If you haven’t heard of Animoca Brands over the past year or so, you haven’t paid close attention. With a long and growing list of digital entertainment, blockchain properties, and gaming, this eight-year-old, 600-strong Hong Kong-based outfit has quietly become one of the most active participants in a world that more and more stakeholders believe is the web’s next iteration.
Just today, a Los Angeles team called the Fan-Controlled Football League — a sports league in which fans vote on real-time decisions for their team — announced $40 million in Series A funding led by Animoca. And the device, which started by developing games for smartphones and tablets, has invested in more than 150 other combinations since it hit the blockchain in 2017.
It was a coincidence, it seems. For Animoca founder Yat Siu, it also seemed like he was likable at first sight. At the time, Animoca was in the process of acquiring a company called Fuel Powered, which shared an office with Axiom Zen project studio, and Siu was fascinated by the blockchain game Axiom was working on called “CryptoKitties.” He learned about it from Fuel Powered’s founder, Mikhail Naim, who was advising Axiom’s founder, Rohan Gargozlu.
Soon after, in early 2018, Animoca struck a deal: an exclusive one-year renewable 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 better known as the NBA Top Shot), and Animoca became one of its early supporters.
Animoca has been on an impressive rip off ever since. Acting as a publisher, and increasingly as a buyer of blockchain assets and tokens, its bloated portfolio includes Sky Mavis, global sensation developer Axie Infinity, which closed on nearly $150 million in funding in October at a $3 billion valuation, and popular metaverse startup The Sandbox, a A game in which players can create and monetize in-game assets that closed a $93 million Series B funding back in November led by SoftBank. (As of last week, the smallest plot of land that land users could purchase in the Sandbox was over $11,000.)
Animoca also acquired an early stake in OpenSea, currently the largest market for NFTs and was valued, as of last week, at a staggering $13.3 billion.
To further underscore that Animoca is consistently close to the action, it was recently paired up with one of last year’s surprising projects, the Bored Apes Yacht Club, to create a Bored Apes themed game this year.
In fact, in a conversation late last week with Siu, he said that Animoca’s holdings were worth about $16 billion in late November, not long after Animoca valued itself at $2.2 billion in a $65 million financing round that included Sequoia Capital. China.
Interestingly, Sequoia and the rest of the syndicate bought publicly traded shares. As Siu explains, Animoca, which previously traded on the Australian Stock Exchange, was delisted in March of 2020 because it “didn’t like the fact that we’re dealing with cryptocurrencies,” he said. Now it operates as an unlisted public company. This means that it can communicate with shareholders through its own website and mailing lists, and its 2,500 shareholders can sell their shares privately to other individuals. (You just have to know to own some.)
Shares of OpenSea and Dapper Labs are simultaneously part of the company’s assets. “They would really be what you describe as balance sheet items; said Siu, who stressed that Animoca is “not venture capital,” even while it might look a lot like it to outsiders.
Animoca’s success has not been without its speed bumps. On Monday, a subsidiary of Animoca that mins sports NFTs (for non-fungible tokens) suffered a security breach that caused users to lose $18.7 million worth of tokens and send the price of the subsidiary’s tokens down 92%.
This brave new world comes with its own downsides.
However, Siu, who is today the CEO and Managing Director of Animoca Group, clearly believes strongly in web3 and it is unsurprising that he does not put much criticism on the surface, including regarding the practicality of creating a fully decentralized business.
Box CEO, Aaron Levy recently asked On Twitter, for example, whether truly decentralized organizations that rely on the input of their communities will really be able to innovate if they are always busy trying to build consensus.
When asked about this, Siu said, “We’re not asking users to be all visionaries,” and that “people will know what’s best for them when there’s something to compare it to.”
We also talked about how Animoca is thinking about investments and partnerships in 2022. He said the company continues to buy game studios in order to “transfer them onto the blockchain and provide primarily digital property rights to end users.” On the investment side, he added, appearance also gravitates toward infrastructure that can help develop and grow network effects for digital properties such as NFTs.
What that means is Lending, DeFi, Fragmentation, Protocols, and Layer 1 [blockchains], class 2 [blockchains]. “
It’s part of Animoca’s overarching belief in “cross-links” as essential for fast-growing fashion to keep growing.
“We want to encourage companies, when launching gaming assets or NFTs, to launch, let’s say, Ethereum, but they should also consider putting it in Flow [the blockchain designed by Dapper Labs]. And they must also put it on Solana and they must also put it on HBAR. The whole idea is to encourage people to put their assets on as many platforms as possible, in as many protocols as possible, because for us that independence is really critical. We look at chains very much like countries. If you are only able to launch a product in one place, in one country, you are limited by the culture and potential of that particular place.”
To get more of that conversation with Siu — who grew up ethnically Chinese in Austria, got his first job with Atari in Germany as a modern 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 the plans for the Facebook metaverse, Jack Dorsey’s Reflections About web3, and how the business world is changing in Hong Kong as China redraws the lines.