Investors rush for web3 gaming in funding winter

NEW DELHI : Web3 gaming firms in India noticed strong investor curiosity this calendar yr whilst cryptocurrencies plunged to close all-time lows. Such corporations produce blockchain-powered video games with play-to-earn (P2E) fashions, the place gamers are rewarded with crypto tokens for both collaborating or successful. In-game objects in such video games are sometimes bought and traded as non-fungible tokens (NFTs) as nicely.

For occasion, homegrown Polygon, which has gained fame within the international crypto and NFT business, led the funding with a $450 million Series D spherical in February from Sequoia Capital India. In addition, Gurugram-based cricket NFT gaming startup Rario raised $120 million in Series A spherical in April and Bengaluru-based Lysto.io raised $12 million in August.

According to information from enterprise funding analysis agency Tracxn, web3 gaming corporations in India raised $620.5 million in 2022 throughout 32 offers in 2022, an almost sixfold leap from the $115.3 million raised throughout 39 offers final yr. This comes despite a funding winter plaguing startups worldwide.

Industry specialists attributed the increase to rising consumer curiosity in P2E video games and the truth that an rising variety of web3 initiatives are beginning in India. Blockchain commerce agency GuardianLink and gaming agency JetSynthesys are two such examples. The former launched a P2E cricket recreation for cellphones and private computer systems in March, whereas the latter acquired web3 product studio Metaphy Labs in September, as a part of its plans to take a position $50 million within the subsequent three years in metaverse initiatives.

In addition, the crypto market crash has led enterprise capital (VC) corporations to redirect some funds from crypto startups to web3 gaming corporations, they mentioned.

“P2E gaming and metaverse are rising as main segments of the web3 panorama. Over half of the site visitors within the area at the moment is from gaming platforms. P2E gaming is doing nicely when it comes to NFT buying and selling volumes as nicely,” mentioned Neha Singh, co-founder and chief government officer of Tracxn. She additionally mentioned that the crash in giant centralized crypto firms resembling FTX, Celsius and BlockFi not too long ago has led to a shift in investor curiosity as nicely.

Priya Ratnam, CEO of Avisa Games Guild (AGG), a blockchain gaming group, concurred, and mentioned distinguished VCs are actively investing regardless of the present market tendencies.

Gaming accounts for a serious share of web3 exercise. According to a November report by gaming investor Lumikai, 30% of the 450 Indian web3 corporations are from gaming. IT business physique Nasscom additionally recognized gaming and metaverse as one of many prime 4 use circumstances of web3 functions within the Nasscom web3 startup panorama report printed in October.

That mentioned, AGG’s Ratnam mentioned web3 video games are nonetheless in a nascent stage.

She mentioned many web2 gaming corporations are switching to web3 fashions to make the video games extra attention-grabbing and profitable.

Interest isn’t coming from conventional recreation growth corporations alone. In March, recreation streaming startup, Loco, raised $42 million from South Korean crypto enterprise agency Hashed, with plans to fund and develop its personal web3 integration.

However, regardless of a great yr total for web3 gaming corporations, specialists additionally warned that the latest crash of the FTX alternate might have an effect on this business. “The downturn has been extra keenly felt post-FTX, so there’s some inertia in funding appetites that can turn into extra obvious over the approaching months. Despite this, a number of funds dedicated to the web3 area previous to the downturn and are nonetheless investing, maybe out of necessity,” said Justin Shriram Keeling, founding general partner at Lumikai.

The collapse of one of the largest exchanges in the world in early November has had a ripple effect across the industry. For instance, the price of AXS, an Ethereum-based token used by popular global web3 game Axie Infinity, fell from $12 in October to $6.5 in December. Gaming activity on the Solana blockchain also fell by 89.42% in November due to the platform’s proximity to FTX, according to blockchain analytics firm DappRadar.

DappRadar’s data, however, also showed that gaming still accounted for almost half of all blockchain activity tracked on 50 networks worldwide, between October and November.

“There is wider use for blockchain now with web3. People are beginning to see its true potential. The underlying technology is extremely useful with plenty of use cases like gaming. Cryptos have received too much attention. Slowly the world is waking up to the fact that lots of peer-to-peer things can be done on it,” mentioned Siddharth Pai, founder and managing accomplice at Siana Capital Management.

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