Animoca Brands, a famous venture capitalist and the company behind The Sandbox, has announced a $2 billion fund for building web3 games and the metaverse. From the start, the company has always been an investor in the crypto and blockchain industry. Currently, it has a portfolio of investments in over 380 companies and startups related to DeFi, cryptocurrencies, the metaverse, and web3.
Animoca Brands is also the creator of The Sandbox, a metaverse platform that has remained a leader in the industry since 2017. Today, The Sandbox remains a top game, irrespective of the unfavorable conditions in the crypto and metaverse markets.
The Sandbox is proof that Animoca Brands knows how to remain at the top spot among venture capitalists (VC). So, the recent move to begin investing in metaverse businesses might be another way for Animoca Brands to ensure it remains in the spotlight.
Market conditions suggest that startups and mid-level companies need funds to stay in business. By launching a $2 billion fund, Animoca Brands is offering such companies an opportunity to get the funding they need, so they do not go out of business. This article will explain the plans Animoca Brands has revealed about this fund and how it helps metaverse businesses.
Animoca Capital – What it involves
The Executive Chairman of Animoca Brands, Yat Siu, revealed in an interview with NlKKEl Asia that the company is considering a fund named Animoca Capital. Its target will be to raise $1 billion to $2 billion. Although there has been no fundraising effort for Animoca Capital yet, Yat Siu mentioned it will begin rolling out investments in 2023.
Animoca Capital’s investments will focus on startups in their growth and late stages. This decision is necessary to avoid the high risks of investing in early or seed startups that sometimes have no defined product. Also, those mid and late-stage startups must offer open or shared metaverse services, made possible through Web3.
According to Yat Siu, Animoca Brands aims to develop the Web3 ecosystem and promote digital property rights. To do that, web3 and the blockchain industry must continue to grow and become more mature and stable.
Therefore, Animoca Capital offers an entry point for investors who want to explore Web3 business opportunities. Only with such investments can the industry develop and become legally recognized, and the rights that digital properties deserve will be upheld.
Additionally, Animoca Capital will not center its investment in a specific region. Instead, Siu stated that there would be no restrictions regarding the countries or regions that the fund would invest.
Also, the fund’s primary goal is not to pursue returns but to create an active market for Web3 products. Since the fund has no geographical restrictions, creating a global market and user base for open metaverses will be easier. After that, Animoca Capital will optimize for returns and profit after pursuing and achieving capital efficiency.
Can the fund attract needed investors?
Earlier, this article mentioned that Animoca Capital has not started raising the money required to set up a $2 billion fund. Thus, judging by the current conditions of the world economy, it might look impossible to raise such an amount in a short period. Likewise, recent happenings in crypto and DeFi might discourage people from putting their money in a Web3 or metaverse fund.
For instance, the fall of FTX also affected about 12 crypto companies. Some of these companies only had a portion of their assets on FTX and were able to manage the loss.
However, the Solana blockchain was severely hit by the FTX contagion because FTX and Alameda were among the largest VCs with significant investments in Solana. At the same time, the downtrend of crypto assets has caused other exchanges (e.g., AAX) and blockchain projects to fold up.
Despite the effects of a bear market, Siu revealed that Animoca investors still seek direct exposure to growing Web3 companies. Hence, Animoca Capital’s role is to open the doors to such direct investments.
Latest funding rounds of Animoca
Animoca Brands has also shown its potential to raise funds even in bad conditions. The company raised $358 million in January 2022. In September, Animoca completed another strategic funding round of $110 million.
This funding round included three new investors – Temasek, Boyu Capital, and GGV Capital. Likewise, two of Animoca Brands’ existing investors (Mirae Asset Management and True Global Ventures) saw the need to participate in the September fundraising process.
In June 2022, Yat Siu announced that Animoca recorded a profit of $573 million in Q1 of 2022, and the company’s portfolio was worth $5.7 billion. He even included that the current downtrend cannot kill Web3, the metaverse, crypto, or the blockchain.
Consequently, it is no concern whether Animoca Brands can raise enough capital for a $2 billion fund. Yat Siu is confident that Animoca Capital will get enough money at the right time despite any odds or competition.
Animoca Brands and the blockchain industry
Yat Siu acknowledged the recent crypto-related events in his interview with NlKKEl Asia. Yet, he clarified his company’s stance regarding such happenings. Siu stated that fundraising has become less competitive in the current bear market, allowing the company to grow its capital and portfolio.
Moreover, Animoca Brands will contribute up to $10 million to the Web3 Industry Recovery Initiative (IRI) created by Binance. Binance launched the $1 billion initiative to support entrepreneurs whose blockchain projects face financial setbacks.
There will be no undue pressure for returns on projects that receive funds from IRI. Rather, Binance and other participants like Animoca Brands are investing in IRI to restore the confidence of people in Web3 and the blockchain industry.
Meanwhile, this is not the first time that Animoca Brands is collaborating with Binance. In December 2021, Animoca and Binance Smart Chain (BSC) created an investment program worth $200 million. The program was to provide new blockchain gaming projects with the necessary funds.
With the upcoming $2 billion Animoca Capital investment fund, Animoca Brands is again showing its commitment to the long-term goals of Web3 and the metaverse. Yat Siu also says that he hopes the fund will help drive digital assets to the limelight and make them legally recognized like physical assets.