Dialogue with Yat Siu, founder of Animoca: How did Animoca Brands achieve a valuation of US$5 billion?
Author: Steven Ehrlich
Original title: "How Animoca Brands Built A $5 Billion NFT Fortune》
Compilation of the original text: Gu Yu, Chain Catcher
Author: Steven Ehrlich
Siu：Original title: "
Compilation of the original text: Gu Yu, Chain Catcher
Siu：Forbes: Can you tell me the history of Animoca?
We did start out as a mobile game business, and we were one of the largest mobile game companies in Asia before Apple disliked the way we were cross-promoting the company's apps in 2012 and took our platform down in disgrace. At that time, we had well over 40 million installs and $20 million in annual revenue.
Forbes: What made you focus on cryptocurrencies?
Siu：We got into blockchain and NFTs in late 2017 with CryptoKitties. We were in the process of closing the acquisition of a Canadian studio called Fuel Powered, which shared an office with another company called Axiom Zen. They are working together on this little thing called CryptoKitties, which launched in November 2017.
The co-founder of Fuel Powered was invited to join Dapper Labs as a co-founder. In this context, we became shareholders of Dapper Labs and publisher of CryptoKitties in January 2018. When we saw the potential of NFTs, representing digital property rights to us, we basically went all in and never looked back.
Forbes: How did you structure your early-stage portfolio?
Siu：We invested in Sky Mavis, developer of Decentraland, OpenSea, Wax and Axie Infinity. We also acquired The Sandbox. This all happened in 2018-2019. Those were the very, very early days, and we were a bit of a loner in this space. If you recall, in 2018, especially in late 2018, everyone was running away from the NFT scene, and here we're talking about NFTs.
You can imagine how difficult it was for us (or anyone) at the time. We were one of the very few people who actually pursued it at the time. We know Bitcoin, and we know that decentralization is a technology. But it’s not fungible tokens that really capture our imagination, because they’re more money-focused. What excites us is what NFT represents. That's basically why we decided to go all in, and I think we arrived at a time when the market was really crushed -- in the broader crypto sense, which in hindsight gave us a lot of opportunity.
Forbes: How has this affected your fundraising? How are you affording all these acquisitions?Prior to this, we were a public company listed on the Australian Securities Exchange. We ended up losing our listing on this exchange because we delved into NFTs and cryptocurrencies. This is a different kind of deplatforming. In 2018, when we saw the potential of NFT, we were a very small listed company in Australia. As chairman, I steered the company in that direction and we recapitalized the company for $500,000. Our market cap at the time was only $3 million.
When we were delisted in 2020 (even though we were suspended in 2019), our company was worth approximately $100 million. We fought the suspension for seven or eight months, so we didn't trade in that time, and eventually, we got kicked out of the exchange, mainly for trading cryptocurrencies, which the ASX was hostile to at the time.
Siu：Still, we raised money along the way, but those were small fundraisers. By the time we first reached unicorn status, we had only raised about $20 million. So one of the ways we traded -- and that's part of what got us in trouble -- was a lot of stock swaps. That means, for the deal with Sky Mavis and OpenSea, we become each other's shareholders. But the last time we formally raised money was in October, I think we raised $65 million at a $2.2 billion valuation.
(Editor's note: On January 18, Animoca closed a $350 million funding round at a $5 billion valuation.)
Forbes: What are your best bets in terms of investment size?
Siu：In terms of financial resources, we certainly have the ability to compete with the big players if need be, but that's not how we play. If you look at Andreessen Horowitz, a VC firm that we have a lot of respect for, they tend to come later relatively speaking. For example, the company led the last funding round of Axie Infinity and entered OpenSea last year. We went into these businesses at a seed round valuation a few years ago. We ended up investing just under $800,000 in Sky Mavis in 2019.
So guys like Andreessen are paying exorbitant prices to get in. I don't think they are irresponsible, but they have to pay more to get in. We are seed and A round investors because we are working capital, not financial capital.
Forbes: Let's talk about how your approach to investing has evolved over the past few years. I see you're expanding into infrastructure like custody and wallets and becoming network validators.
We are validators for many chains, including Flow. For us, broadly speaking, when you think about all the investments we've made to help build the metaverse/Web3, each of them is about deploying an emphasis on property rights in this metaverse, for us , This is NFT.
SiuTo facilitate this, we need to create something to help build the network effect of all these NFTs. This means, for example, investing in making it easier for users to use. We invest in platforms like Kikitrade, which is basically a very simple on-ramp to crypto; for example, we invest in projects like validators, where we have tokens in the ecosystem.
This is what we call a hedging strategy. Due to our investment in Dapper Labs, we are a large shareholder in FLOW; we are a large holder of AXS and have over 100 more tokens in the space. For us, it's not just a way to invest, it's a way to hedge ourselves and help grow the ecosystem. If we believe that the future is in the metaverse, we need to have more and more currencies that grow in that space. There's no point in cashing out in the real world because getting back to the real world is expensive.
