Crypto gaming platform LootRush has raised US $12 million in a seed investment round, led by crypto-focused venture capital firm Paradigm, and with substantial participation from Andreessen Horowitz (also known as a16z), LootRush said in a blog post.
The seed investment round also included support from Y-Combinator, Brex founders and a group of angel investors including the founders of popular crypto game Axie Infinity, Plaid, Wildlife Studios, Dapper Labs, The Chainsmokers and Vivi Nevo.
Gaming is one of the most profitable sectors of the entertainment industry, with the global games market generating an estimated US $180.3 billion worth of revenues in 2021. Within that segment are the hugely popular play-to-earn blockchain based games, which are growing at an even faster pace.
In fact, the blockchain gaming industry grew 2,000% in the past year and there were US $2.5 billion in investments into the blockchain gaming space last quarter, compared to US $4 billion raised for the sector across all of 2021, showing a significant acceleration in money pouring into the sector. NFT games generated US $2.32 billion in revenue in the third quarter of 2021, or 22% of all NFT trading volumes.
According to LootRush, the three major problems that crypto game developers and publishers are facing include technical challenges to set up, high costs and longer time to start playing. These issues prove to be high barriers for entry into crypto gaming, the company said in the blog post.
LootRush claims to be the first and only platform that make crypto gaming accessible. It provides low-cost solutions for in-game NFT and by eliminating the technical knowledge required to enter crypto gaming. It said it would enable gamers to own NFT and help NFT owners find great players.
LootRush offers a quick-start platform for blockchain-based games, which typically have a more complicated on-boarding process than traditional video games. The blockchain-agnostic platform also offers NFT rentals for gameplay, thereby cutting the cost for a new gamer and earns yields for the NFT owner.
Enabling other business models like rentals can make the cost to start playing a game much lower, potentially bringing a new wave of users into the sector. it claims to enable players to play video games with NFT at 100x lower price and provide more flexibility.
In addition, it offers a larger portfolio of NFT and intends to cut down the time to start playing from few hours to a few minutes. Overall, it would make easier for new users to try play-to-earn games, it said.
The funds raised by LootRush in the seed investment round will be used to facilitate the official launch and support its growth, it said in the blog post. It will also be used to hire more people and buy NFT at scale.
Founded in 2021, LootRush is based in the US but has a fully remote team spread across the US, Latin America, Europe and Asia. The idea came into the mind of LootRush CEO Anderson Ferminiano when his friend tried to play a crypto game, which took him about three hours before he gave up, even after spending US $1,000 on NFT.
Blockchain gaming companies are raising money in the hundreds of million of dollars in venture capital, while NFT market is moving into a new growth phase with innovating projects tasting success in a maturing market.