Yield Guild Games Completes $4M Series A Led by Gaming and Esports Fund, BITKRAFT

Yield Guild Games
Jun 16 · 11 min read

In late 2020, Yield Guild Games set out on a mission to introduce as many people as possible to the concept of play-to-earn. Just eight months later, we have witnessed countless life-changing success stories as a result of the money earned by playing NFT games such as Axie Infinity.

“People have bought everything from nappies and milk for their babies, to shoes and shirts to wear to job interviews. Families have paid their kids’ school fees and bought digital devices for their home schooling. Some bought motorcycles. More upgraded their mobile phones. Others are doing home renovations. This guy bought a block of land. And this 22-year-old bought a couple of houses. This overseas Filipino worker has earned enough from NFT gaming to be able to quit his job in South Korea and come home to his family in the Philippines.”

For Filipinos, Axie Infinity is more than just a crypto game, by Leah Callon-Butler, originally published on Coindesk, 12 May 2021.

But the play-to-earn movement is still in extremely early stages.

While the NFT game industry is growing fast, so far, only one game has broken 100,000 Daily Active Users (DAU).

This tells us there is still plenty more room for growth. Even at this nascent stage, it appears inevitable that game-based economies will be the pathway to realize the true utility of NFTs and unlocking huge economic incentives for the benefit of all who participate.

The play-to-earn revolution is a 21st century economic phenomenon spreading rapidly throughout the world and YGG is adding fuel to it.

FUELING THE PLAY-TO-EARN MOVEMENT

Provided by like-minded investors who recognize the positive impact and potential of the play-to-earn movement, this funding will enable YGG to make investments in the future of the guild as well as the players themselves.

“Our primary goal is to scale play-to-earn to millions of players around the world.”

While YGG’s seed round mainly took investment from cryptocurrency funds, its Series A has welcomed a broader set of participants. The guild was met with significant interest from leading investors around the world, and in selecting its investors, YGG’s most important partnership criteria was to identify a mutual long-term alignment with YGG’s vision to onboard players to the Metaverse and help them earn an income via play-to-earn games.

Ultimately, the Series A round was led by BITKRAFT, one of the world’s most respected gaming and esports firms. Led by Founding General Partner Jens Hilgers, BITKRAFT became interested in YGG in early 2021 when it first recognized parallels between YGG’s vision and the fund’s own future-of-work thesis, that is, that much of the world’s future job creation will come from inside virtual worlds and video games.

Other investors that participated in the round included A.Capital Ventures, Atelier Ventures, Fabric Ventures, Greenfield One, IDEO CoLab, Mechanism Capital, ParaFi Capital and Third Prime Capital. Returning investors include Animoca Brands, Ascensive Assets, Bitscale Capital, Dialectic Capital, Free Company, SevenX Ventures and Sfermion. The seed round was led by Delphi with participation from BlockTower Capital, Scalar Capital, gumi Cryptos Capital, and others.

Having a best-in-class fund such as BITKRAFT invest in the future of YGG, with participation from other industry-leading investors that also recognize the bright future ahead for NFTs, is a signal that play-to-earn is to be taken seriously.

Within the next decade, YGG is predicting that any game with an economy inside it will adopt some form of play-to-earn. As such, working with such a respected fund in the game industry opens the door for YGG to engage with other major publishers and game studios on how they can create an NFT game of their own.

THE FOUNDING TEAM

“There’s always been the promise of a liberating economic force,” says Gabby, describing the allure of crypto-based technologies. His future co-founder, Beryl Li, was focused on similar goals to deliver economic empowerment to Filipinos and improve access to financial services.

As Entrepreneur in Residence in the early days at Coins.ph, a Philippine crypto exchange and mobile wallet founded in 2014 which serves over 10 million customers today, Beryl saw that for most of the opportunities presented by crypto-based economies, including direct access to banking and digital payment services, local and international remittances, mobile air-time, bill payments, game credits, and online shopping, it was still necessary for users to have some upfront capital in order to participate.

Beryl always believed there should be opportunities to benefit from the promise of this new financial system by contributing other valuable economic resources, such as time and skill, even where people had zero money to begin with.

Teaming with Owl of Moistness, a developer since 2016, with blockchain experience since 2018, who built a breeding algorithm for Axie infinity and many bots on Discord, the three began to brainstorm what the future of finance could look like, if it were built on crypto, NFTs and DeFi.

The idea for YGG germinated in late 2020, and with an early seed raise of $1.325mil led by Delphi Digital, the guild took its first steps toward its vision to build a better, more inclusive and more rewarding future in the Metaverse.

CULTIVATING THE COMMUNITY

Play-to-earn games offer an enticing proposition in that players can make money while doing what they love and having fun. However, the high cost of NFTs has become a barrier for many of those who would benefit most from play-to-earn. Especially since the release of the play-to-earn documentary, the demand for “Axie Scholarships” has skyrocketed.

Scholarships are a profit-sharing model where Axie owners rent their NFTs to new players so they can play the game and start earning in-game tokens without having to invest any money upfront. Earnings are split between the player, the owner of the NFT, and the Community Manager — the latter being the one responsible for recruiting, training and mentoring the new player. The only upfront requirement of the player is time, enthusiasm and a willingness to learn.

Community Managers are key to YGG’s scalability. Each acts like a sub-guild for YGG, taking the NFTs that YGG has invested in and distributing these assets to the players within their local network that have been identified as high potential. In this way, YGG does not manage any “scholars” directly, but rather, the guild seeks to work with reputable Community Managers that can nurture up-and-coming talent and play a personal role in the player’s development.

Currently, YGG has a Community Manager in Cabanatuan City, Nueva Ecija (the location where the mini documentary Play-to-Earn: NFT Gaming in the Philippines was filmed), as well as other locations within the Philippines.

Globally, YGG also has Community Managers in Indonesia, Brazil and Venezuela, and is currently looking for a suitable partner in Thailand. As such, Community Managers are critical to YGG’s impact and scalability.

This commitment to building and sustaining organic community connections underscores YGG’s belief in the future of player-owned economies.

Traditionally, it was only game developers who had the opportunity to reap revenue from selling virtual items in game-based economies. In player-owned economies, players can buy and sell from each other, and instead, the role of the game developer is to create an environment that is conducive for that to happen. This is what fuels play-to-earn games, such as Axie Infinity, where the player community is investing and earning collectively, which increases the overall value of the economy for the entire community.

INVESTING IN NFT GAMES

By continuing to invest in the NFTs that underpin these games, YGG will continue to build value for the guild and provide exclusive access for its members. The Series A funding will allow YGG to invest in more games and more NFTs for the benefit of the guild.

When making investment decisions, YGG considers the play-to-earn tokenomics of the game and its plans for guild-based gameplay. For YGG, the most critical component is the monetization design in the way that players can earn money from the game. Provided this aspect is made clear, and is potentially lucrative for players, YGG is comfortable investing in the game at a very early stage of development — perhaps even before it is launched.

This ensures that YGG guild members have priority access to the industry’s most promising up-and-coming NFT-based games.

“If there’s a play-to-earn yield component, we want to be there.”

FUTURE PLANS

To put this into perspective, it took seven months from October 2020 to May 2021 to onboard YGG’s first 1,000 Axie scholars. Then, between May and June 2021, the guild nearly doubled its scholarship base, increasing the total number of scholars to 1,900.

To date, YGG scholars have collectively earned over 14 million Smooth Love Potions (SLP), the in-game reward token in Axie Infinity, valued at more than USD $2 million.

It’s important to note that these are not your average startup growth metrics. These numbers represent 1,900 people whose lives have significantly improved because of YGG’s efforts in countries like the Philippines, Indonesia, India, Venezuela and Brazil. Play-to-earn games have found a powerful Product-Market Fit in emerging markets where they can legitimately provide a pathway for people to lift themselves out of poverty. Now, YGG wants to accelerate that impact.

The VC investment in this funding round is the reason that YGG will be able to scale very quickly to enable more scholars, allowing YGG to cover the cost of breeding the Axies needed so that more ambitious scholars around the world can begin to play-to-earn.

In the short term, YGG intends to expand its operations to:

  • breed more Axies;
  • acquire more scholars;
  • invest in more NFT assets as well as new and upcoming play-to-earn games.

Currently, the wait list for an Axie scholarship is so long that user acquisition is not an issue for YGG. The main immediate requirement is to invest in as many high-yield NFTs as possible, so that new users have quality NFTs to play and earn with as they come in and join the guild.

Over the longer term, YGG will:

  • Continue to onboard newcomers to the crypto economy;
  • Become a globally recognized esports brand.

With BITKRAFT’s support of YGG, the guild is aiming to build up a world class esports team. As one of the largest and most respected gaming and esports funds in the world, BITKRAFT are not only lending their contacts in the game industry, they’re also lending their esports expertise.

NFT esports is still very new. However, some games, such as Axie, already have a competitive tournament circuit. This will be an opportunity for high calibre talent that come in through YGG’s scholarship program, to rise up into esports where players compete in tournaments around the world for larger prize monies as compared to everyday farming of in-game tokens.

OUR INVESTORS

But YGG is not a charity or a philanthropic venture; all the player benefits are baked into YGG’s business model which is delivering “profit for purpose” in the truest sense. The people who have had — and will have — their lives improved by the play-to-earn movement can engage from anywhere in the world, so long as they have a mobile phone and an internet connection.

New investors:

BITKRAFT Ventures

A.Capital Ventures

Atelier Ventures

Fabric Ventures

Greenfield One

IDEO CoLab

Mechanism Capital

ParaFi Capital

Third Prime Capital

Returning investors:

Animoca Brands

Ascensive Assets

Bitscale Capital

Dialectic Capital

Free Company

SevenX Ventures

Sfermion

Selected Angel Investors:

Dennis “Thresh” Fong (GGWP)

Carlos “Ocelote” Rodriguez (G2 esports)

Jiho Zirlin (Sky Mavis)

Trung Nguyen (Sky Mavis)

Darren Lau

Mai Fujimoto (Miss Bitcoin)

Tracheopteryx (yearn.finance)

Bam Aquino

Ignite Group

RedCave Ventures

Coingecko Ventures

Morningstar Ventures

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