Weekly News Digest #22

a16z raised $4.5B Crypto Fund

US-based venture capital firm Andreessen Horowitz has announced a $4.5B fund — Crypto Fund Four. A third of the funding, around $1.5B, will go towards Seed investment, while the remaining $3B will be used for venture investments.

Andreessen Horowitz made its first crypto investment back in 2013 when it led a $25m Series B round of Coinbase, which is now the second-largest crypto exchange in the world. The other important milestone in a16z crypto initiatives is the launch of its first Crypto Fund with a size of $350m in 2018, which was a huge amount of money at the time, but is not that impressive today, at the heyday of the web3 market. After that, we saw a $515m Crypto Fund 2 in Apr’20, and a $2.2B Crypto Fund 3 in Jun’21. Overall, the total funding raised by a16z to invest in crypto/web3 projects reached around $7.6B, solidifying the fund’s position as one of the key crypto investors today.

The new fund is almost 13 times higher than the first crypto fund, and more than 2 times higher than the previous one — thus, this is one of the most demonstrative signs of the tremendous crypto industry growth we have observed over the last few years. This is fair not only for the investment world, but for the gaming industry as well — you can check our latest report, to see how blockchain gaming now dominates the private investment category.

What is almost as interesting as the size of the fund is its timing. The market experiences a huge decline, with an infamous Luna crush and Bitcoin being 55.6% down from its all-time high numbers (at the moment of writing). However, all of this doesn’t stop the a16z LPs from allocating their money to the fund. In the interview with CNBC, a16z General Partner Arianna Simpson said that Andreessen Horowitz is investing long-term and is ready for market fluctuations. On the contrary, it may allow the companies to focus more on the technology, rather than on the short-term valuations. We think that this is indeed a promising investment opportunity for a16z, which can get certain discounts investing in the companies currently trying to survive the ‘bear’ market. We are also probably about to see some companies going bankrupt, and those who stay, as it often happens, will have more chances to solidify their position in the market.

One more thing about the new a16z crypto fund size: it is 7.5 times higher than the gaming fund Andreessen Horowitz announced last week. Games Fund One with its $600m capital is still a big deal, however, which shows that investors believe in the future of the gaming industry and its recession resistance. However, crypto now overshadows many of the other markets in terms of venture interest, including gaming. VC funds are ready to invest in the web3 businesses, and the startups are more than willing to get private capital, as we see by the amount of NFT-related pitches. We will see how long the trend will continue, but for now, it seems like the current decline of the crypto world will stop neither investors, nor founders.

We want to thank Hiro Capital and The Games Fund for supporting this digest.

MERGERS & ACQUISITIONS

UPDATE: US-based video game company Take-Two Interactive (NASDAQ: TTWO) has completed the acquisition of US-based mobile game developer and publisher Zynga Inc. (Nasdaq: ZNGA) for a total enterprise value of $12.7B. The enterprise value comes from a $9.681 price per share, paid $3.5 in cash, and $6.361 in shares. We have analyzed this deal in detail in one of our previous weekly digests.

VENTURE FINANCING

UK-based indie games publisher Firestoke has raised $2.2m in Seed funding. The round was led by Hiro Capital with participation from others. The funding will be used towards the expansion of the portfolio of games, increasing publishing staff, and further accelerating the company’s growth. Firestoke plans to release its first titles for PC&console by the end of 2022.

Singapore-based metaverse platform BUD has raised $37m in Series B funding. The round was led by Sequoia Capital India, with participation from ClearVue Partners, NetEase, and others. The company raised $15m in Feb’22, and after this round, the total financing has exceeded $60m. The funding will be used for the platform development and introduction of a marketplace for non-fungible tokens.

Newly established web3 game developer MetaKing Studios has raised $15m in Seed funding. The round was led by Makers Fund, and BITKRAFT Ventures. The funding will be used for further development of Blocklords — multiplayer medieval strategy MMO game built using web3 technology.

Seychelles-based cryptocurrency trading platform KuCoin via its subsidiary KuCoin Ventures has invested an undisclosed amount in US-based web3 gaming publishing platform Joyride Games. This is one of the first deals backed by KuCoin’s $100m Creators Fund. The funding will be used to grow Joyride’s team, to further develop the publishing platform, and to launch the company’s first game titles.

Luxembourg-based platform to design, simulate and balance game economy systems Machinations.io has raised $3.3m in Series A funding. The round was led by Hiro Capital. The funding will be used towards hiring and expanding its operations team, and adding more tools to its platform.

Sweden-based mobile games developer Wicket Gaming has raised $0.51m by direct issue of 277,778 shares with subscription price amounted to $1.84 per share. The company also decided to raise a loan of $1.53m to complete the acquisition of German-based digital consulting company Wegesrand Verwaltungsgesellschaft. The deal will help to accelerate the growth of the Company’s operations.

Israel-based mobile game developer Candivore has raised $10m in funding. The round was led by vgames. The funding will be used for the company’s growth and advertising campaign of its title Match Masters in the UK market.

US-based AR startup Jadu has raised $36m in Series A funding. The round was led by Bain Capital, with participation from General Catalyst Partners. The funding will be used to build a gaming platform that lets players use NFTs as avatars.

FUNDRAISING

US-based web gaming platform Kongregate and Australia-based ​​blockchain game tech company Immutable have established a $40m fund. The fund will invest in developers who make blockchain games for Kongregate platform.