Zebedee raised $35M from investors including Square Enix for blockchain game payments

Zebedee has raised $35 million in a new round of funding to further develop its Bitcoin-based payment systems for games and integrate with new partners.

The Hoboken, New Jersey-based company hopes to transform games by adding new revenue streams powered by cryptocurrency, blockchain, and other technologies.

Zebedee enables programmable payments and small transactions to power economies for virtual worlds with near-zero fees. That is, it takes the big transactions fees out of blockchain-based cryptocurrencies such as Bitcoin and enables much smaller transaction sizes.

Kingsway Capital led the round. It was joined by global merchant bank The Raine Group as well as video game giant Square Enix. Existing investors including Lakestar and Initial Capital also participated in the round.

Zebedee said it has created a platform that allows any game developer to easily add programmable money into their games. Anything that happens in a game can trigger a payment, which is sent instantly and at nearly zero cost.

When a player shoots someone in a competitive CS:GO match, they can take a small amount of money (e.g. a fraction of a cent) from them in real-time inside the match itself. When a character in a platform game jumps and picks up a coin—as in Super Mario—that coin can be worth real money, which the player receives instantly and can also spend instantly.

To make this work, Zebedee offers both application programming interface (API)-based tools for developers as well as an app for gamers. The APIs are easier to implement and it enables developers to discover the growing range of Zebedee-powered games. And it acts as a wallet for sending and receiving funds between games and players.

Bitcoin Lightning Network

To make this work from a technical standpoint, Zebedee uses the Bitcoin Lightning Network as a key piece of its payments infrastructure. While blockchain gaming has become a persistent buzzword over the past two years, Zebedee said it dfferentiates itself as a FinTech and payment services provider focused on gaming: Bitcoin is simply the payment rail that enables the flexible, programmable transfers of any amount between any game, app or user.

For Zebedee users, it is not about Bitcoin, nor should it be, the company said. It is about a more rewarding experience in games, packaged into intuitive and simple user experience that does not require any knowledge of crypto.

“We are pleased to be in a position where we can confidently scale our team and grow our business even as the macroeconomic backdrop becomes increasingly uncertain,” said Simon Cowell (not that Simon Cowell), CEO of Zebedee, in a statement. “This funding round gives us the ability to meet our highly ambitious roadmap both in terms of building out our infrastructure to support the hundreds of millions of users that play our partners’ games, as well as hire the top-level talent needed to ensure every partner has the best possible experience working with Zebedee.”

Zebedee contends this approach clearly resonates with both gamers and game makers and has led it to have an outstanding year, with the user count increasing by over 10 times since the startup announced its previous funding round in September 2021.

“We are excited to lead Zebedee’s latest funding round and support their continuing mission to become the Bitcoin enabler of choice for their partners,” said Afonso Campos, managing partner at Kingsway Capital, in a statement. “Partnering with Zebedee will allow its entire ecosystem to benefit from higher user retention, lower transaction costs and generally a superior payments experience. Importantly, it will also help bring Bitcoin to millions around the globe.”

The growth has partly been driven by Zebedee’s speedy work and a growing number of partnerships both with game studios building on the platform and integrations with notable finance industry players, the company said.

The company said it is in a strong position to expand its best-in-class infrastructure, tools and services tailored specifically for games developers, many of whom are already working with Zebedee.

“In Zebedee, we see a world-class team that has created a truly powerful use case for cryptocurrency in games,” said Kenny Lee, vice president at Raine Group, in a statement. “We have seen new monetization methods disrupt the gaming industry in the past, and we believe the integration of Bitcoin directly into games is a new way to expand the connection with players and engage them in ways that were never possible before. The wide range of use cases for Zebedee’s platform provides flexibility for the game designer and allows Zebedee to partner with any developer, from triple-A console and PC to hypercasual mobile.”

Square Enix, which recently divested its Western game studios to invest more in innovations, did not offer a comment. Zebedee has raised $50 million to date and it has 53 employees. The company was founded in October 2019.

The company said the average transaction (in what it calls nanopayments) is 8 cents, and the size of the currently supported smallest transaction is $0.0002

Competitors include mainstream payment companies such as Xsolla, PayPal, and Tilia.

As for the inspiration for starting the company, Zebedee said money didn’t really work in digital games and, more broadly, virtual worlds. We saw Bitcoin as the technological key to that puzzle and set out to build a solution tailored to the needs of the modern gamer that also unlocks massive value for game developers.