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Why You Need a Metaverse Startup in Your Portfolio

Why You Need a Metaverse Startup in Your Portfolio
By Vin Narayanan
Date September 27, 2022

I recently recommended a metaverse play to our Crypto Asset Strategies members. I’m not sold on the metaverse. But I still believe gaining exposure to this space is critically important. Here’s an excerpt from that piece that explains my logic:

VR and AR technology are steadily improving. But they’re not ready (yet) for mainstream adoption. I believe we’re still more than a few years away from seeing that. But I’ve also been waiting since 1993 (Sega VR anyone?) for VR to become a reality. So I’m a bit jaded.

Equally important is that society hasn’t figured out how to solve many of the basic problems plaguing the internet — including rampant bullying, censorship and disinformation. The very same dynamics that make social media and comment sections toxic will likely emerge in the metaverse. Will people really flock to a virtual universe that has the exact same set of problems that the physical universe does? Somehow, I doubt it. And considering much of the metaverse is going to be (at least initially) reliant on user-generated content, this is a serious problem.

Yet despite these significant and real concerns, I believe you should add a metaverse project to your crypto portfolio. The metaverse’s market potential is too big to ignore.

The metaverse’s current market size ranges from $125 billion to $201 billion depending on who you ask. And it’s expected to grow into a $435 billion to $546 billion market by 2028. IF the forecasting is correct, this segment is just too big to ignore. And even if the forecast is horribly wrong, there’s nothing wrong with pocketing a decent gain before the metaverse goes away completely.

I believe this same logic (minus pocketing a quick gain) applies to investing in a metaverse startup. If you’re building a startup investment portfolio of 25 to 30 companies, then it makes sense to invest in at least one metaverse company. The market potential — even with the sizable risk that comes with it — is too big to ignore. And any metaverse startup won’t go public or get acquired for another 10 years. By then, the metaverse space should be better defined than it is today. A smart investment now could yield outsized results.

Walmart understands this. That’s why it announced this week that it’s launching two metaverse projects.

Both projects are immersive experiences on Roblox, a popular metaverse platform. Walmart’s “Universe of Play” will offer a gaming experience that showcases characters from popular toys (like Paw Patrol) that Walmart sells. And “Walmart Land” will include a Netflix trivia contest and virtual merchandise.

Walmart isn’t the only big brand playing in the metaverse. Patrón, Estée Lauder, J.P. Morgan and HSBC are all experimenting in the metaverse. And that’s just the beginning of the list. 

All of these companies are trying to reach new generations of customers by being active in the spaces where young people hang out. It reminds me of the internet’s early days — big brands diving into the deep end because they knew their future customers lived online.

I’m looking for good metaverse startup investment opportunities right now. And I’m not the only one. According to McKinsey, metaverse investments have jumped from $57 billion last year to $120 billion (so far) this year. 

When you invest in startups in an emerging space, you don’t want to get in too early. But you don’t want to get in too late either. I believe we might be in that sweet spot for the metaverse. 

If I spot a metaverse startup worth investing in, I’ll share it with you. And after that, it’s up to you. I believe every startup investor should have one metaverse company in their portfolio. And now is a very good time to invest in one.

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