CryptoKitties: Behind The Deal With Version One Ventures

April 6, 2018 | By: Jon Jackson Photo Credit: cryptokitties.co
Photo Credit: cryptokitties.co

On Mar. 20, Vancouver and San Francisco-based Axiom Zen, the maker of CryptoKitties announced that it had raised CAD $12M in Seed/Series A funding. The syndicate of investors on this deal included Andreessen Horowitz, Union Square Ventures, CAA Ventures, Digital Currency Group, Rising Tide Fund, YesVC, Hex Capital and CVCA member firm, Version One Ventures.

CryptoKitties are digital collectibles which are built on top of the Ethereum blockchain. Each one is unique and has certain attributes that make them rare and desirable, almost like a digital beanie baby. And users are spending tons of real money on them, with some of the rarest kitties fetching over $100,000 when the game first launched.

While Axiom Zen (CryptoKitties) has been being pretty quiet about what the funding will be used for, the CVCA has learned that the funding will be used for hiring and customer acquisition which is normally the case with an influx of capital.

The CVCA caught up with Version One Ventures to get a bit of an inside look at the deal in our latest “Behind The Deal” series.

Why Did Version One Choose to Invest In Axiom Zen & CryptoKitties?

There are three things that got us really excited about CryptoKitties. First, it’s native to the blockchain. Crypto Collectibles is a powerful up-and-coming use case for blockchain. With CryptoKitties, people can create and purchase one-of-a-kind works of art thanks blockchain technology.

Another thing that drew us to CryptoKitties is that the team has taken an incredibly thoughtful approach to building products that put the user at the center and thinking about what ownership and decentralization mean in the digital/crypto age. You can read co-founder Mack Flavelle’s post on Medium for more on this. It has been so impressive to see a product team deeply thinking through the tradeoffs of centralized and decentralized systems when designing a product and the industry will need more of this in order to use the advantages of decentralized systems in a broader way.

And lastly, CryptoKitties is powered by a rockstar team: Roham Gharegozlou, Mack Flavelle, Dieter Shirley, and Mik Naayem. They represent some of the best talent in the crypto space right now, combining product, blockchain/ crypto, and business building talents.

Where did Version One find out about Axiom Zen & CryptoKitties?

Boris Wertz, Founding Partner at Version One Ventures has known the Axiom Zen team for a while. Both Axiom Zen and Version One Ventures are based in Vancouver.

What is your anticipation about this sector in the short term and long term?

We are in the early innings when it comes to blockchain apps, but the earliest adoption of new technology platforms has often been driven by games and gaming companies. We believe that CryptoKitties can play a leading role in the mass adoption of blockchain going forward.

Is there anything particularly interesting about Cryptokitties that you’d like to emphasize?

CryptoKitties is a game that lets users breed, raise and trade digital kitties. Each kitty is created on the distributed ledger and has a unique genome that defines its appearance and traits (“cattributes”). Each CryptoKitty is a unique object on the Ethereum blockchain and can be bought or sold on the game’s marketplace. At one point, CryptoKitties accounted for nearly 30% of all transactions on Ethereum.

Tell us about the lead at your firm that was involved with the CryptoKitties deal.

Boris Wertz was lead on this deal for us and he’s quite deep into crypto/blockchain at this time. You can read Version One Venture’s blog for all his thoughts about the topic.

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