BreederDAO Raises Funding from a16z to Scale NFT Generation

The Emerging Web3 Ecosystem and Specialized NFT Production

Debates continue regarding the degree of decentralization in emerging “web3” companies compared to established tech giants. However, a network of interconnected businesses, often backed by the same investment firms, is rapidly taking shape.

Investment in NFT Gaming Assets

Late last year, Andreessen Horowitz (a16z) invested in Yield Guild Games (YGG), a company that acquires Non-Fungible Tokens (NFTs) from blockchain-based games. These NFTs are then leased to players who earn revenue through gameplay.

“Axie Infinity” is among the most rapidly expanding of these games. Within the game, creatures can be bred for combat and, if successful, sold for profit.

Expanding the Axie Infinity Ecosystem

By October, a16z spearheaded a substantial investment in Sky Mavis, the company behind “Axie Infinity.” Subsequently, they are now providing funding to BreederDAO, a relatively new, Philippines-based company specializing in the creation of digital assets for blockchain games and virtual worlds, including “Axie Infinity.”

BreederDAO's Series A Funding

Founded by a young team, including an early advisor to YGG, the 23-person BreederDAO recently secured $10 million in Series A funding through a token sale. This sale was co-led by a16z and Delphi Digital, with participation from Hashed, com2us, Morningstar Ventures, Mechanism Capital, Sfermion, The LAO, Emfarsis, and others.

Addressing the NFT Supply-Demand Imbalance

The rationale behind funding a company focused solely on producing digital assets lies in a growing imbalance between supply and demand. Arianna Simpson, a general partner at a16z, explains that interest in playing these games is exceeding the availability of necessary NFTs.

Demand for NFTs is beginning to outstrip supply, creating a need for increased asset availability.

The Role of Third-Party Asset Providers

Game developers have already demonstrated a willingness to collaborate with third-party organizations like YGG and other “play-to-earn” guilds. These guilds purchase NFT gaming assets and lease them to players under revenue-sharing agreements.

These guilds now require a faster influx of assets, which has led to the emergence of BreederDAO. YGG, Ready Player DAO, and Earn Guild are among the entities utilizing BreederDAO’s services. (YGG also holds a stake in BreederDAO.)

Future Growth Potential

Simpson and her colleagues anticipate further customer acquisition. a16z data indicates that guilds like YGG and Earn Guild attracted $532 million in funding last year. However, the players leasing these assets represent less than 2% of “Axie Infinity’s” nearly 3 million daily active users, suggesting significant growth potential.

BreederDAO aims to collaborate with 5,000 play-to-earn groups by 2025, contingent on their continued existence.

NFT Generation and the Supply Chain Model

There are no technical obstacles preventing blockchain games from generating more NFTs independently. However, according to Simpson, companies like Sky Mavis prefer to concentrate their efforts on core game development rather than NFT production.

They are not opposed to third-party production, provided it benefits the overall economics of the game. Increased player participation in “Axie Infinity,” for example, enhances the value of the game’s tokens.

Simpson describes this process as a supply chain, where different companies specialize in various stages of production to create a finished product.

BreederDAO’s Current Focus

Currently, BreederDAO primarily focuses on creating NFTs for “Axie Infinity,” as well as other play-to-earn blockchain games like “Crabada” and “Pegaxy.”

The company sells these NFTs at fixed prices, although a revenue-sharing model may be adopted in the future. Fractionalization of NFTs is not currently implemented, but Simpson suggests it could be considered in the future.

The BreederDAO Team

BreederDAO is led by Filipino co-founders Renz Chong, Jeth Ang, and Nicolo Odulio. Chong has a background in management consulting, Ang is a serial entrepreneur, and Odulio, a former commercial pilot, serves as the company’s smart contract expert.

Odulio possesses experience in building cryptocurrency projects and decentralized applications across multiple blockchains, including Binance Smart Chain and Ethereum.

Investment Strategy and Token Launch

Simpson and the other investors participated in funding rounds prior to the public launch of BreederDAO’s token. This was done to strengthen the team in preparation for the token release, with investors receiving tokens proportional to their investment.

BreederDAO had previously secured an undisclosed amount of seed funding, with participation from YGG, Infinity Ventures Crypto, Ascensive Assets, Bitscale Capital, FireX, Mentha Partners, and Not3Lau Capital.