VRChat Raises $80 Million in Venture Funding, Proving the Metaverse is So Far VR's Most Successful Application

For some reason this huge news hasn't yet been picked up by any of the major tech outlets that I can see, but VRChat just raised $80 million in funding:

The VRChat team is excited to announce that we have closed an $80M Series D investment round. This latest financing was led by Anthos Capital, alongside existing investors Makers Fund, GFR fund and others. We welcome Anthos and are proud to have them on board!

This new investment will allow us to expand the VRChat team, iterate on the platform and grow our community. This includes the ability for creators to earn and enable more people around the world to access VRChat. Partners like Anthos Capital open unique opportunities to help us further our goal as a virtual universe.

As a reference point to how huge this funding round is, consider the fact that in 2017, VRChat only raised $4 million. Defying the bearish performance of nearly all other VR-related startups since then, usage has continued to grow since then, with monthly active users I'd estimate to be in the low six figures -- and even more notable, 1 in 3 daily users (i.e. about 40,000-100,000) logged in via HMDs, With VRChat concurrent numbers starting to pass Second Life's CCU this year, I'd estimate VRChat now has over 1 million monthly active users (and that's probably a conservative guess).

Looking at larger market, VRChat is one of the most-used VR applications, easily eclipsing usage of high-end games like Half Life: Alyx and indie hits like Beat Saber. And far as funding goes,  take a look at this:

Assuming this Crunchbase database is current, VRChat's $80 million fund raise is by far the largest XR-related round since... Rec Room's raise of $100 million last March.

Or put it another way: Metaverse platforms are the VR apps showing the best results in terms of user growth of any VR app by far. (I'm tempted to say "only" here.)

The secret of VRChat's growth? Read my recent posts on its creative community:

• User-Made Game In VRChat Becomes So Popular It's Being Turned Into A Standalone Game For Oculus & Steam
• VRChat Now So Popular With Devs, Thousands Are Using A Compiler That Converts C# To The World's Internal Scripting Language
• Rec Room Has More Users, So Why Does VRChat Seem To Have Much More User Creativity? Consider The Stonecutter Test
• Inside VRChat's Happy Hill Dog Park, The Virtual Dog Experience Created By Academics To Study Real Life Well-Being & Social Isolation

Much thanks to Adeon for the tip!

Comments

[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.