Hong Kong's Animoca Brands raises another $75m
Hong Kong’s Animoca Brands – a start-up with interests spanning gaming and the metaverse – has raised USD 75.3m from several VC firms. It brings total funding in the past eight months to about USD 500m.
The latest investment is described as a second tranche of the USD 359m round raised in January at a pre-money valuation of USD 5bn. That round came only three months after a USD 65m investment that valued the company at USD 2.2bn.
The current tranche brought together existing investors Liberty City Ventures, Kingsway Capital, and 10T Holdings, as well as Alpha Wave Ventures, Generation Highway, and Cosmic Summit, among others. The two prior investments notably featured Sequoia Capital China, Gobi Partners, Mirae Asset Capital, MSA Capital, and Provident Capital.
Animoca was founded in 2014 with a focus on mobile games and subscription products that feature gamification, blockchain, and artificial intelligence. It went public in Australia via a reverse merger with defunct mining player Black Fire Minerals.
The Australian Securities Exchange delisted the company in 2020 citing breaches of its rules, including “involvement in cryptocurrency-related activities.” Animoca contested the claims and pledged to continue its usual operations as a private company.
Seed-stage investors have been buying into the company since 2018, when Helix Accelerator and Mind Fund provided USD 1.1m to help develop a blockchain version of The Sandbox, a game title that is now being built out as a virtual real estate and metaverse asset. Total funding since then comes to about USD 650m.
Sandbox is a wholly owned subsidiary of Animoca that has raised substantial funding in its own right. SoftBank Vision Fund 2 led a USD 93m Series B round for the platform in November that also featured Liberty City. Conceptually, the non-fungible token (NFT) platform is a digital world that hosts virtual real estate sales and intellectual property marketing.
Unlike cryptocurrencies, NFTs are designed to be individually distinct, one-of-a-kind assets. Animoca sees them as part of a social movement where identities and possessions in immersive virtual environments are considered as real as those in offline life. These environments can take the form of games or more open metaverse concepts such as Sandbox.
“We actually have terrible user experience in the digital world, but we’ve been conditioned to it for the last 20-30 years because we looked at our digital lives as an add-on to physical life,” Yat Siu, co-founder and chairman of Animoca, told AVCJ last year. “Now, we’ve tilted, and COVID-19 definitely accelerated this thinking. Our digital lives have become centre stage.”
This opportunity set has remained attractive to generalist investors even amidst an extended period of lower cryptocurrency prices. For many of them, NFTs, the metaverse and web3 constructs represent a new way for aspirational markets to pursue freedom, inclusion, and status.
“The genie of digital property rights has been let out of the bottle, and the internet users engaging with this revolutionary technology will not be returning to the digital servitude that is common in web 2.0,” Manuel Stotz, founder of Kingsway, said in a statement. “The long-term growth trajectory of NFTs and similar ownership technology is extraordinarily steep, especially in emerging markets.”
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