Gaming startup Infinite Canvas is banking big on the rise of the metaverse and the value of user-created content in video games as it launches its business with $2.8 million in pre-seed funding.
The metaverse is basically a more interactive version of the internet driven by user-generated content. It could become the main way we communicate and live online -- Facebook chief Mark Zuckerberg recently told The Verge he wants Facebook to become a metaverse-focused company. Xbox boss Phil Spencer also said Microsoft is taking cues from social media like TikTok to determine what user-generated content to target in games.
Infinite Canvas was founded earlier this year by Tal Shachar — former chief digital officer at esports team Immortals Gaming Club — and President Sebastian Park, who was previously the vice president of esports for NBA team the Houston Rockets.
The pre-seed round was led by Los Angeles-based Lightshed Venture Partners. New investors, including San Francisco-based Bitkraft Ventures, Emerson Collective, Day One Ventures and Crossbeam, also participated.
Shachar told dot.LA the $2.8 million will allow Infinite Canvas to expand its staff from 10 people, pay its content creators, invest in more content and marketing, and explore the potential of the metaverse.
The term is credited to writer Neal Stephenson, who defined it as "a convergence of physical, augmented, and virtual reality in a shared online space."
Infinite Canvas co-founders Tal Shachar (left) and Sebastian Park.
Video game publishers are beginning to invest more in platforms that let hardcore gamers use their content to create new in-game experiences. Studios will open their IP to players, who can then sell what they create (maps, items, skins, etc.) on the game's marketplace for the studio to take a cut. PC gaming titan Valve Corp. got in on this early with Steam Workshop, and Sony's been doing this since 2012.
"That's something that's increasingly happening where big games and big publishers are adding to that capability," Shachar said. "But there's also more publishers and studios launching games that from day one are built around users creating content."
Shachar wants Infinite Canvas to capitalize on a new, younger demographic of players and creators. The coronavirus pandemic caused a huge jump in people playing games. "Roblox" has 43 million daily active users and it's estimated that half of all U.S. kids have a Roblox account. "Fortnite" has over 350 million monthly players and generated $5.1 billion in revenue last year. These numbers are only expected to grow.
"We partner with these creators that are building experiences on various gaming platforms such as 'Roblox,' and we provide capital, technology optimization, expertise and guidance, in addition to marketing support, in exchange for effectively a stake in the revenue that is produced by these experiences," Shachar said.
On YouTube, it's pretty simple to get paid if you make videos and have a strong follower base -- sign up for a creator account, get monetized and then let the cash roll in along with the views. But for gamers who are creating immersive worlds and challenges inside a game, being paid isn't guaranteed -- unless the creator also makes a video or live stream.
"We are just at the beginning of seeing what the metaverse market opportunity can be," Lightshed Ventures partner Rich Greenfield said in a statement Monday. "While the path to monetization is clear on platforms like YouTube, in virtual worlds Infinite Canvas is pioneering a network that will unite creators, players, and content partners to enhance the earning power of the talent building new virtual empires."
Infinite Canvas wants to build a network of popular creators making in-game content and unite them with advertisers and brand partnerships. As creators become monetized for their in-game work, Infinite Canvas will take a cut of the revenue.
"Creators need support, infrastructure, tools and promotion to grow and connect with their community. At Infinite Canvas, we want to support those creators building the future," Shachar said. "We think creating an organization that combines all of these types of people, players and IP holders can help grow the community and take the metaverse to new horizons, while unlocking earning potential for everyone."
The startup has seven content creators signed on as partners so far, including Anthony "RussoPlays" Russo, who has 1.8 million YouTube subscribers and gaming duo Terabrite Games, which has roughly 1.4 million subscribers.
Infinite Canvas is planning on courting more influencers and celebrities to give it a boost, a move that's worked for other publishers. Last year, a Lil Nas X concert in "Roblox" racked up about 35 million viewers.
Holding virtual concerts inside "Fortnite" was a new move for Epic Games at the beginning of the pandemic but it drove hundreds of millions of people into in-game events after signing pop hitmakers like Travis Scott and Ariana Grande to do virtual concerts. Scott's concert in April attracted over 12 million viewers, and since then Epic's made the in-game shows a regular series.
Shachar said Infinite Canvas would consider using its platform to host in-game events in addition to other content. "We see hosting events inside of experience as one form of entertainment that's possible on the platform," Shachar said. He added Infinite Canvas will also host "more traditional gameplay (that) could be people just hanging out and having a good time or folks having concerts inside of these experiences."
Genies, a startup that makes virtual avatars out of musicians, celebrities and, very soon, everyone else, is moving from Venice to a 20,000-square-foot converted warehouse in Marina Del Rey.
The move comes on the heels of Genies' $65 million Series B fundraise. The new space is five times the size of the startup's former office; it includes a recording studio, screening room, 25-foot ceilings and enough space to double the company's current employee count of about 60.
It's both a necessary step to accommodate the company's aggressive hiring plans and a bet on L.A.
"Genies' commitment to Los Angeles further demonstrates the unique offering only this city has," said Raise Commercial Real Estate's Mac Burridge, who represented Genies on the deal. "The confluence of entertainment and technology has never been more prevalent and companies like Genies are the reason for L.A.'s quick recovery."
It's go-time for Genies following the fundraise that brought tech veteran Mary Meeker onto its board. The company also recently brought on a new head of talent to lead the ongoing buildout of its executive team.
Genies joins a host of startups that already call Marina Del Rey home. Dollar Shave Club, System1, ZEFR, The Bouqs, Whatnot and Survios all reside in the unincorporated coastal community nestled between Venice and Playa Del Rey.
"Silicon Beach I don't even think is a fair way to describe Los Angeles tech anymore," said Burridge. "I think Los Angeles is a tech hub, whether your office is in the Valley, Downtown or in the South Bay and everything in between."
The deal is part of what Burridge describes as a "tidal wave of demand" for office space in Los Angeles coming out of the pandemic.
"Momentum hasn't, I don't think, ever been as hot as it is right now," he said. "There's never really been 12 full months of pent-up demand that's hit the market all at once, and that's what's happening right now."
Genies will follow a hybrid in-person and work-from-home policy beginning in September, said chief operating officer Jake Adams. Its staffing plans will focus on hiring engineers and designers.
What's the Value of an Avatar?
Genies has established itself by partnering with and building virtual avatars for celebrities including Justin Bieber, Rihanna and Russell Westbrook. The company says it controls "99% ownership of the celebrity avatar market." Last week, hip-hop trio Migos became the latest to render themselves into avatars with the company. Genies has also partnered with Warner Music Group to bring its avatar technology to the label's expansive roster.
Sporting a digital avatar can help celebrities advertise their milestones and ventures through an expanded online presence. It also offers potential for profiting from the so-called metaverse – the growing confluence of virtual worlds, social interactivity and commerce – by selling digital wearables and collectibles.
As for Genies, Adams, the COO, said the purpose of building avatars for celebrities is to encourage fans to adopt avatars of their own.
"That really shows users firsthand the potential of an avatar and how it can augment their digital and social experiences," he said.
Genies plans to launch a consumer app in the fall, where users can create their own avatars. Adams is working to craft partnerships that will enable those characters to travel across the digital universe. One established partnership is with GIPHY, which allows users to create GIFs that are shareable across numerous platforms.
Adams said Genies is currently testing its consumer-facing app with a small cohort. It plans to launch the app widely in conjunction with the digital goods marketplace that it is building with Dapper Labs, the blockchain company behind NBA Top Shot.
Genies does not share revenue or profitability figures but sources say the key challenge facing the company is whether they can become financially sustainable.
The marketplace is key to those plans. Genies will use it to create, market and sell digital goods, including NFTs, sometimes in collaboration with a brand or celebrity, for example to accompany an album release.
"When you think about our avatar itself, it really needs to sit in that flywheel where a user can buy something in our marketplace, they can adorn it on their Genie and then use it across their various digital experiences," Adams said.
Raising $65 million unlocks opportunities like investing in a new office and hiring a team to realize that vision. But it also comes with newfound pressure.
"The stakes definitely get pushed up," Adams said. "We have the resources to execute and now it's really just on us to make it happen."
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L.A.-based digital avatar company Genies has a plan to monetize the metaverse.
The startup announced Monday it has closed a $65 million Series B fundraise. Genies, which got its start building cartoon-like online avatars for celebrities, recently opened its platform up to anyone who wants to create their own digital "fantasy version" of themselves.
Chief executive Akash Nigam previously told dot.LA that his company, which does not publicize its financials but has now raised over $110 million, hopes to earn "99.9%" of its revenues from the digital goods economy. The new funding will be used to further build out that ambition.
The round was led by BOND, whose general partner Mary Meeker publishes a widely read annual report on internet trends. NEA, Breyer Capital, Tull Investment Group, NetEase, Dapper Labs, and Coinbase Ventures also participated.
The digital goods available for purchase will come directly from Genies and in partnership with celebrities. They will continue using their avatars to promote milestones like new albums and song releases, and can now commemorate those milestones with "special edition" digital items they can sell to fans.
Later this year, users will also be able to purchase and trade tokenized digital goods – that is, digital swag whose ownership and uniqueness is verifiable with an NFT, or nonfungible token. That's the outcome of Genies' recently announced partnership with Dapper Labs, the company that operates two of the most popular NFT exchanges, NBA Top Shot and CryptoKitties.
Genies is expanding into a digital goods marketplace where fans can buy digital items from creators and celebrities.
Genies launched in 2017 and quickly established itself as the go-to provider of cartoonish avatars for celebrities, with initial ambitions to operate as a digital avatar talent agency. It has worked with thousands of celebrities, primarily musicians, including Justin Bieber, Jennifer Lopez, Shawn Mendes (who is also an investor) and Rihanna. The company recently announced a partnership with Warner Music Group, which plans to use Genies' avatars and latest features for its roster of artists.
In late 2020, it partnered with Gucci and Facebook-owned Giphy to let those companies' digital users build avatars on their apps. This was a key step in Genies' ongoing expansion beyond celebrities. The company plans to grow its software development kit to incorporate the same functionality into other third-party platforms.
In addition to taking a cut of digital-good sales on its own platform, Genies also aims to make money through its integrations with other apps by capitalizing on its association with celebrities. Genies' outlines its pitch to other platforms in three steps: celebrities create digital goods on your platform; users buy those goods for their avatar; you get a cut. Genies also says it can help design the digital goods and analyze user data to guide design decisions.
With its new funding, new app and expanding SDK integrations, Genies hopes to enable users to bring their avatars anywhere on the web, and monetize the customization of those avatars. The company is building out its executive suite to oversee that vision.
It'll be competing with Snap-owned Bitmoji, among others.
"Genies has opened the door to a new type of virtual self-expression that is changing the way we interact with one another online – starting with celebrities and moving to all of us," said Meeker in a statement. "Using your Genie avatar, you can be anyone you want to be in the way you want, communicating across the vast digital landscape. We're excited for our partnership, and look forward to helping Genies grow the metaverse, one avatar at a time."
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