Hong Kong Crypto Tycoon Seeks to Secure $1 Billion for Web3 Investment Fund

Animoca Brands Corp. is looking to raise around $1 billion this quarter for its new Web3 and metaverse investment fund. This is a significant reduction from its original ambitions, due to the current crypto industry meltdown.

Animoca Capital is in talks with potential investors and is looking to raise money to support blockchain and metaverse startups, co-founder Yat Siu said in a Twitter Spaces chat with Bloomberg in Hong Kong Thursday.

The collapse of the FTX exchange in early November sent shockwaves through the crypto world, triggering bankruptcies and shutdowns among various industry players. Around a dozen of Animoca's portfolio firms were severely affected by the event, beyond the broader market downturn, Siu said. They included NFT spaceship seller Star Atlas, which had much of its treasury sitting on Sam Bankman-Fried's now-defunct trading platform.

For Animoca Capital, the goal is to raise funds in Q1 and then see what happens. Siu said that it is a challenging market but they have received a lot of interest. He added that a shaky market could mean eventually raising slightly lower than the targeted amount.

Animoca's chief executive said in a November interview with Nikkei that the company is planning to raise up to $2 billion for a new fund, which will be set up in conjunction with former Morgan Stanley executive Homer Sun.

The FTX chill and global economic slowdown have made fundraising more difficult, but Siu remains optimistic that capital and interest in crypto remain strong. A number of subsidiaries of Sequoia-backed Animoca have been able to raise money even during the FTX cycle, Siu said, without revealing names or valuations.

Even after the collapse of FTX, the Web3 firm still has a sizable war chest.

Animoca Brands has no plans to raise any more money for itself after accepting Temasek's investment in September, according to Siu. The company is instead focusing on developing an ecosystem of complementary crypto firms that will build the so-called Web3. This next iteration of the web is loosely defined, but it will have fewer intermediaries and more direct interaction between users and service and content providers.

Animoca's revenues have been hit by market turbulence, with a slump in digital asset prices affecting the company's bottom line, according to CEO Robbie Siu.

"Because our revenues are based on tokens, the overall revenue in fiat terms will also be affected," Siu said.

The online market for digital tokens crashed in 2022, led by tightening global liquidity, the collapse of the Terra ecosystem and most recently the failure of Bankman-Fried's FTX and Alameda Research. The largest cryptocurrency, Bitcoin, sank more than 61% over the last year while the second-ranked Ether is down nearly 65%.