The Metaverse Industry Ecosystem [KPMG CFO Lounge] examined by VC and PE investments > NFT_News KDCA(한국데이터공인인증원)

As non-face-to-face culture and digital businesses develop rapidly around the world after the COVID-19 pandemic, the transition to the metaverse era is also accelerating. In addition, the rise of the MZ generation, which is familiar with the digital environment, and technological advances such as 5G, VR (virtual reality), and AR (augmented reality) are combined to actively engage in mergers and acquisitions (M&A) and investments in metaverse platforms or related technologies. In addition, the metaverse market is expanding as various industries are actively entering the metaverse business.

Attention should be paid to trends in metaverse investment by VC and PE

Since VC (venture capital) and PE (private equity fund) evaluate the potential of investment target companies in a few years, looking at VC and PE's investment trends can be a useful milestone in identifying changes in the industry. Today, VC and PE investors are busily moving to preoccupy the initial market, seeking promising startups in the metaverse sector. As of January 2022, 748 global VC and PE investors are investing in metaverse, and as a result of examining the top 10 investment companies (based on the number of investment companies), most of them are VCs that are investing intensively in blockchain and cryptocurrency. Among them are famous VCs such as Sequoia Capital and Light Speed Venture Partners. Corporate-led venture capital (CVC) such as Samsung Next, LG Technology Ventures, and Kakao Investment are also looking for promising startups in the metaverse field. In addition, game companies such as Com2us, Epic Games in the United States, DeCentraland in China, and Mihoyo in China directly invest in metaverse startups. In addition, as a result of checking the top 10 metaverse companies that are receiving investment from a number of VCs and PE, it was found that there are many companies related to P2E (Play to Ear) games, and investment is focused on companies that are likely to generate profits.

Many new companies in the software sector

As a result of examining 150 metaverse companies that have received investment from VC and PE around the world over the past four years (January 2018 to January 2022), most of them were recently established. 56.2% of companies were startups established after 2020, and 39.7% of companies were established between 2010 and 2019. The U.S. (51) was the largest nationality of metaverse companies invested by VC and PE, followed by Singapore (14), the U.K. (13), and China (11). As a result of checking the industrial groups to which metaverse companies belong, it was found that all of the top six industrial groups were related to software. Entertainment software companies accounted for the largest number with 65, followed by financial software (16), business and productivity software (16), multimedia and design software (14), and social and platform software (8).

Metaverse Companies…Focus on gaming, entertainment, immersive experience, Web 3.0, NFT business

The 150 metaverse companies that have received investment can be largely classified into five groups. The first group is a game and entertainment company that includes Roblox and The Sandbox. Many of the companies are identified as P2E (Play to Ear) and GameFi (Game+Finance) companies that allow users to generate profits by playing games. Game companies issue in-game tokens, assetize game items with NFT (Non-Fungible Token, irreplaceable token), and link them to cryptocurrency to allow users to enjoy games and earn financial rewards.

The second group is a company that provides immersive experiences. These include companies that make online streaming events feel more realistic or allow indirect experiences of products online without visiting offline stores. ORB Media of Ireland is developing a solution that allows customers to have a vivid brand experience without visiting the store through 360-degree VR video production technology. Companies that make virtual spaces more realistic and provide more immersive experiences are attracting VC and PE investments.

The third is a technology infrastructure company for implementing Web 3.0. Web 3.0 refers to a next-generation web environment in which data is distributed and stored and ownership of data can be controlled by individuals. Metaverse and NFT can also be viewed as derivatives of Web 3.0. Detailed technologies of Web 3.0 include decentralized distributed file systems (IPFS), distributed applications (DApp), and clouds. Base technology companies for implementing Web 3.0 are also actively attracting investment from VC and PE.

The fourth is a social and commerce company. Based on social networks, the company is expanding into profitable businesses such as commerce and is trying to implement a more realistic virtual world by switching services from existing 2D to 3D. Representatively, Meta (formerly Facebook) is trying to implement a high-level metaverse in which online and offline are interconnected in fields such as digital workplaces and e-commerce, in addition to simply making existing 2D content into 3D.

The fifth is the NFT field. NFT is used as a means of proving ownership of digital assets in Metaverse, and investment in related companies is also active. Companies are differentiating NFT with unique concepts and curations, and the types of NFT digital assets range from games to digital art, collections, and movies.

Companies stepping into metaverse must first define their own perspective on metaverse. Consideration should also be given to what type of metaverse will be suitable for the company's business model. Based on this, it is necessary to think about how to build and utilize the metaverse platform and how to differentiate it from the customer experience provided by existing online and offline channels. Successful metaverse businesses should be promoted through concreteization of metaverse ecosystem expansion strategies, NFT utilization strategies, and metaverse monetization strategies.

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