Investing in Web3 gaming has indeed demanded a higher level of due diligence during a challenging cryptocurrency bear market, as noted by Animoca Brands CEO Robby Yung. Yung, who also co-founded the popular Metaverse platform The Sandbox, emphasized the need for more rigorous evaluation criteria when considering investments in Web3 gaming while speaking at the European Blockchain Convention in Barcelona.
“Now that we’re in a sort of crypto winter and an economic downturn, from the investor perspective, we can afford to be quite choosy because, obviously, capital is scarce.”
Yung stated that investment propositions revolve around identifying passionate teams with specific skill sets who are developing product ideas that clearly fit the market. He highlighted the current cautious approach due to the economic downturn and capital scarcity, allowing investors to be more selective in their choices.
The CEO of Animoca Brands further explained that the stage of development for potential projects they consider investing in is now typically more advanced compared to previous standards. Investors are increasingly demanding tangible progress from projects seeking capital, requiring at least an alpha build and some form of user testing.
While investors have become more discerning, Yung acknowledged that companies have continued to secure funding, particularly in the latter half of 2023, indicating an improvement in the market with a “flight to quality.”
Yung also addressed the challenges of user acquisition in the Web3 gaming space, attributing it to difficulties in game distribution. He pointed out that mainstream gaming platforms have been hesitant to list games with Web3 infrastructure due to uncertainties about how it might impact their existing business models and distribution fees.
According to Yung, this reluctance has hindered collaboration between traditional gaming giants like Steam, EA, and Epic Games and the Web3 community to explore solutions that could benefit the broader gaming market.
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