Animoca Brands raises $65M at $2.2B valuation from Ubisoft and others

Animoca Brands has raised a new round of funding — the third time since May — and this time the company has scooped up $65 million at a $2.2 billion valuation. It’s another endorsement for blockhain gaming.

Just this week, similar blockchain gaming opportunities enabled Concept Art House to raise $25 million and Galaxy Interactive to raise a $325 million fund to invest in blockchain games. Last week, Bitkraft raised a $75 million token fund. Sky Mavis raised $152 million two weeks ago, Dapper Labs raised $250 million, Mythical raised $75 million, and biggest of all Sorare — a 30-person team that makes a blockchain fantasy soccer game — raised $680 million. That basically adds up to a summer of blockchain gaming’s historic boom.

The investors in Animoca Brands’ round include some strategically important allies such as French video game giant Ubisoft, which has been supporting blockchain startups in its accelerator. Other investors included Liberty City Ventures, Ubisoft Entertainment, Sequoia China, Dragonfly Capital, Com2Us, Kingsway Capital, 10T, Token Bay Capital, Smile Group, Tess Ventures, MSA Capital, Octava Fund, Adit Ventures, Summer Capital, Sigitech Holdings, Black Anthem Ltd, Mirana Corp, and Justin Sun.

Above: Yat Siu is chairman of Animoca Brands.

Image Credit: Animoca Brands

“This round includes a number of game companies that actually participated in the round, which is obviously important for various strategic purposes,” said Yat Siu, chairman of Animoca Brands, said in an interview with GamesBeat. “We weren’t originally looking to raise another round, but some of the partners that we had viewed as strategic people wanted to work with us and collaborate on potential blockchain games and licensing deals. That led to this round.”

This means that since May the company has raised $203.88 million in funding, thanks to its strategy of making games with nonfungible tokens (NFTs) for both digital property rights and digital collectibles. NFTs tap the transparent and secure digital ledger of the blockchain to authenticate the uniqueness of digital items, and so they enable new business models for games, Siu said.

As an example, Animoca Brands‘ The Sandbox can sell digital land rights as property to online users, or let players earn unique items in its F1 Delta Time racing game. We’ve seen a historic boom in the NFT market across industries such as art, digital collectibles, and now games like Sky Mavis’ Axie Infinity.

Above: Phantom Galaxies is coming from Blowfish Games, owned by Animoca Brands.

Image Credit: Animoca Brands/Blowfish Games

The market for NFTs surged to new highs in the third quarter of 2021, with $13.2 billion in sales in the first nine months of the year, according to DappRadar. NFTs have exploded in other applications such as art, sports collectibles, and music. NBA Top Shot (a digital take on collectible basketball cards) is one example.

Published by Dapper Labs, NBA Top Shot has surpassed $780 million in sales in just a year. And an NFT digital collage by the artist Beeple sold at Christie’s for $69.3 million. Investors are pouring money into NFTs, and some of those investors are game fans. The weekly revenues for NFTs peaked in May and then crashed, but in August and September, those revenues rose again, fell, and then held steady. And while critics have said the market will crash as soon as the hype dies down, the percentage increases for NFT sales from a year ago are huge.

Siu said that NFT collectibles in games enable the true digital ownership of users’ virtual assets and data, and offer various play-to-earn capabilities, asset interoperability, and decentralized finance (DeFi) opportunities. Games such as Axie Infinity are being played in emerging countries such as the Philippines, where players can earn multiple times the minimum wage in a month.

Above: Animoca Brands’ team

Image Credit: Animoca Brands

Siu believes that NFTs can bring decentralized in-game rewards and better monetization to video games, and that mainstream adoption of the technology is just around the corner.

Animoca Brands was one of the earliest companies to adopt a blockchain gaming strategy in 2018, starting with a belief that NFTs would be adopted in games. Now that prediction has come true, though blockchain games still face significant hurdles in mainstream adoption, ease of use, environment impact concerns (some true, some outdated), and fears of scams.

With the new funding and other big deals, Siu hopes that more people are paying attention to the possible disruptive effects that NFTs and blockchain gaming can have on the whole industry. Besides enabling NFTs, blockchain can enable Web 3, or the decentralized web, where consumers can take control of their property, their data, and their privacy, Siu said. And he believes that with all the time people spend inside games, they should come out of it with rewards, and that’s what is possible with NFTs.

“I believe that the gaming, art, and music industries are entering a digital renaissance period uniquely enabled by blockchain,” said Mia Deng, partner at Dragonfly Capital, in a statement. “Yat and his team have demonstrated vision and foresight from the beginning and we are  therefore excited to partner with Animoca Brands to build some of the largest on-ramps of the virtual world.”

Siu said that many of the investors also purchased secondary shares from existing shareholders in the round. That means the investors poured even more money into the company, and some of those shareholders are probably very happy.

The participation of France’s Ubisoft and South Korea’s Com2Us is very interesting.

Above: There will be blood in The Walking Dead experience in The Sandbox, which embraces NFTs.

Image Credit: The Sandbox

“Ubisoft, as you know, has been swirling around the blockchain space for a while,” he said. “Many of the successes that you’ve seen have gone through the accelerator program or incubator program that Ubisoft had. Ubisoft has been observing for a while. They really understand the blockchain. This investment in Animoca Brands is a signal.”

Animoca’s larger ambitions — shared by CEOs such as Facebook’s Mark Zuckerberg — focus on being on eof the companies that helps create the metaverse. Like Epic Games CEO Tim Sweeney, Siu wants the metaverse to be open, where people can own their own data and take their digital assets from one world to another.

Above: Fans can buy land near The Walking Dead experience in The Sandbox.

Image Credit: The Sandbox

“It is a shift in thinking now, and a vote of confidence in the open metaverse,” Siu said. “The biggest signal is really among gamers at large. As we all know, gamers have some skepticism, which I think is born out of mostly misunderstanding as to what NFTs really are. Ubisoft is the kind of company that had a long history, in developing products with a gamer in mind.”

As for gamer adoption of NFTs, Siu said, “We’re not expecting to convert gamers overnight. It doesn’t happen this way. In fact, as you probably well know, gamers are amongst the most stubborn people sometimes. We’re evangelizing and just trying to educate people about this space.”

Animoca Brands has 453 employees now. And even as it raises money, it has made over 100 investments, including participating in the funding round yesterday for Concept Art House.