Authors
- DAO Investment Committee
Summary
The DAO Investment Committee proposes to make a $3M investment in “Project Firebrand” at a pre-money valuation of $80M with a 1.25% advisory token allocation and a $5M investment in “Project Roadslide” at a pre-money valuation of $40M with up to 2% advisory allocation (based on performance).
Project Firebrand: codename used to maintain confidentiality during fundraising - team is fully doxxed, a veteran 100+ person studio building a AAA Web3 shooter for PC and consoles. They have a successful track record in the PC/Console space, and their past games have generated tens of millions of dollars in revenue.
Project Roadslide: codename used to maintain confidentiality during closing of the fundraising - team is also fully doxxed and have a significant track record in their respective area. They had successful and profitable games for years and will bring fun, engaging sport mobile games to the web3 space.
Abstract
Without diving into the specifics of the games themselves, we would like to share a couple of thoughts on our current investment thesis and our view on the current industry.
The market is evolving, and so is our investment approach
The “first wave” of blockchain gaming was dominated by crypto-native teams that sometimes lacked meaningful game development experience. Initially, they are focused on the technology aspect on the blockchain side, plus its in-game economy and secondary the game development itself. The game-development experience is often acquired through individual hires.
While we believe that the best of these teams will ship projects that are successful, it became evident that we are now at the start of the “second wave”, marked by the arrival of veteran teams with a long track record in the games industry who are moving into web3 for the first time.
The Merit Circle DAO’s expertise complements the skills of these veteran gaming teams extremely well. Considering the Merit Circle DAO is a web3 native organization, we are in the perfect position to complement teams first introduced to these novel technologies. We are working hand in hand with these veterans as they work through key elements such as economy design, blockchain selection and go to market strategy.
Fewer, more concentrated bets
In order to give our founders the attention and support they deserve, focus is key - this means making fewer, but bigger, bets. Trading greater diversification for higher concentration may sound risky, but we believe the opposite is true. By reserving larger amounts of both our money and our time for our highest conviction opportunities, we both maximize our exposure to the upside and our ability to contribute to the likelihood of the best outcomes.
On that note, we are extremely excited to share more information about ‘Project Fireblock’ and ‘Project Roadslide’ (codename used to maintain confidentiality during fundraising) and why we are convinced about these investments.
Motivation
We would like to break down the motivation to dive into these specific games in various topics.
1 - Team, team, team
Project “Firebrand”: The founders and senior team members have held lead roles on some of the biggest and most successful games in the industry, including Diablo III, Valorant, League of Legends, Overwatch, Division 2 and Horizon Zero Dawn. Much of the team has worked together for more than a decade. Why does this matter? Simply put, individual talent is valuable but not enough - game development is a complex and deeply collaborative process with many interdependencies and it takes time for teams to gel. There are no shortcuts to building a team like this. Even more exciting is that this team is already at scale - with more than 100 developers already working on the game, they are well positioned to deliver a AAA-quality shooter that competes with the best of the genre.
Project “Roadslide”: The team has been together for several years - where they shipped several comparable seasons which still has above a million monthly active users. Featured and chosen by both Apple and Google editorial teams dozens of times, showcased by Facebook, Samsung, Huawei and others as a top leading premium game and reaching top charts in 87 countries
2 - Self-sustaining games that last forever
Project “Firebrand”: Unlike the “first wave” of blockchain gaming, this team’s first principles are starkly different. First, the team is establishing in-game meta-systems that naturally evolve and spark innovation over time through the positive-sum decisions of players in the game, thus sustaining the game’s growth without much direct developer intervention. Second, the team is building game economies that are durable over time, forever ensuring price stability for common goods and low floors to entry so the game remains accessible with no upper bound for the number of players.
Project “Roadslide”: The main difference between seasoned crypto natives dabbling in game development and Roadslide, an experienced gaming team is mainly data. Over the years of building games, the team learned so many interesting facts about the tendencies of players in the game. What makes players play, come back and what drives their decision making. They have seen it all, and can perfectly use these lessons to create a sustainable and engaging game economy.
3 - Play-to-Contribute
Project “Firebrand”: This team is building a AAA shooter title with a meta-design that has been proven to be timeless yet still novel in standout features – a game that players play for the sake of playing, not out of obligation nor pure financial incentives. Ultimately, this team understands the necessity for the game to satisfy core human needs such as a sense of deep emotional investment – human connection, sense of belonging, and self-actualization.
Project “Roadslide”: Taking into account the years of game development, and the experience of building a game with over 250 million downloads, it’s safe to say that this team knows what it takes to build a fun game. Similar to Firebrand, the goal here is to create a really fun game that people will want to play for the sake of the game, not the financial incentives that come along with it.
Budget
The total budget is $8M in USDC divided in $3M to Project Firebrand, and $5M to Project Roadslide.
Rationale
Beneath, we have compiled a list of questions that might be asked after going through the proposal above.
Isn’t it smart to keep a large USD position in these uncertain market conditions?
Currently, we already possess a USD position of more than $60M when including all staked positions. The acceptance of this proposal would bring our USD position to roughly 50M+, which we consider to be enough to continue with the following activities for the foreseeable future;
- Continuous investments in seed rounds
- Continue development of in-house products
- Continuous stimulation and development of new products
- Maintain current and future contributors that contribute to the DAO
Considering we already have an advisory stake, why don’t we lower our investment size?
The height of the advisory stake is obviously correlated with the investment size. Therefore lowering that amount would also lower the advisory stake. Both ticket sizes are to equal the largest investor in the round which gives us certain weight into discussions.
Are we somehow managing the risk we are taking?
The team is working with both parties to bring them to Sphere (and probably even a native marketplace integration) to have royalties to the DAO without touching the investment base itself for the foreseeable future. Moreover, we deem both projects to have a much smaller risk of failure than the average investment. Both because of the teams working on it and the category they are servicing. This is why we are comfortable doubling down on both projects. It also means we will be even more hands-on than we already are with other projects, to make sure the projects will reach their potential.
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