On December 20th, Rec Room announced it closed a $145 million funding round. As a result, the company’s total valuation is roughly $3.5 billion. This money will reportedly be used to build out its tools and audience of gamers so that users can create their own gaming experience across numerous types of platforms and devices.
This funding round was led by Coatue Management. Sequoia Capital, Index Ventures, and Madrona Venture Group also made contributions during this most recent financing round.
“It’s been amazing to watch Rec Room grow from a tiny collection of mini-games into a global platform with millions of experiences built by the community. The platform has become a place where people can come together to form meaningful connections, build communities, and share their creativity,” said Rec Room’s Co-Founder, Nick Fajt. “There’s still so much more we want to do, and as we head into 2022, we’re excited to build more experiences, expand to new platforms, invest in best in class trust and safety systems, and continue to expand our creator tools.”
Rec Room is a free-to-use platform where people can create highly-customizable digital rooms and social hangout spaces. Since being launched in 2016, the organization reports over 37 million users participating in 12 million different virtual rooms.
The Profit‘s Take:
In March, they raised $100 million at a $1.25 billion valuation. So, nine months later, they are seeing their valuation go up by almost 3x. Honestly, I have never used their platform. It looks like they are trying to compete with Roblox. If the numbers are true here, then you’re talking about something that’s probably half the size of Roblox. In terms of what they’re paying per user, it’s like $100 rather than $1,000 for Roblox, so this makes it seem like a bargain all of a sudden. So you can understand how a Sequoia sees a path to a return of 10X. Sequoia probably thinks they can get $10 to $15 billion from this investment. I’m excited to see how many more sandbox-style metaverses are created over the next six to 12 months. It’s possible the market could soon become oversaturated. Furthermore, I don’t know how sticky these platforms are. I don’t think you have the sticky network effects that keep people locked into any one sandbox forever. It’s easy to move from one metaverse to the other, the only thing you have to do is get your friends to sign up. I’m worried because I don’t see how this is different from any other sandbox platform out there right now. The only difference between this and Roblox or Minecraft is the names.
(All information was provided by PR Newswire and TechCrunch)
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