March 28, 2022

Who's investing in the metaverse? We sat down with the top VCs

Metaverse startups: here’s who you need to pitch to

Maija Palmer

14 min read

Sabina Wizander, Creandum

Some of the shine has come off the metaverse recently, with Elon Musk calling it little more than a marketing gimmick and the average price of non-fungible tokens (NFTs, seen as a key part of buying and selling things in the metaverse) dropping dramatically.

But big companies’ interest in the metaverse has not dipped at all. Microsoft bought games company Activision Blizzard for $68.7bn, while Epic, the maker of multiplayer online game Fortnite, recently bought Bandcamp, a community for independent music artists, signalling its intention to move further into online concerts and music discovery. HSBC announced plans to shut down 69 physical bank branches while at the same time buying a plot of virtual land on metaverse platform The Sandbox for an undisclosed sum.

Meanwhile, some 70 fashion brands, including big names like Estée Lauder, Tommy Hilfiger, Dolce & Gabbana and Forever 21, took part in a virtual fashion week in Decentraland, another metaverse platform.


The metaverse is clearly still big business, and venture capital investors, even at more generalist funds, are looking for deals in this area.

“Web3 and metaverse are here to stay — not just in one industry but across all of them,” says Sabina Wizander, partner at Creandum.

Read more:  15 metaverse startups to watch according to investors and founders 

Though many of the recent big deals have been in the US, European investors see the arrival of the metaverse as an opportunity for Europe to regain some of the tech dominance it lost during the last 15 years.

“If the metaverse ends up being mainly games-based then Europe will have a chance — some of the world-leading games companies have come from Europe,” says Henry Gladwyn, partner at OMERS Ventures.

Europe has a handful of specialist metaverse investors, such as FOV Ventures, launched just this month, and Hiro Capital, the Luxembourg-based games sector fund. In addition, generalist funds and specialist deeptech investors are looking for select deals. Sifted caught up with a few to get an idea of what they are focusing on and how they see the metaverse market unfolding.

Metaverse startups should take note. This is who you need to pitch to — and what they are looking for.

Avatar of Luke Alvarez, Hiro Capital

Luke Alvarez, Hiro Capital

Invested in: Frameplay, Dreamcraft Entertainment, Keen Games

Hiro Capital is the big beast of European metaverse investment, having recently launched its second fund — €300m — to accompany its first €115m fund launched in 2019. Hiro Capital has also launched a special purpose acquisition company and is looking to take a games company with an enterprise value of between €400m and €2bn onto the stock market.

Hiro has a solid games pedigree. It was founded by Ian Livingstone, the former chairman of Eidos, the publisher of the Tomb Raider games, who is sometimes referred to as the “father of Lara Croft”. And yes, it’s called Hiro Capital after the name of the main character in Neal Stephenson’s Snow Crash, the 1992 book which predicted the metaverse.

The first investments from the Hiro Capital 2 fund are expected to be announced next month, says Luke Alvarez, founder and general partner. Most of the fund will be targeted at European startups, with about 15% going to the US and a small handful to other markets (for example, Hiro Capital recently invested in an Indian realtime games company called Loco).

It is still early days in the metaverse, we’ll be building it out over the next 20 years

“We think of the metaverse as partly AR and VR, partly massively multiplayer games and partly Web3 and crypto,” says Alvarez. He believes in a future with a “mad mishmash of overlapping metaverses” rather than one dominated by Meta or Microsoft.


Alvarez is also very bullish that European companies will take a large slice of the metaverse market.

“2022 is as exciting an opportunity as 2002, when we were at the beginnings of the mobile internet, which led to the emergence of companies like Facebook and Google, Tencent, Alibaba and Baidu.”

While European companies notably missed out on the mobile internet era, Alvarez believes Europe can play a big role in the metaverse era.

A third of the world’s games content is developed in Europe and a lot of the early proto metaverses, such as Minecraft (now owned by Microsoft but originally created by Sweden’s Mojang) were developed here, he points out. Metaverse platform The Sandbox, though now owned by Hong Kong’s Animoca Brands, was created by Frenchman Sebastian Borget.

“There are more games developers in Europe than in the US and it is generally less expensive to develop things here,” says Alvarez.

Alvarez is also keeping an eye on the companies coming out of the Oxford and Cambridge clusters, which are developing the hardware for augmented reality and virtual reality. “We’re watching developments like laser holography and other ways of delivering images to people’s eyeballs. These will help create a superscaled AR proposition for billions of people, hopefully in 10-15 years.”

Alvarez expects to invest about 20% of the new fund — around 10 or so deals — into deeptech companies. This could mean investing in no-code games platforms that allow kids to create their own games more easily, or in-game advertising that will allow, for example, a brand to put a logo on a t-shirt in a game.

He’s relaxed about the rise and fall of sentiment around the metaverse, taking a long-term view on it.

“It is still early days in the metaverse, we’ll be building it out over the next 20 years,” he says.

Henry Gladwyn OMERS Ventures

Henry Gladwyn, OMERS Ventures

Invested in: and about to unveil another metaverse investment

Omers Ventures is a generalist fund that has only recently come round to the idea of investing in areas like gaming and crypto.

“Gaming and crypto has been a journey for us,” says Henry Gladwyn, partner. “But the metaverse is such a megatrend that we have to try to be a part of it.”

And so in December OMERS chose to lead the $45m Series C round into, which makes it easy to make and share clips of memorable gameplay moments.

Gladwyn thinks about the metaverse and gaming as the next stage of the internet and social media.

“A lot of what gaming offers is an interesting alternative to the problems that Web2 had,” he says. Web2 depended on attracting a mass audience on platforms, then trying to connect people through their interest groups. This could sometimes lead to extremism and obsession and wasn't always a natural way for people to be social.

If you get a Roblox in your portfolio, it will give you fund return on fund return on fund return.

Gladwyn says he is looking for games that can truly become social experiences. Medal, for example, is trying to build the social network of games with its shareable clips of memorable gameplay moments. But equally OMERS might invest in game engines, or something else ancillary to games.

Every metaverse investor is secretly hoping to find the next Roblox, Gladwyn says. “If you get a Roblox in your portfolio, it will give you fund return on fund return on fund return.”

But he worries that metaverse games are too dependent on finding a hit, and also that the companies might not have long-term staying power after the initial buzz around them fades. Everyone is watching how Roblox does.

“If Roblox disappears, then people will go back to the drawing board,” says Gladwyn.

Gladwyn adds that it can be hard for a generalist firm to get into the best metaverse deals. The crypto end is particularly tricky, he notes, as many crypto companies have a distrust of VCs and have alternative ways of raising money. But, he says, there is always space for generalists in later stage megarounds.

FOV cofounders David Haynes and Petri Rajahalme

David Haynes and Petri Rajahalme, FOV Ventures

David Haynes, one of the founding team at music streaming company Soundcloud, has teamed up with Petri Rajahalme, an XR industry veteran, to launch FOV Ventures, a fund specialising in early-stage metaverse startups.

The €25m fund will back 25-30 metaverse startups at the seed and pre-seed stage. FOV will invest in three different types of metaverse companies. First up, those that are creating games and experiences in the metaverse, including digital fashion, shopping and concerts.

They are also looking at startups in the enterprise metaverse — either virtual meetings or digital twins for factories. The third area for investment will be startups creating the “tools” for the metaverse: the platforms, avatars, sound effects and backdrops.

FOV will not invest in cryptocurrencies and NFTs — although these are seen by some people as an essential building block of the metaverse.

Read Sifted’s full article on FOV Ventures here.  


Sabina Wizander, Creandum

Invested in: Resolution Games, Armada Interactive, Scapin

Creadum is a generalist firm, but recently decided it needed to participate in the metaverse and Web3 trends. “We need to skate to where the puck is going, if that is not too much of a Swedish ice hockey metaphor,” says Wizander. “It is clear that metaverse and Web3 are here to stay — it isn’t just one industry but across all of them.”

Wizander remains sceptical on NFTs and cryptocurrencies. “I am still looking for a use case that solves an actual problem,” she says. “I wouldn’t want to invest in a speculative NFT project.”

However, Creandum did invest in Scapin, a metaverse destination game where people can socialise with each other. Much like OMERS Ventures’ Gladwyn, Wizander is looking at the metaverse as an evolution of the current internet.

“When people are sceptical about whether we will really live in these virtual worlds, I would say — aren’t we already doing that? We are constantly heads down in our phones. It is just that at the moment we are consuming mostly text or video,” she says.

“If anyone told us five years ago if we would be sitting in video meetings 12 hours a day and that would be the only way we did business, we wouldn’t have believed it. The metaverse idea is just the next step in how we can spend time online in a more meaningful way,” she says.

Wizander believes there will be multiple metaverse platforms — a few big ones and a long tail of smaller ones. They will need to be interoperable and people will need to be able to take their profiles and avatars across all of them.

Creandum is interested in virtual goods and fashion. One big question for Wizander is where the power will lie — will big metaverse destination platforms want to control the identities of visitors, or will they let users and third-party makers of virtual goods own their own identities and products?

Predicting which platforms will become most popular with users is also a gamble, she says.

“Building a consumer platform is not a science, you need something of a magic touch to get people to spend time there and build on it,” Wizander says.

Ziv Reichert, LocalGlobe

Ziv Reichert, LocalGlobe

Invested in: Improbable, 100ms

“Our belief is that there won’t be a single metaverse, there will be millions, the way we have websites today,” says Ziv Reichert, partner at LocalGlobe.

“I see the metaverse as a transition from the 2D internet to the 3D internet. The beginnings of that are already emerging in Roblox, Minecraft and Fortnite. It doesn’t have to be through VR or AR, it could be mobile-first.”

Another generalist VC that occasionally dips its toes into the metaverse, LocalGlobe invested in Improbable, the gaming engine that is working on getting thousands of people onto the same games server at one time. Technology like this is a foundational block of metaverse platforms — if you can’t get masses of people on at the same time, it will be hard to host big concerts or sporting events in the virtual world.

LocalGlobe is also looking to invest in tools to make it much easier for anyone to build a 3D world — the equivalent of what Squarespace and Wix did for building websites. Reichert is also interested in how to build user identities in the metaverse and in digital fashion.

Reichert believes that Europe’s strong arts ecosystem is what will help it dominate the metaverse. “It is one thing to build out 3D persistent environments but if they don’t have any life in them they are meaningless,” he says.

Max Bautin, IQ Capital

Max Bautin, IQ Capital Fund

Invested in: Virti, Cauldron, Audio Analytic

IQ Capital, based in Cambridge, is a deeptech specialist fund and has invested in startups like Virti, which offers VR training for companies, and Cauldron, the immersive gaming studio spun out of fintech unicorn Thought Machine.

Bautin is wary of the metaverse hype. “We are looking to invest mainly in technologies for which there is a current, confirmed demand. This is very unclear right now on the consumer side of metaverse propositions. But there is clear demand in areas such as using virtual and augmented reality for training and education,” he says.

“We invested in Virti because it is a virtual training company and this is a fantastic space, every company has the potential to use it. There is a need for training in any job, and VR can meaningfully improve its efficiency,” he tells Sifted.

IQ Capital will also look at other metaverse tools, for example, technologies for enabling advertising in the metaverse. Bautin sees advertising as one of the main ways of monetising the metaverse.


Anne Glover, Amadeus Capital Partners

Invested in: XYZ Reality, V7, PolyAI

Anne Glover, cofounder and CEO of Amadeus Capital Partners, is also something of a metaverse sceptic. She believes that VR headset-related metaverse experiences will only ever appeal to a subset of the population.

“There's a lot of money to be made from that, but I personally don't think that format is going to take over all walks of life,” she says.

So when it comes to the metaverse, Glover and her team are focused more on business applications, for example XYZ Reality, a London-based startup creating augmented reality overlays of building designs for construction sites. Glover also personally invested in a VR company creating safety training experiences for oil rig workers — able to place them on a virtual oil rig before they would have to face the dangers of the real thing.

Amadeus is also interested in toolmakers, and recently invested in V7, a machine vision startup that allows users to rapidly tag people and objects in videos. Glover believes there will be a growing need for tools like this as we move into a more visual internet.

David Glick Edge VC

David Glick, Edge VC

Invested in: Mojo Vision, Dream Corporation. BLAST Premier

Edge doesn't brand itself as a metaverse investor, but prefers the broader definition of investing in the creative economy.

Like many metaverse investors, Edge's focus is on the tools that will allow the metaverse to be built, rather than trying to pick the ultimate piece of content that is going to take off. Edge is looking at VR training and education, as it believes that more training is going to take place in a more immersive environment. Surgeons, for example, will use immersive VR as part of their training, as haptic technology becomes more advanced and imitates live body surgery.

Edge has invested in some of the hardware that may help make the metaverse a reality — for example Mojo Vision, which is developing smart contact lenses with built-in displays, and Otherworld, a VR entertainment venue in London.

Some of Edge’s portfolio companies like Dream Corporation. BLAST Premier and Jungle, started off focused on Web2 experiences, but are now expanding into Web3, so Edge is becoming a metaverse investor there by default.

Dream Corporation, for example, is a virtual reality theme park hosting a wide selection of virtual reality games, experiences, food and drinks. One of its sub-brands Otherworld, has real-life locations across London that take you to sixteen unique VR locations.

BLAST Premier delivers elite level esports and gaming content to viewers worldwide and is looking to develop a more immersive version of the game, with creator tools to allow gamers to monetise their own creativity.

Jungle Creations, a social-first video content publisher, recently launched Futur3ology, a social-first consumer brand, on Snap as it moves towards providing Web3 experiences for its followers

Other European metaverse investors to watch

Cambridge Innovation Capital (UK) — invested in Audio Analytic, AudioTelligence,

Octopus Ventures (UK) — invested in: XYZ Reality, AudioTelligence

Taavet+Sten (Estonia) —  invested in Ready Player Me

PROfounders (UK) — invested in Talewind, Sidequest, Leap Motion (now part of Ultraleap)

Picus Capital (Germany) — invested in Invact Metaversity

Nordic Ninja (Finland)— invested in Ready Player Me, DappRadar, Varjo

Presto Ventures (Czech Republic) — invested in Wolf 3D, Oddin, NFT Scoring

Koha Capital (Estonia) — invested in Ready Player Me

Foresight Group (UK) — invested in Kognitiv Spark