Venture Firm Rolls Out its Investing Strategy for the 'Metaverse' that May Soon Eclipse the Internet

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

Venture Firm Rolls Out its Investing Strategy for the 'Metaverse' that May Soon Eclipse the Internet

Gaming is eating the world.

So says a new report issued Tuesday by L.A.-based investment firm MaC Venture Capital.

The report mentions the recent explosion of gaming companies – including Epic Games' $1.78 billion raise that valued it at $17.3 billion, Unity's $1.3 billion IPO that valued the Epic competitor at $13.7 billion and Roblox's $150 million fundraise that valued the kid's gaming "sandbox" at $4 billion — and that was before the pandemic boosted Roblox's user base.

But most of the analysis is devoted to the techniques and tools that gaming has popularized over the years, and that are fast proliferating into areas as diverse as retail, film production, medicine and national defense.


MaC, an early stage firm formed from a merger of Cross Culture Ventures and M Ventures, invests in tech companies it believes will benefit from shifting cultural trends and behaviors.

Underlying much of the firm's optimism around the gaming industry is its maturity, general partner Michael Palank told dot.LA. Multiple generations have now grown up with gaming, from early Nintendo consoles to mobile games and newly immersive platforms like Fortnite. That familiarity has pushed the mechanics of video gaming – taking action, leveling up, expanding your in-game persona – far beyond a traditional leisure activity, he said.

A graph from MaC Venture Capital's report highlights gaming's growth in 2020.Image from MaC Venture Capital

In addition to merging into other sectors, those tropes are starting to inform how people operate in new spaces, including what industry observers have termed the "metaverse." MaC sees this space as a virtual world "where we will not just play games but socialize with friends, shop, learn, earn a living, perform, transform, travel and escape.

"Many believe that the metaverse will not only be the next great computing platform — one that rivals the internet itself — but also a virtual world where billions of people come to transact trillions of dollars," the report says.

The ubiquity of gaming has created a stronger desire among consumers to be able to participate in their content.

And, especially among young people, the way one's digital self is presented to the world is closing in on its real-world analog.

"Your inventory of items, the character you play with, the skins you have, the avatars you choose – these things are becoming as important as wearing a Starter jacket was when I was in high school," Palank said.

MaC is currently raising capital for its next fund; Palank said he expects about 25% of it will be deployed to gaming.

The report, entitled "The State of Technology & Culture: Gaming Takeover," touches on gaming's darker side as well, including its issues with misogyny and a lack of diversity among developers and characters. This, despite the fact that people of color have a proportionately higher engagement with gaming, as the report details.

"There is a lot of work to be done to ensure that this new gaming-influenced world is the kind of world in which we want to live," the report states.

PlayVS employs has key relationships with educational institutions as well as partnerships with major game publishers including Riot and Epic. Image from PlayVS

As for what MaC will actually do to avoid a world of underrepresentation and gaming addiction, among other potential problems, the firm's partners ascribe to a philosophy of "investing in the future that we want to see," Palank said.

For example, Cross Culture Ventures was an early investor in PlayVS, a company that enables high schools and colleges to run esports programs and participate in leagues and tournaments. Palank pointed to the priority that PlayVS places on increasing access to gaming as one reason the firm found it appealing. The company was founded by Delane Parnell, who is Black.

"If it were a team that didn't care or know about diversity challenges in gaming and had no passion about rectifying those issues, I think PlayVS would have been a less attractive investment," Palank said.

The report also highlights L.A.-based Glow Up Games and Robin Games as companies poised to bring more diversity to the industry.

Los Angeles is likely to play a big role in the firm's investment strategy. Palank said he expects at least half of the fund's future bets will be L.A.-based.

MaC's L.A.-based investments in gaming also include Artie, which is seeking to change how mobile games are distributed; FazeClan, whose culture-shaping initiatives include retail, esports and content production; and Within, whose Wonderscope app is designed to give kids AR-enabled interactive story experiences.

https://twitter.com/hisamblake
samblake@dot.la

Subscribe to our newsletter to catch every headline.

Cadence

This Startup Wants to Make Testing for ADHD and Dyslexia as Common as Going to an Optician

Keerthi Vedantam

Keerthi Vedantam is a bioscience reporter at dot.LA. She cut her teeth covering everything from cloud computing to 5G in San Francisco and Seattle. Before she covered tech, Keerthi reported on tribal lands and congressional policy in Washington, D.C. Connect with her on Twitter, Clubhouse (@keerthivedantam) or Signal at 408-470-0776.

This Startup Wants to Make Testing for ADHD and Dyslexia as Common as Going to an Optician
Courtesy of Polygon

Here’s how Jack Rolo describes his childhood: He was good at chess, and bad at spelling. He was good at math, and bad at reading. Rolo went on to study physics at Durham University in his native England—and despite often struggling in his courses, it wasn’t until after he graduated that he was diagnosed with dyslexia, a common language processing disorder that affects reading.

Read more Show less

ZipRecruiter CEO Ian Siegel on How the Job Market Has Shifted

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

Ian Siegel, ZipRecruiter
Image courtesy of ZipRecruiter

On this episode of Office Hours, host Spencer Rascoff talked with ZipRecruiter CEO and founder Ian Siegel about how he built his company, the lessons he's learned along the way and how he's seen the pandemic drastically reshape the job market—probably for good.

Read more Show less

Riot Games Doubles Down on Mobile With ‘Aim Lab’ Investment

Samson Amore

Samson Amore is a reporter for dot.LA. He previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Samson is also a proud member of the Transgender Journalists Association. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him

Riot Games Doubles Down on Mobile With ‘Aim Lab’ Investment
Image from Aim Lab

Riot Games has invested in virtual shooting range developer Statespace, accelerating the Los Angeles video game publisher’s efforts to dominate the mobile gaming space.

Read more Show less
RELATEDEDITOR'S PICKS
LA TECH JOBS
interchangeLA
Trending