Story Outline
Some of the shine has come off the metaverse recently, with Elon Musk calling it little more than a marketing gimmick and the average price of non-fungible tokens (NFTs, seen as a key part of buying and selling things in the metaverse) dropping dramatically.
We think of the metaverse as partly AR and VR, partly massively multiplayer games and partly Web3 and crypto,” says Alvarez. He believes in a future with a “mad mishmash of overlapping metaverses” rather than one dominated by Meta or Microsoft.
1.Hiro Capital Dominates European Metaverse Investment with a Whopping €415 Million in Funds
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Hiro Capital is the big beast of European metaverse investment, having recently launched its second fund — €300m — to accompany its first €115m fund launched in 2019. Hiro Capital has also launched a special purpose acquisition company and is looking to take a games company with an enterprise value of between €400m and €2bn onto the stock market.
Hiro has a solid games pedigree. It was founded by Ian Livingstone, the former chairman of Eidos, the publisher of the Tomb Raider games, who is sometimes referred to as the “father of Lara Croft”. And yes, it’s called Hiro Capital after the name of the main character in Neal Stephenson’s Snow Crash, the 1992 book which predicted the metaverse.
The first investments from the Hiro Capital 2 fund are expected to be announced next month, says Luke Alvarez, founder and general partner. Most of the fund will be targeted at European startups, with about 15% going to the US and a small handful to other markets (for example, Hiro Capital recently invested in an Indian real-time games company called Loco).
2.Alvarez is very bullish that European companies will take a large slice of the metaverse market
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Alvarez expresses strong optimism that European companies will have a significant presence in the metaverse market. He believes that the current opportunity in 2022 is as exciting as the mobile internet era in 2002, which led to the emergence of tech giants like Facebook, Google, Tencent, Alibaba, and Baidu. While European companies missed out on the mobile internet era, Alvarez sees great potential for Europe to play a major role in the metaverse era.
Europe already holds a notable position in the gaming industry, with a third of the world’s games content being developed in the region. Early proto metaverses, such as Minecraft and The Sandbox, were also created in Europe. Alvarez highlights the advantage of having a larger number of games developers in Europe compared to the US and the relatively lower development costs in the region.
Alvarez is particularly interested in deep tech companies, with plans to invest around 20% of the new fund into such ventures. These may include no-code games platforms that enable easier game creation for kids and in-game advertising that allows brands to integrate their logos into games. He is also keeping a close watch on hardware development for augmented reality and virtual reality, with the potential for innovative technologies like laser holography to create a super scaled AR experience for billions of people in the coming years.
Though many of the recent big deals have been in the US, European investors see the arrival of the metaverse as an opportunity for Europe to regain some of the tech dominance it lost during the last 15 years. “If the metaverse ends up being mainly games-based then Europe will have a chance — some of the world-leading games companies have come from Europe,” says Henry Gladwyn, partner at OMERS Ventures.
