Apes in the Metaverse
By Alan Soclof
3 BIG STORIES
1. Apes in the Metaverse
Yuga Labs, the company behind the Bored Ape NFTs, announced a $450M funding round at a $4B valuation led by Andreesen Horowitz.
Along with the raise, Yuga Labs announced the launch of Otherside. The Otherside is a metaverse project where NFT enthusiasts and owners can connect with others in a MMORPG video game—and it looks sweet.
Yuga Labs was in the news just a few weeks ago when they announced the acquisition of CryptoPunks and Meebits, two of the other biggest NFT brands, from Larva Labs. For context, the current market cap of these three NFT brands is ~$5.5B.
Is this a big deal?
As big as it gets. In many ways, this is an inflection point for NFTs and the Metaverse. Why?
Until now, NFTs have not had much intrinsic value. Their utility was low and a lot of the value was around hype. Now, with Yuga Labs’ big push into the metaverse and creating a video game around NFTs, we could see the digital assets gain some serious utility.
Why the inflection point then? Because, if the game is successful and rivals Fortnite, Roblox, etc., we could see values of the NFTs become even more valuable. But if it busts, the bubble could easily burst.
Personally, I am really excited about what Yuga Labs is doing and think The Otherside could be incredibly successful—especially when you have all of those celeb Bored Ape NFT holders pumping the game!
Prediction: The Otherside will be the game of the metaverse and legitimize NFTs as an asset class.
Image: Screenshot from Yuga Lab’s trailer that they released for Otherside
2. Anaplan: A Bravo Acquisition
On Sunday night, private equity firm Thoma Bravo announced the acquisition of publicly traded Anaplan, an enterprise SaaS company.
Bravo acquired the company at a $10.7B valuation vs. the $7.4B valuation that the company closed at on Friday. Here are some key stats from Anaplan from their FY22:
- Revenue: $592.2M
- Operating loss: $200.7M
- Cash Balance: ~$300M
Is PE’s role in the public markets here to stay? What does this mean for the VC community?
Many former VC darlings have gotten pounded in the public markets with 70-80% valuation cuts. Due to the lack of profitability, many of these companies are also in need of additional capital, likely depending on stock equity raises from the public markets.
However, with stock prices being so low, equity raises would anger shareholders greatly due to the dilution that would occur. Therefore, PE is swooping in and not only offering financial resources but also giving them at valuations that these companies would not be able to claw back to in public markets for a long time.
Anaplan being acquired at 18x FY22 sales—even though they lost $200M last year—shows that there could be valuation support for (strong) companies, possibly giving some stability to both private and public companies.
Due to the weak IPO market and companies like FTX sharing their desire to stay private longer, PE becoming more active in late stage VC deals could happen.
Prediction: Three to four years from now, Anaplan will IPO (again) @ a $20B valuation, making Thoma Bravo look incredibly sharp (and rich).
3. SoftBank Out. GM In.
Last week, GM announced that they purchased SoftBank’s $900M equity stake in the autonomous ride-sharing company Cruise for $2.1B. As part of the deal, GM will also invest $1.35B in Cruise, which was originally committed by SoftBank.
What do these moves mean for the companies involved?
This is right in line with the company’s current strategy of liquidating positions from Vision Fund 1 in order to invest in Vision Fund 2 companies. The Cruise deal is likely a big relief to SB due to the collapse of the $40B Nvidia acquisition of ARM that would have given a massive influx of cash to SB, who bought the asset for $32B in 2016.
SoftBank is now looking to IPO ARM, however, the influx of cash will be significantly less than it could have been if the acquisition with Nvidia had gone through.
Side note: I do think there is a slight chance that SB could use the proceeds from the Cruise sale to double down on some of their public equity investments that have gotten pounded like:
- Invitae: -80% YTD
- Pacific Biosciences: -70% YTD
For Cruise and GM, this takes the company one step closer to a possible Cruise spinoff/IPO and makes the process a whole lot easier, as GM will look to unlock the value/upside that Cruise will demand.
Additionally, I expect GM upping their stake in Cruise to be very good for the company as there are now less investors and companies to make happy. It’s GM’s show, and they have serious incentive to see the company succeed.
Cruise, not Tesla, continues to be my favorite to win the autonomous ride-sharing wars.
QUOTE OF THE DAY
“The key to making great investments is to assume that the past is wrong, and to do something that’s not part of the past, to do something entirely differently. I asked what was the most outrageous thing you’ve ever done, knowing in my heart of hearts that I’d pick the one who’d done something most outrageous.”
-Don Valentine, Founder of Sequoia Capital
What They Do: Uses AI to deliver attorney quality contract negotiation advice
Amount Raised: $5M funding round
Lead Investors: Ulu Ventures
The Rundown: LexCheck gives clients the ability to have attorney quality review of legal documentation and receive insights nearly instantly. Clients can customize preferences for their specific industry and needs.
The technology is already being used by global Fortune 500 companies and can save company attorneys ~90% of their time. This early success has helped LexCheck grow 4x in 2021, and this funding looks to add fuel to the fire.
What They Do: Donation-based email solution
Amount Raised: $3.5M seed round
Lead Investors: Corazon Capital
The Rundown: If you are like me, your inbox is filled with seemingly endless emails from marketers. Gated is looking to change that by encouraging unknown contacts to donate a small sum of money to charity in order to have their email sent to the person’s inbox.
Simply put: Less emails from marketers, and more emails from people who really want to get in touch with you. Plus, charities benefit.
Through Gated’s service, individuals have seen the number of emails in their inboxes decrease by 43% on average.
What They Do: Job platform with focus on skill training
Amount Raised: $3.1M seed round
Lead Investors: Hustle Fund, Northwestern Mutual Future Ventures
The Rundown: Ramped is a job platform that is focused on providing candidates with job opportunities, and also offers mini-courses and certifications that help them work on specific skills that employers are looking for.
The company has already seen great success:
- Applicants on average only apply for five jobs on the platform before being offered a role and have a 13x better success rate than people who apply to positions through other sites
- 125 corporate partners including Fortune 500 companies and unicorns
Ramped is one to watch.
What They Do: Curator of in-game sports betting
Amount Raised: $1M seed round
Lead Investors: Acies Investments, Sharp Alpha Fund
The Rundown: Kero Gaming looks to carve out a niche in the sports gambling landscape by creating an app that allows users to gamble on game-specific events, refreshing with a new bet every 30 seconds.
The interface is cool, and I think that teams will be quick to adopt the technology if successful, as it could be incredibly lucrative—especially in slower-paced baseball.
Kero already has partnerships in place with professional sports teams like the Chicago Bulls, Atlanta Falcons, Minnesota Vikings, and more.
What They Do: Platform that helps real estate professionals earn additional income
Amount Raised: $550K pre-seed
Lead Investors: N/A
The Rundown: Realthy created a platform that enables real estate agents to generate additional income by receiving a commission for referring clients to various home-related products and services.
The company shares that agents on their platform can expect to earn over $4,000 a year by using the service with minimal additional effort.
Realthy wants to have 200K real estate brokers on the platform by 2024 and expects to raise a seed round in the near future.