if you haven’t heard Animoca brands over the last year, you haven’t paid much attention. With a long and growing list of digital entertainment, blockchain and gaming properties, the eight-year-old, 600-person Hong Kong-based company has quietly become one of the most active participants in a world that more and more stakeholders believe is the next iteration of the web.
Even today, an LA outfit called Fan controlled football league – a sports league where fans vote on real-time decisions for their team – announced $40 million in Serie A funding led by Animoca. And the company, which started out developing games for smartphones and tablets, has invested in more than 150 other companies since getting onto the blockchain around 2017.
It was as fortuitous as it sounds. For Animoca founder Yat Siu, it also seems like love at first sight. At the time, Animoca was on its way to acquiring a company called Fuel powered, who shared an office with a venture studio Axiom Zen, and Siu was intrigued by the blockchain game Axiom was working on called “CryptoKitties.” He learned this from Fuel Powered co-founder Mikhael Naayem, who was advising Axiom founder Rohan Gharegozlou.
Soon after, in early 2018, Animoca struck a deal: a one-year renewable exclusive licensing and distribution agreement with Axiom Zen to publish “CryptoKitties”. It took off in such a big way that Naayem and Gharegozlou teamed up to form Dapper Labs (now known even better for its “NBA Top Shot” market) and Animoca became one of its first sponsors.
Since then, Animoca has been at an impressive stage. Operating as a publisher and, increasingly, a buyer of blockchain assets and tokens, its expanding portfolio includes Sky Mavis, developer of global sensation “Axie Infinity,” which closed on about $150 million in funding in October at a $3 billion valuation, and the popular metaverse initialization the sandbox, a game where players can create and monetize in-game assets and which closed in $93 million in Series B funding in November, led by SoftBank. (Last week, the smallest piece of land users could buy in Sandbox was over $11,000.)
Animoca also took an early share of OpenSea, the largest NFT market today and valued last week at a staggering $13.3 billion.
Noting further that Animoca is consistently close to the action, it most recently joined one of last year’s standout projects, the Bored Monkeys Yacht Club, to create a Bored Apes themed game this year.
Indeed, in a conversation late last week with Siu, he said Animoca’s holdings were worth about $16 billion at the end of November, not long after Animoca itself was being valued at $2.2 billion. on a $65 million funding round which included Sequoia Capital China.
Interestingly, Sequoia and the rest of the syndicate bought publicly traded stock. As Siu explains, Animoca, which was previously traded on the Australian Stock Exchange, was excluded in March 2020 because he “didn’t like the fact that we were dealing with cryptocurrencies,” he says. It now operates as an unlisted public company. This means that it can communicate with shareholders through its own website and mailing lists, and that its approximately 2,500 shareholders can sell their shares privately to other individuals. (You just need to know you have some.)
Interests in OpenSea and Dapper Labs are, however, considered part of the company’s assets. “They would really be what you describe as balance items; they basically just add up to the value of Animoca Brands’ equity,” said Siu, who emphasized that Animoca is “not a VC,” even though it might look a lot like an outsider.
Animoca’s success was not without speed bumps. On Monday, an Animoca subsidiary that mints sports NFTs (for non-fungible tokens), suffered a security breach that cause users to lose $18.7 million worth of tokens and the subsidiary’s token price to drop 92%.
This brave new world comes with its own specific downsides.
Still, Siu, who is now the executive chairman and managing director of the Animoca group, is obviously a big believer in web3 and, unsurprisingly, is not a big believer in recent criticism, including the practicality of creating fully decentralized businesses.
Caixa CEO Aaron Levie asked recently on Twitter, for example, whether truly decentralized organizations that rely on input from their communities will be able to truly innovate if they are always busy trying to build consensus.
Asked about this, Siu said, “We’re not asking users to all be visionaries” and that “people will know what’s best for them when there’s something to compare.”
We also talked about how Animoca is thinking about investments and partnerships in 2022. He said the company continues to acquire game studios to “move them onto the blockchain and provide quintessentially digital property rights to end users.” On the investment side, he added that the company is also drawn to infrastructure that can help develop and enhance the network effects of digital properties like NFTs.
As for what that means, it’s “borrowing, DeFi, slicing, protocols, and layer 1.” [blockchains]and Layer 2 [blockchains].”
It’s part of Animoca’s overarching belief in the “cross chains” needed for fast-growing garments to keep growing.
“We want to encourage companies, when they launch their gaming assets or NFTs, to launch it, say, Ethereum, but they should also consider putting it on Flow. [the blockchain designed by Dapper Labs]. And they should also put it on Solana and they should also put it in HBAR. The idea is to encourage people to release their assets on as many platforms as possible, on as many protocols as possible, because for us, that independence is really critical. We look at chains very much like countries. If you can only launch a product in one place, in one country, you are limited by the culture and potential of that particular place.”
For much more of that conversation with Siu – who grew up ethnically Chinese in Austria, got his first job at Atari in Germany as a gangly teenager and sold one of his first startups to a fish oil company – you can hear the whole thing. here. Among other things, we discussed Facebook’s metaverse plans, Jack Dorsey’s plans thoughts about web3 and how the business world in Hong Kong is changing as China redraws the lines.