The allure of non-fungible tokens and the metaverse in general are reflected in Yuga Labs’ massive seed round of funding, which positions the startup to create a media empire around its blockbuster NFTs and future launches of games and entertainment within the metaverse.
The $450m seed funding round announced on March 22 values Yuga Labs at $4bn. Lead investor was Andreessen Horowitz’s a16z crypto, and other participants included game studio Animoca Brands and its subsidiary Sandbox, strategic partners LionTree, Sound Ventures, and Thrive Capital, plus cryptocurrency players FTX and MoonPay, among others.
Yuga Labs’ simian panache
Yuga Labs is best known for its market-leading NFT brand Bored Ape Yacht Club, whose cartoon simians on the Ethereum blockchain have attracted celebrity buyers such as US late-night talk show host Jimmy Fallon, tennis great Serena Williams, pop star Justin Bieber, and rappers Snoop Dogg and Eminem. Bored Ape NFTs usually sell for several hundred thousand dollars and one of them, #8817, sold at auction in October 2021 for $3.4m. Yuga Labs also owns two other dominant NFT brands, CryptoPunks and Meebits, which it acquired from Larva Labs earlier this month.
Additionally, Yuga Labs last week launched ApeCoin, its own cryptocurrency designed for use as the main in-house token within the company’s expanding culture, gaming and commerce properties. In true Web3 fashion, the cryptocurrency is owned and controlled by ApeCoin DAO, a decentralized autonomous organization. Initially airdropped for free to Bored Ape NFT holders on March 17, ApeCoin rapidly skyrocketed in value before settling down somewhat in ensuing days. CoinMarketCap reported that ApeCoin was priced at $11.85 on March 22, the day Yuga Labs announced its seed investment round, giving ApeCoin a live market cap of nearly $3.3bn at that time.
Next stop: The metaverse
Armed with its new seed capital infusion, one of Yuga Labs’ next pursuits is its own metaverse project, dubbed Otherside, which has been described as an MMORPG, or massively multiplayer online role-playing game, that will enable interoperability across the broader NFT universe. The company is reportedly partnering with a handful of game studios to bring its vision of a decentralized world to virtual life, but has not revealed a timeline for launch.
Though Yuga Labs was already financially sound after taking its cut of NFT transactions – a supposedly leaked pitch deck showed its 2021 gross revenue was $138 million with net revenue of $127m for a 92% margin – its product portfolio is relatively thin. The company has produced ape-based brands of NFT artwork, released a limited-time game (the November 2021 10-day members’ only Bored Ape Yacht Club vs. Mutant Ape Yacht Club mobile game), and acquired two leading NFT competitors.
Nonetheless, having only launched Bored Ape Yacht Club in April 2021, Yuga Labs’ rapid trajectory cannot be dismissed, and the company appears to have a detailed game plan to complement its considerable ambition. Investors and partners have placed a big bet on virtual lightning striking twice.