Huobi Ventures Weekly Report #37

Huobi Ventures Weekly Insights

Insight provided by Evans HuangFu of Huobi Ventures

Web3.0 Gaming Investment

It has been a year since the explosion of Axie Infinity during the summer of 2021, and a large amount of venture capital has poured into the GameFi field, given that GameFi is the most compelling application scenario of NFT and a natural gateway to onboard the next wave of crypto users. However, there is always a question for crypto VCs when it comes to GameFi — how to make a good investment in the Web3.0 Gaming sectors?

Huobi Ventures has been actively looking into GameFi field in the first half of 2022, and last week we invited MJ Wang, former CEO of Riot Games China as a guest speaker to share his opinions on Web3.0 Gaming investment. The following is the summary of our discussion:

Why is web3.0 gaming investment so hard?

  1. Stage Dilemma — Blockchain gaming projects only have two or three fundraising rounds, which requires very high investment skills for investors;
  2. Hardcore Gamer Dilemma — It is very hard for investors to abandon their own tastes;
  3. Prototype is hard to understand — Prototype is playable but ugly, which is difficult for investors to get it at first glance;
  4. Team is important but not everything — Experienced game developers may have path dependencies;
  5. How the Web3.0 is being integrated and is the team capable of making the product?

How to evaluate a game?

  1. Market Opportunities — good gaming projects have to identify what are the market opportunities such as unserved audience, under-realized products & disreputable market and whether they are going to use an inside-out or outside-in approach;
  2. Product Thesis — How the founding team differentiate and how they defend;
  3. Audience — The founding team has to recognize potential audience groups. For instance, who are the core players (the target market that must be reached), who are the growth players and who are the breakout players;
  4. GTM strategy — which region you are going to penetrate first, how you build up your community and how to do user acquisition;
  5. Web3.0 feature integration — how to reasonably integrate tokenomics, NFT, Governance and guilds with in-game economy.

By default, we are very skeptical about 1. MMORPG games which look fancy but not attractive 2. Web2 + blockchain games which are very hard to coordinate, integrate and control risk 3. Esport Concept 4. Multi-layer ecosystem which is hard to balance. Web3.0 games are riskier since the on-chain assets cannot be rolled back and some good fits for web3 games may be simulation in general, deck building and community-focused games with strong interoperability.

About Huobi Ventures

Huobi Ventures is focused on growing its venture investment portfolio and supporting blockchain projects through long-term investment strategies.Huobi Ventures aims to identify strategic opportunities across different blockchain verticals to complement and expand Huobi’s product offerings. Acquisitions will be integrated into Huobi’s growing suite of blockchain-enabled applications and services to expand the business into new markets.

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Huobi Ventures

Huobi Ventures

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Focus on Huobi’s venture investment portfolio and supporting innovative blockchain projects through long-term strategies. Twitter:@HuobiVentures