of trust in the team.
We are proud to be the first investors for both Mundfish and Red Rover, backing these prominent companies from the very beginning.
Discussing our achievements in the mobile segment, the company Deus Craft stands out as one of the leaders in the time-management genre. Renowned for their hit title Grand Hotel Mania, the studio has achieved lifetime revenue surpassing $100 million. GEM Capital was one of the first investors in this studio and successfully exited the company.
There are many more truly significant achievements of our portfolio companies and details of new deals which are not publicly unveiled yet. Stay tuned for updates!