Firms continue to raise venture capital dollars to develop innovative metaverse projects globally

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The full realization of the metaverse is still a few years away. The economic downturn has also had a severe impact on the global metaverse industry. Notably, venture capital investment in the sector has experienced a dramatic turnaround over the last 12 months, as the emerging technology has struggled to garner widespread consumer interest and adoption. However, despite the funding downturn in the global metaverse industry, there are some players that have shown promise in the space and venture capital firms are also backing them with a multi-million-dollar cash infusion. For instance,

• In October 2022, Improbable, a United Kingdom-based metaverse startup, announced that the firm has raised US$100 million in a funding round which is backed by Elrond, the blockchain technology firm. The multi-million-dollar funding round comes even after the firm posted record losses. The October 2022 capital round values the firm at more than US$3 billion.
• Before the US$100 million round, the firm also raised US$150 million in April 2022, which included participation from SoftBank. Founded in 2012, Improbable has pivoted its business model from making video games to creating a metaverse platform, after struggling for years with its initial business model. Notably, the firm is projecting that the metaverse platform will drive profitability for the business, which incurred losses of £152 million in 2021.

The metaverse platform developed by the firm allows institutions, businesses, academics, and game developers to build and create their own virtual worlds. Notably, the firm is also working with militaries, who are using the metaverse platform for simulation, in the United Kingdom and the United States.

• In November 2022, Yahaha, a China-based metaverse gaming platform, announced that the firm had raised US$40 million in a funding round, which was led by leading tech giants such as Alibaba and Temasek. Notably, the firm provides the infrastructure to anyone who is looking to build games.

The low-code immersive gaming platform is looking to use the funding round to improve its feature and platform offering. From the short to medium-term perspective, the firm plans to add more monetization features and other commercial developments to its platform. In the early alpha stage, the firm has recorded strong growth, with over 100,000 creators signing onto the platform.

Along with triple and double-digit million-dollar funding round, early-stage startups are also attracting single-digit venture capital funding around the world. For instance,

• In October 2022, METAV.RS, a French metaverse startup, announced that the firm had raised €3 million in a funding round for its content management platform. Notably, the funding round included participation from various French and foreign investment funds. Web3 industry leaders and experienced entrepreneurs also participated in the funding round.

The firm has developed a no-code platform, which is integrated with various tools and apps, thereby enabling brands to manage their own virtual worlds. Notably, the marketing teams are using the platform to integrate content inside the metaverse, thereby driving more engagement from their customers. The firm has also developed a platform that interoperates with major social networks and metaverse platforms. The service is also interoperable with major e-commerce platforms. Some of its early clients include players from the retail to the luxury industry.

• In September 2022, Spot, a United States-based metaverse startup, also announced that the firm had raised US$5.5 million in a seed funding round. Before September 2022 funding round, the firm also raised US$1.7 million in April 2021 from a host of investors including Freestyle, Liquid 2 Ventures, Community Access Fund, and others.

Notably, the firm develops virtual hubs which can be used for various purposes, such as business events or functions. In virtual hubs, people can communicate with each other through video conferencing functions. Through its virtual hubs, the firm is looking to take the competition to players such as Slack. As hybrid and remote work policies are implemented by businesses across the globe, many businesses are employing such tech to manage their workforces more efficiently. While the market is very competitive, with leading players such as Slack and Teams, dominating the sector, Spot is able to compete with them as they do not offer virtual office spaces.

As more and more startups continue to innovate in the metaverse sector, venture capital dollar is expected to further flow into the market, albeit at a slower pace compared to 2021. For the metaverse industry to drive mass adoption among consumers at a global scale, the technology needs to be merged with the daily lives of consumers.