Venture capital firms haphazardly piled into blockchain gaming projects during the last bull run but are taking a much more mature and sustainable approach this time, according to industry executives.
“[It was] insane,” Shi Khai Wei, founder of cryptocurrency-focused VC firm LongHash Ventures, told Cointelegraph, adding that some GameFi projects were receiving up to $100 million with only a few team members and some lofty promises.
Keiran Warwick, founder of GameFi studio Illuvium, who recently raised $12 million in VC funding, said he saw the same thing, with much of the investor fervor then driven by a fear of missing out (FOMO).
Illuvium confirmed it secured a $12 million Series A funding round on March 26. Source: Illuvium.io
“If someone’s speaking to you and they pitch a game that four or five other firms have invested in, you think, well, they’ve done their due diligence, and they know what they’re doing, so we’re just going to follow suit,” said Warwick, adding:
“You get this FOMO and traction purely because people don’t want to miss out and they think, well, others are in, so we’re in.”
But VCs have since expanded their checklists and want to see gameplay, artists, developers, security audits and much more, Warwick noted.
“The amount of scrutiny that VCs are putting projects under now versus then is huge.”
Wei attests to this and says a longer checklist actually helps his firm weed out the not-so-legitimate projects.
LongHash has been more invested in GameFi this time as the top-tier projects have launched or are close to launching and are priced at much more reasonable valuations, Wei explained. His firm has invested in Yield Guild Games, Guildfi, Snack Club, Moonveil and Ignite Tournaments.
Wei said GameFi has become a focus area for LongHash Ventures in recent months and hopes the firm will be 6-12 months ahead of the curve when the next wave of FOMO kicks in.
Why #web3?
Network effects are the true underlying force of web3 and it also leads to cross-game collaborations.
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