You might believe that venture capital firms only invest in low-risk initiatives with a long track record. "They would never invest in NFT games or metaverse efforts," as previously stated, is no longer true.
According to the most recent BGA Games Report from DappRadar, venture capital investments in NFT games have managed to reach $1.3 billion – although this is not a final result. But what makes NFT games so valuable?
To begin with, while venture funds have potentially significant resources, it is a mistake to believe they are willing to invest in unrealistic or overly risky ideas. Like any other business, profits are venture funds' primary goal.
As a result, if they invest in NFT gaming projects, long-term polls, interviews, and research have shown that this concept can make their money. They used these tools to forecast the evolution of demand for NFT gaming over time.
The global NFT industry has the potential to grow at a CAGR (compound annual growth rate) of 23.9% between 2022 and 2028, attaining a market size of $19.57 billion, according to BlueWeave, a reputable consultancy firm.
Simultaneously, ultra-optimistic reports, such as the one from Verified Market Research, forecast that the market will reach $231 billion by 2030. It's a convincing reason for venture capital companies to make an investment now.
They see gaming's utility and real-world value.
Venture capitalists seek out exceptional and innovative ideas. However, venture capital firms still require that these brilliant ideas meet certain criteria, the most important of which is that they are practical or implementable in the real world.
What exactly does it mean? It means that monetary rewards earned by users in a game, for example, can be transitioned to other currencies and used as payment - or that land created by players can be purchased or traded.
In other words, the possibilities extend beyond the game space. The logic is straightforward: if something has true value, it is less likely to vanish one day because it is not reliant on a single game.
They have faith in NFT.
Following the crash of the NFT market, many individuals began to believe that the technology was either too young to be taken seriously or was merely a passing fad. Venture capitalists, on the other hand, do not share this perspective.
They looked at several successful NFT cases in real estate, online games, digital art, and so on. They even point to Romania, an Eastern European country where the government establishes an institutional NFT market.
The Romanian government aims to significantly reduce the bureaucracy needed to replace or modify official state documents and cards by allowing individuals to mint them on the blockchain as non-fungible tokens. Why not if a country believes in technology?
They want to capitalize on the current market conditions.
Despite the boom, statistics show that the number of investments in 2021 will be considerably lower than this year, regardless of the market crash. A bear market is ideal for investment firms because it excludes most fraudulent projects. Hype no longer supports initiatives that lack strategy.
Venture capitalists comprehend that if a project can make it through challenging market conditions, it has a good chance of becoming a hit when the bull market returns. They understand that if they invest in NFT games throughout a bear market, the uptrend will result in massive profits.
Consider the number and size of companies investing in NFT initiatives. It is sufficient to cite a few examples: Facebook, Visa, and Samsung. Meta announced in September that users in more than 100 countries could share digital collectibles on Facebook and Instagram.
In March, Visa introduced an NFT creator program to help small businesses enter the digital economy. In May, Samsung launched the Samsung NFT platform, allowing people to watch their favorite NFTs on their TV screens.
Of course, there are still issues to consider, such as uncertainty and the threat of cyberattacks. The existence of venture capital companies and reputable entities in the space, on the other hand, suggests that the NFT market's best days are yet to come.
I am confident that the more imaginative opportunities patrons have and the more secure they feel while playing NFT games, the faster widespread adoption will occur.
What do you think is the biggest reason venture capitalists are backing NFT games? Let us know your thoughts by sharing this article online.