Animoca Brands completes $75M raise at $5.9B valuation to invest in blockchain games

Animoca Brands said it completed the second phase of a $75.3 million funding round from earlier this year that valued the company at $5.9 billion.

The blockchain game company will use the funds to invest in more games and advance the vision for the “open metaverse.”

The current raise is the second tranche of the funding previously announced in January. That round was extended to accommodate due diligence processes.

Investors in the current tranche included Liberty City Ventures, Kingsway Capital, Alpha Wave Ventures, 10T, SG Spring Limited Partnership Fund, Generation Highway Ltd, Cosmic Summit Investments Limited, and others.

Yat Siu, co-founder and executive chairman of Animoca Brands, said in a statement, “Digital property rights represent a society-defining generational shift that impacts everyone online and will set the stage for the emergence of the open metaverse. We are deeply honored to continue to enjoy strong support from investors as we work to solidify the leadership position of Animoca Brands in the Web3 industry and in the field of true digital ownership.”

I asked if any strategy was behind the timing of the funding. Siu said in an email reply, “The devastating dotcom crash of 2000 didn’t kill the burgeoning Internet. The horrific 2008 financial crisis didn’t halt the explosive growth of the Internet, smartphones, or mobile gaming. The frigid crypto winter of 2018 didn’t extinguish the crypto flame. All of those events seemed brutally terminal at their time, but if you could travel back to 2000, 2008, and 2018, you would have no difficulty in picking the winning side that seemed — back then — to be inexorably doomed.”

He added, “Similarly, the current market conditions will not kill Web3, the open metaverse, NFTs, or cryptocurrencies. There will be bumps on the road, cyclical variations, and the occasional black swan event, but the map to the future is legible by anyone who takes a broader and longer view.”

He pointed out that in 2018 and 2019, Bitcoin was at one point around $3,000, and Eth (Ethereum’s currency) was below $100.

“This may be a winter. But, if it is, then 2018/19 was more of an ice age. We have invested in companies (Klang, Planetarium most recently) and also acquired a business during this time (Tiny Tap), I think our sentiments are clear,” he said. “This is one of the best times to be investing from an entry point perspective (and indeed valuation) and we are not alone in this.”

Siu said he was grateful for investors who support the market and believe in the long-term vision. He noted that the funding, like all fundings, is not about today but about tomorrow.

The company also said, “There was no particular strategy on timing. We have been working on this raise for a while, but it took a bit longer to close (as mentioned in the announcement) owing to the completion of due diligence.”

Animoca Brands will use the new capital to continue to fund strategic acquisitions, investments, and product development, secure licenses for popular intellectual properties, and advance the open metaverse, including through its efforts to promote digital property rights for online users.

That won’t be easy to do as a “cryptocurrency winter” has set in as crypto prices have plummeted, making both crypto investors and users feel like they don’t have as much money as they once did. Add to that inflation and fears of a recession in the global economy and many in the industry are worried that blockchain game companies could run dry on cash before they get their products to the market.

In the first quarter, blockchain games were a third of all funding for games, according to Drake Star Partners. And blockchain game pitches amounted to as much as 90% of all pitches coming into gaming VCs. But that could slow down now.

Animoca Brands is one of the true believes in the market for blockchain and non-fungible tokens (NFTs), which use the blockchain to authenticate unique digital items. Animoca Brands has a growing portfolio of more than 340 investments, including Colossal, Axie Infinity, OpenSea, Dapper Labs (NBA Top Shot), Yield Guild Games, Harmony, Alien Worlds, Star Atlas, and others.

Emil Woods, managing partner of Liberty City Ventures, said in a statement, “Over the next decade, humanity will discover and embrace the game changing power that blockchain based digital ownership of assets will bring to countless aspects of daily life. We are proud to support Animoca Brands, a highly talented team of visionaries and builders at the forefront of this movement to embrace and fulfil the promise of Web3.”

The company wants to deliver true digital ownership of users’ virtual assets and data, enabling various DeFi and GameFi opportunities (including play-and-earn), asset interoperability, and an open framework that can lead to greater equitability for all participants in the open metaverse.

Manuel Stolz, CEO of Kingsway Capital, said: “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. The long-term growth trajectory of NFTs and similar ownership technology is extraordinarily steep, especially in emerging markets. We are thrilled to grow our continuing partnership with Animoca Brands, who earned its stripes by emerging from the previous crypto winter of 2018-2019 with a much larger and stronger business.”