CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Axie Infinity is a sexy new blockchain-based model of gaming—but it’s facing the same old crypto pitfalls

November 29, 2021, 4:06 PM UTC

Hello Term Sheet readers, from my flight some 36,000 feet up in the air en route to San Francisco.

Also flying especially high in recent months, even for a crypto product: Axie Infinity.

Created by Vietnam-based developer Sky Mavis, the blockchain-based game has transcended into the realm of becoming a movement: Inspired by the Pokemon franchise, Axie Infinity allows users to earn tokens by breeding, battling, and trading their NFT-based creatures. Its in-game currency—the coolly named Smooth Love Potion—in turn can potentially be traded for cash. Yes, unlike many of the multiplayer games of yesteryear, Axie Infinity allows users to potentially directly and officially make real hard cash by playing. 

And unlike the well-known NFT-based game that predated it, Crypto Kitties, Axie Infinity (many of whose teams met while playing the aforementioned game) isn’t just about collecting and trading NFTs. It is a sign of crypto growing up.

So popular is this so-called “play-to-earn” model that playing Axie has become an actual job in economically hard-hit developing nations like the Philippines and inflation-rocked Venezuela—with anecdotes of players even taking it on as their full-time work. So electrifying were such stories that musician Grimes, in TikTok describing her interest in radical wealth redistribution through gaming, used Axie as an example of the future she envisioned in which some kind of gaming could replace full-time labor.

This all makes Axie the kind of sexy, slightly zany, big-idea bet that a certain crop of venture investors are more than happy to embrace: In October, the company behind Axie, Sky Mavis, raised funding at a roughly $3 billion valuation from Andreessen Horowitz—a valuation backed by a four-times increase in its users in about three months, to 2 million in October, per the Financial Times. And certainly its links to a future metaverse—Axie will allow outside developers to build games in its world—no doubt has a part in getting investors salivating.

But as new and exciting this all is, Axie’s model is facing the same old boring but important questions that have dogged the crypto companies from the start: Is the hype overrunning the viability of the business model itself? 

The Financial Times points to analysts who note that Axie is heavily reliant on new players to grow, meaning any slowdown could be painful. Not to mention, cryptocurrency’s volatility is a problem for even the most well-worn businesses in the space, and Axie is no exception: the price of Smooth Love Potion has taken a far rockier ride downward than its name suggests, as players have traded their tokens in for local currencies.  

These questions won’t be going away anytime soon. The bright side for crypto founders is that they might not have to really face them for a while yet. There’s now plenty of funding in the space and an abundance of support for investing in startups in general beyond a 10-year lifecycle

The latter trend in particular can be great for developing tech—for example, startups in the climate space that truly just need more time to come to fruition. On the flipside, it could also certainly act as a smokescreen for startups that would’ve been better off dying a quicker death.

DORSEY OUT: Jack Dorsey said he is stepping down from his role as Twitter CEO: The company’s chief technology officer, Parag Agrawal, is replacing him as the new chief. It’s not Dorsey’s first time exiting the position—he was ousted as CEO in 2008 before returning in 2015. But it is nonetheless notable: Last year, Elliott Management fought to dethrone Dorsey. It was only after Twitter cut a deal with private equity titan Silver Lake and Elliott that those pressures fell away.

While I’m at Brainstorm Tech through Wednesday, please copy Jessica Mathews, Jessica.mathews@fortune.com, on deals news for inclusion below.

Lucinda Shen
Twitter: 
@shenlucinda
Email: 
lucinda.shen@fortune.com

Jessica Mathews curated the deals section of today’s newsletter.

VENTURE DEALS

- Dream Sports, a Mumbai, India-based sports technology company that owns brands including Dream11, raised $840 million in funding from investors including Falcon Edge and Tiger Global.

- Armis, a Palo Alto, Calif.-based security platform company, raised $300 million in funding from One Equity Partners and other investors..

- Spinny, a Gurgaon, India-based car buying platform, raised $248 million in Series E funding led by Tiger Global and Abu Dhabi Growth Fund and joined by Somerville SPV and Aveni Spinny, per Entrackr.

- Slice, a Bengaluru, India-based fintech company, raised $220 million in Series B funding led by Tiger Global and Insight Partners and joined by Sunley House Capital, Moore Strategic Ventures, Anfa, Gunosy, Blume Ventures, and 8i.

- Thought Machine, a London-based banking technology firm, raised $200 million in Series C funding. The round was led by Nyca Partners and was joined by ING Ventures, JPMorgan Chase, and Standard Chartered Ventures.

- Motorway, a U.K.-based used car marketplace, raised $190 million in Series C funding. The round was led by Index Ventures and ICONIQ and was joined by investors including Latitude, Unbound, BMW, and i Ventures.

- Quell Therapeutics, a London-based autoimmune and inflammatory disease cell therapy company, raised $156 million in Series B funding. The round was led by Jeito Capital, Ridgeback Capital Investments, SV Health Investors, Fidelity Management & Research Company and Syncona, and was joined by investors including British Patient Capital, Janus Henderson Investors, Monashee Investment Management, Point72 and funds managed by Tekla Capital Management.

- Mainstream Renewable Power, a Dublin-based renewable energy company, raised $101.5 million in funding from existing investors including Aker Horizons.

- Mindspace, a Tel Aviv, Israel-based flex office provider, raised $72 million in a round led by Harel Insurance Investments and Financial Services, More Provident Funds, Shalom Meckenzie, Arkin Holdings and joined by investors including Yoav Harlap, Kobi Rogovin and Globalworth.

- Mr Yum, a Melbourne-based payments platform for hospitality and entertainment companies, raised $65 million in Series A funding. The funding was led by Tiger Global and was joined by Commerce VC, VU Venture Partners, Skip Capital, Patty Mills, Rüfüs Du Sol, TEN13 and AirTree.

- PostEx, a Lahore, Pakistan-based receivables factoring and courier service company, raised $8.6 million in seed funding, in a round led by Global Founders Capital and joined by FJ Labs and RTP Global.

- Particular Audience, a product discovery platform for retailers, raised $7.5 million in Series A funding led by Equity Venture Partners and joined by investors including Carthona Capital.

- Blockade Games, an Indianapolis, Ind.-based game studio built on blockchain, raised $5 million in seed funding. The round was led by Animoca Brands and Digital and was joined by Drew Austin from Redbeard Ventures, Flamingo DAO, Galaxy Interactive, Roham Gharegozlou from Dapper Labs, Keith Grossman from TIME, and Meltem Demirors from Coinshares.

PRIVATE EQUITY

- Clearlake Capital agreed to acquire Quest Software, a Aliso Viejo, Calif.-based information technology software company, from Francisco Partners, for $5.4 billion, including debt, per the Wall Street Journal

- A subsidiary of Koch Strategic Platforms agreed to invest $100 million in Standard Lithium, a Vancouver, B.C.-based lithium development company.

- Accurate Group, a Novacap-backed firm, agreed to acquire eMerge Property Solutions, a Watauga, Texas-based broker price opinions and alternative valuation solution company. Financial terms were not disclosed.

EXITS

- A Vitol Group-backed fund agreed to acquire the remaining stake of Vivo Energy, a London-based energy company focused on Africa, from Helios and existing shareholders for around $2.3 billion. 

- Juggernaut Capital Partners acquired DAVEXLABS, a Santa Monica, Calif.-based hair care developer of L’ANZA products, from WestView Capital Partners.

OTHER

- Capital One acquired TripleTree, a Minneapolis-based investment banking advisory platform for healthcare technology and services companies. Financial terms were not disclosed.

IPO

Cloud Village, a Chinese music-streaming service provider, raised $422 million in a Hong Kong IPO. Cloud Village is a division of NetEase.

CoinDCX, an Indian cryptocurrency company, is planning an IPO, per Bloomberg.

Samolet Group, a Russian real estate company, is weighing a 2023 U.S. IPO, according to Reuters. The firm became the first non-state company to list in Russia in 2020.

Phoenix Motor, an Anaheim, Calif.-based electric vehicle drive system designer, filed for an IPO. EdisonFuture is its parent company.

Mitesco, a St. Louis Park, Minn.-based primary care clinic company, filed for an IPO.

SPAC

Griid Infrastructure, a Bitcoin mining company, is in talks to go public via a merger with Adit EdTech Acquisition Corp., a SPAC, according to Bloomberg. A deal could value the firm at more than $3 billion.

PEOPLE

Frontline Ventures added Zoë Chambers as a partner. Previously, she was at Octopus Ventures

This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.