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Friday, June 25, 2021

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seph

This is a positive take which is always good, but it's worth remembering another yet to be profitable VR startup that recently needed Series D funding and crossed the 80 million mark with it. High Fidelity.

Needing Series D funding isn't a success, its admittance of failure to meet the goals of previous rounds of funding. We can't know how much of a failure without knowing the valuation of the company and how much stock the founders and employees had to give up to get that $80 million, but considering this round was led by a new late-stage venture capital company Anthos rather than earlier investors like HTC quadrupling down on their early investment might be a bad sign.

Whatever the case it's sink or swim time for VRChat, because as rare as Series D funding is, Series E is rarer still. They may've given up so much stock now a Series E is impossible and time's now ticking on becoming profitable or having to shut down, be purchased or pivot.

VRChat probably can't pivot the way High Fidelity has into a cheaper to run audio company, with a CEO and founder who can sell his earlier success for more money like Philip has with Linden Lab.

80 million is a lot of money. hopefully it lasts them long enough to figure out how to monetize. Short of that hopefully they find a good buyer which might actually be what this latest round of investors are banking on moreso than success.

Wagner James Au

"Needing Series D funding isn't a success, its admittance of failure to meet the goals of previous rounds of funding."

That might be true of some startups but in this case VRChat has only gotten $15M total since 2016:

https://www.crunchbase.com/organization/vrchat/company_financials

LinkedIn counts 41 VRC employees, so that $15M is probably going almost entirely into salaries. $80M strikes me as a vote of confidence that the company is showing really good KPIs.

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Wagner James Au
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