The so-called “crypto winter” has wiped $2 trillion off the overall cryptocurrency market cap since November, and many investors have gone into hibernation. But Yat Siu, founder of Hong Kong-based Animoca Brands, is more aggressive.
Animoca, Asia’s largest blockchain venture capital firm, is forming a sprawling financial, gaming and social media conglomerate with more than 340 companies in total. The company’s goal, Siu said, is to give people ownership of their virtual properties and break up the empires of Meta and Microsoft. Siu describes it as a “digital dictatorship”.
Siu came into the industry from the cryptocurrency crash of 2018, when he turned his small video game studio into a cryptocurrency investment firm. The company bought a stake in the developer of CryptoKitties, a Pokémon-like game featuring virtual cats that can be traded for cryptocurrency. Just four years later, Animoca has become the most influential investor in the cryptocurrency industry, backed by Sequoia Capital and George Soros.
“If people say this is a crypto winter, then 2018 is a crypto ice age,” Siu said. “It’s time to deploy more capital, not less.”
If successful, Siu will be another crypto leader. Animoca, whose investment business is similar to VC firm Andreessen Horowitz (a16z) or Sam Bankman-Fried-led FTX.US, is seen as a legitimate Asian cryptocurrency startup, and its absence is a worrying sign. Now that Animoca is one of the few organizations that preserves its investment muscle, Siu’s money is more of a powerful weapon — but if this crypto downturn doesn’t develop as it did in 2018, this strategy of ramping up investments could be will backfire.
“Animoca can be invested at any stage, at any time,” said Brian Lu, founding partner of Infinity Ventures Crypto, which counts Animoca as one of its backers. “People say, ‘They’re everywhere, so if Animoca isn’t investing in you, maybe something’s wrong with you?'”
Siu’s entrepreneurial career began in the 1990s when he started several software companies, one of which even required him to use a personal credit card to maintain it. The startup Outblaze sold its cloud messaging business to International Business Machines during the 2009 global recession, which allowed Siu to co-found Animoca in 2011 and explore a passion for video games. The studio helped make hundreds of mobile games, but sadly failed to make a consistent profit. In the company’s darkest days, Siu laid off half of its staff and sold shares at a discount to raise money.
CryptoKitties give Animoca a new lifeline. Animoca’s knowledge of the Chinese gaming market helped it secure the distribution rights for CryptoKitties in the region. At its peak in late 2017, some CryptoKitties were even trading above $100,000. When the market cooled the following year, Animoca bought a stake in game developer Dapper Labs, which turned out to be a successful investment. (Dapper is now worth $7 billion.)
Animoca has since acquired the developers of The Sandbox for $5 million, and last year helped The Sandbox persuade SoftBank Group and other backers to put in $93 million in SoftBank Vision Fund 2’s first crypto deal. Animoca backed another popular cryptocurrency game Axie Infinity and OpenSea, which became the mainstream market for NFTs.
But the models for these games have yet to prove sustainable. In CryptoKitties, the most valuable enigmatic cats over time are concentrated in the hands of a few players, and those who are reluctant to spend money on popular breeds want the game to die down and stop playing. As the game’s popularity waned, Animoca offered some discounted marketing tactics, but ultimately because the market wasn’t ready, Siu said. The company largely abandoned the game.