I hope this doesn’t come across as bitter, merely contrarian.
Is Sorare’s $680 million Series B funding round a good thing — either for the developer itself or the blockchain game sector in general?
On the positive side, Sorare (the game) is no flash-in-the-pan.
Sorare (the developer) has been building its fantasy soccer game since 2018, and has found a group of committed players and investors who have driven its economy to $85 million in lifetime NFT trading.
That’s the third largest blockchain game in terms of trading volume behind Axie Infinity and Zed Run.
It’s also managed to sign licences with most of the valuable soccer leagues. It currently has 180 clubs and 6,000 individual players signed up.
The big absence here is the UK Premier League, where only Liverpool and West Ham are part of the Sorare game. I’ve heard various reasons why this is the case, none of them convincing but I guess $680 million buys you a lot of leverage in these kind of negotiations.
(N.B. I’ve been since told the new Premier League licensing deal will be negotiated in summer 2022, so that’s been the restriction for Sorare to-date.)
And it’s this situation in which the investment is definitely good for the business. Sorare can now sign any licensing deal it wants for any sport.
One of the key takeaways from the investment announcement was that it would launching new games for new sports in 2022.
And this is also the underlying problem with $680 million; Sorare can now basically do what it wants and that means a potential loss of focus.
Hiring is one aspect of this. Hiring too many people, too quickly typically means a company finds it hard to maintain culture and also hires sub-optimally.
Launching too many projects with these new hires just compounds the issue.
My confirmation bias
There’s also the underlying reason that I’m not convinced about Sorare as a game.
Clearly on one level that’s because I’ve not played it that much. I invested around $100 earlier in 2021, before realising you then needed to invest $300 to get the five NFTs to compete even at the lowest level.
(Prices have risen since, although there is now a new entry-level division being launched.)
Sorare was also a game that struggled with Ethereum’s gas costs. Like Axie Infinity, it originally used the Loom sidechain, then when Loom stopped supporting games, it when to Ethereum mainnet, and has recently announced it will be using StarkWare’s ZK rollups tech (as does Immutable X).
Then there was the issue of wallets. You had to transfer your ETH from Metamask into the game’s wallet to use Sorare, which for purists like me was just adding friction.
Of course, none of these things necessarily matters in future as Sorare builds for the massmarket, but they do account for my personal reticence.
Certainly, in future, as more of these type of deals are announced, I will attempt to be more self-critical when comparing my own confirmation bias to what’s actually happening in this crazy sector.
My final point is that this investment round involves SoftBank, Atomico and Bessemer Ventures; all highly regarded VCs but with no experience of blockchain games. It’s also interesting (to me) that no crypto VCs are involved.
Sorare has previously attracted investment from the likes of ConsenSys, Fabric and Delphi Digital but nothing I can see in its Series A and B rounds. Perhaps crypto VCs just tend to be early stage and don’t have the money to participate in these rounds.
I do worry, however, that the scale of particular round may be more about SoftBank’s flex than what is good for Sorare. And we all know how that played out for WeWork.
Still, enough of my negativity.
If nothing else, this investment and future large rounds rumoured for Dapper Labs and Sky Mavis mean it’s clear blockchain gaming is the hottest tech sector at the moment, and that’s good for everyone.
But if you are planning a funding round, don’t get too greedy.
$680 million is an impressive warchest for future success but it can quickly flip to 680 million reasons to fail.