Is the glass half full or empty? There’s a question…
Having run the numbers on investment into the blockchain games and metaverse sector during Q3, I doubt anyone will be surprised that the total is down significantly compared to Q2.
$1.3 billion in Q3, compared to
$2.5 billion in Q2
As a point of comparison, across the first nine months of 2022, I tracked $6.7 billion of announced funding compared to $4.3 billion for the whole of 2021.
At these rates, the total for 2022 would be around $8.7 billion, up 102% year-on-year but much less than the potential $10 billion annual amount I (and others) were previously debating.
Again, this data comes with the usual caveats that we’re ordering deals when investment is officially announced, not when the deals actually happen and the money changes hands.
My view is that deals are usually announced several months post so this slowdown is more about what was happening in June and July, than August and September.
The summer months are always a slower investment period too. Nevertheless July and September were the two lowest months of announced investment during 2022 to-date.
It’s also worth noting that there’s been very little activity in terms of token IDOs and NFT mints recently (the red bars). Obviously this is a result of market conditions, combined with the new trend for NFT free mints.
Another interesting angle — which is related — is that the number of Series B and (especially) C investment rounds in the broader gaming sector are also down.
Jason Chapman of Konvoy Ventures had a good Twitter thread on this, although I’ve not double-checked his data.
But it seems broadly correct. The last Series C in the blockchain game sector was Klang in July and there’s only been three B rounds recorded since: Zebedee ($35 million), Ready Player Me ($56 million) and Gunzilla ($46 million).
On the upside, I expect some of the largest blockchain and metaverse projects to be announcing high eight and nine figure investments before the year is out.
There’s still plenty of VC firepower waiting to be deployed!
This Substack is sponsored by Hiro Capital: Deep pockets
Immutable X Migration news
Personally I’m still waiting for the killer app on Ethereum L2 chain Immutable X, but it’s certainly generating headlines in terms of its ability to attract titles.
It’s just announcing the following games — previously on Polygon — are moving over.
Cross the Ages
Delysium, and
Ember Sword (actually this was announced months ago, I think?)
Another source of content has been the collapse of the Terra blockchain, accounting for
Deviant’s Factions
Undead Blocks
Tatsumeeko (which also has NFTs on Solana), and
StarHeroes
Another recent joinee — although not featured on the official PR — is WorldSpark’s EdenBrawl, which was originally oriented towards Solana.
One underlying motivation for this activity is Immutable X’s scalability, subsidised gas fees, and Ethereum-based security model. Another is its $500 million ecosystem fund, which has provided obvious financial incentives for some projects either by way of direct investment and/or token-related grants.
And, less we get too carried away, it’s always worth pointing out that there are projects going the other way too; notably MetalCore, which moved from Immutable X to Polygon.
Angry Dynomites Labs news
Personally I’m a big fan of Germany startup Angry Dynomites Labs. It’s attempting to build an on-chain game from the bottom-up by releasing a set of four NFT primitives (on Ethereum) that generate different tokens (on Polygon), which require players to co-operate economically to combine to fulfil larger goals.
Today, it’s launched its second NFT collection, with its 500 fire dynos now joined by 1,500 water dynos. My experience of the mint was flawless — I filled my boots — so now I’m just waiting for the reveal.
In the meantime, check out my podcast with CEO Oli Loeffler, who some may recognize from his previous role at mobile idle game specialist Kolibri, which was acquired by Ubisoft in 2020, and which Oli and friends started out of university back in 2016 as Fluffy Fairy Games.
SEC vs Bored Apes news
The usual array of rumor and scuttlebutt arises from the news that the SEC is apparently investigating Yuga Labs over whether it’s been selling unlicensed securities.
It’s not clear if this is an official investigation or just a more casual internal fact-finding process. To be honest, given Yuga Labs’ status in the sector both in terms of its NFT collections and the APE token, it would be a surprise if the SEC hadn’t been doing this already.
Yet, given the amount of legal expertise and capital Yuga has accumulated, it would be an interesting target for the SEC should it choose to attempt an official court case, not least because Yuga won’t be intimidated by — and might even welcome — the process.
In fact, you could argue creating some new legal precedent — and in the process overturning the now clearly-obsolete Howey Test — would be a positive for everyone.
Additional Links
Uniswap Labs valued at $1.66 billion after $165 million Series B
STEPN developer Find Satoshi Lab promises a “marathon”
Blockchain Brawlers’ poker-like gameplay is intriguing me (YT)