Over the past few years, the metaverse has emerged as a hotbed of innovation and investment, largely fueled by the crypto industry’s growth and enthusiasm. However, recent upheavals in the crypto market, such as the SVB collapse, the USDC depegging, and increased scrutiny from the SEC, have forced many crypto firms to reevaluate their metaverse investments, leading to a significant reduction in funding and targets. Recently, crypto firm Animoca Brands has decided to cut its metaverse fund by 20% amid the market’s turmoil.
Animoca Brands Takes Bold Move Amid Uncertain Market Conditions
According to sources familiar with the matter, Animoca Brands, a gaming developer based in Hong Kong that specializes in blockchain technology, has scaled back its target for its “metaverse fund” by 20% to $800 million due to recent volatility in the cryptocurrency industry. This represents another reduction in the company’s ambitions.
Two anonymous insiders have disclosed that Animoca Brands had announced in November its plans to establish a new fund, Animoca Capital, with a goal of raising $2 billion. However, in January, the company cut the target in half to $1 billion. As of late, Animoca Brands has reduced the target further by 20% to $800 million. The sources, who were not authorized to speak to the media, chose to remain anonymous.
In July of last year, Temasek, a Singapore-based company, led a financing round that resulted in Animoca Brands being valued at approximately $6 billion. However, according to two sources, the company’s shares have since traded at a significantly lower valuation in secondary markets, with its market capitalization falling below $2 billion.
Animoca Brands was formerly listed on the Sydney exchange until 2020, but it now trades shares on PrimaryMarkets, a private secondary share trading platform. According to recent data from the platform, the company’s market capitalization was just under 1.9 billion Australian dollars ($1.26 billion) at the beginning of this week.
Animoca Has No Fund-Raising Plans
When approached for comment on its fund-raising plans, a spokesperson for Animoca Brands declined to provide a statement. The spokesperson acknowledged that the company’s shares were trading at a discount on PrimaryMarkets, but stated that the platform was not a reliable indicator of value.
The reduction in Animoca’s fundraising target and its declining valuation are indicative of a shift in sentiment within the crypto industry. The excitement surrounding such technologies has waned in the wake of a series of scandals, ranging from the collapse of the FTX exchange to the bankruptcy of several crypto lenders.
The Australian Securities Exchange removed Animoca Brands from its listings in 2020, citing the company’s aggressive expansion into the cryptocurrency industry. However, its significant presence in crypto subsequently positioned it to become a major player in 2021 and 2022 during the peak of the crypto boom. A series of large investments contributed to a nearly 600% increase in its valuation.
Despite the lowered expectations, the company remains optimistic about the potential of blockchain technology and its applications in gaming, NFTs, and DeFi. Animoca Brands has been actively involved in these sectors, having invested in or partnered with several successful projects, including CryptoKitties, The Sandbox, and Axie Infinity.
According to a report in January, Animoca Brands’ co-founder Yat Siu stated that the company had invested in over 380 companies, including Axie Infinity and OpenSea, to create a blockchain-based “metaverse.” This metaverse would allow users to purchase and trade digital assets in the form of non-fungible tokens.
While this may be a setback for the metaverse in the short term, it could also serve as a catalyst for the industry to develop more resilient and sustainable investment strategies. As the crypto market matures and weathers these storms, the metaverse could ultimately emerge stronger and more robust than ever before.
Animoca Brands’ decision to reduce its target for its crypto fund may be disappointing for investors; it is important to note that the overall cryptocurrency market is facing a downturn. Nonetheless, the company’s commitment to the blockchain and cryptocurrency sector is unwavering, and it is likely that Animoca Brands will continue to play a leading role in the space.
