Metaverse Startup to Go Public via SPAC - $1M in 2021 Revenue

InfiniteWorld to Go Public via SPAC Merger

A new Special Purpose Acquisition Company (SPAC) agreement has been announced, effectively bringing an early Christmas for investors. InfiniteWorld revealed yesterday that it will be merging with Aries I Acquisition Corporation.

This transaction is projected to value the startup at approximately $700 million, according to the company’s own assessments.

The Metaverse and SPACs

The frequency of SPAC deals is notable. However, this particular instance involves the metaverse, necessitating a closer examination.

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Following Facebook’s strategic shift and rebranding as a metaverse company, the term has become ubiquitous. The metaverse remains a somewhat ill-defined concept.

It encompasses elements of digital interaction, community building, online commerce, and the creation of an alternative online identity, but it’s currently a significant focus within the technology sector.

Consequently, it’s not unexpected that a company focused on this area has secured a merger with a blank-check company.

Understanding InfiniteWorld

What exactly does InfiniteWorld offer? This was initially unclear. Fortunately, the company’s investor presentation provides some clarity.

We will now analyze the details of the deal, the products offered by this metaverse company, and then assess its financial forecasts, which are somewhat ambitious.

InfiniteWorld is still in its early stages of commercial development, particularly when compared to other crypto-based companies that have achieved substantial revenue growth.

However, the company anticipates significant future growth. Let's delve into those projections.

Merger Announcement: InfiniteWorld and Aries I Acquisition Corporation

Infinite Assets, Inc., operating as InfiniteWorld, is set to merge with Aries I Acquisition Corporation. Aries I is currently traded on the Nasdaq exchange under the stock ticker “RAM.” Presently, the stock is valued around $10 per share, showing a slight recovery following its initial public offering earlier in the year.

This merger is designed to transition InfiniteWorld into a publicly traded company, with a projected equity value of approximately $700 million, as stated by both organizations. It’s important to note this valuation is subject to potential adjustments based on shareholder redemptions.

Furthermore, the anticipated cash reserves for InfiniteWorld following the completion of the transaction are estimated at $171 million. This includes $145 million contributed by Aries I, contingent upon no redemptions, alongside InfiniteWorld’s existing cash holdings.

The companies also disclosed that InfiniteWorld possesses approximately $93 million in cryptocurrencies, valued according to recent pricing data from Coinbase.

Key Financial Implications

Essentially, Aries I is poised to inject a substantial sum – in the low nine-figure range – into InfiniteWorld. This infusion of capital is projected to elevate InfiniteWorld’s equity valuation towards the $1 billion threshold.

Understanding InfiniteWorld

The question arises: what exactly defines a metaverse company? As detailed in InfiniteWorld’s presentation, it encompasses a range of initiatives, both conventional and blockchain-based, designed to facilitate cryptocurrency integration for its client brands.

A review of their offerings reveals significant commonalities across the various InfiniteWorld products. For instance, PRDKT, Pholio, the Infinite Marketplace, Infinite Biz, and Infinite App all demonstrate involvement within the NFT space.

Furthermore, the company engages in other metaverse-related activities, notably augmented reality (AR) and virtual reality (VR) development through its Mecanique subsidiary.

Specifically, InfiniteWorld explains that PRDKT assists brands in establishing a digital presence. Pholio provides concise, creative content solutions, while Fantascope offers extended animated video clips.

Crucially, InfiniteWorld intends to license its NFT marketplace technology to other businesses through a white-label solution.

The overall structure represents a diverse collection of services. Should a brand seek to transition from traditional operations to a digital format, InfiniteWorld appears well-positioned to offer relevant solutions. Essentially, the company functions as a comprehensive resource for metaverse-related needs.

But how do these services contribute to the company’s financial performance?

Positive Outlook for InfiniteWorld

Despite a limited operational history, InfiniteWorld possesses substantial ambitions. The following observations are based on their SPAC presentation:

InfiniteWorld projects approximately $1 million in revenue for 2021. Company forecasts indicate a significant increase to $19 million in 2022 and $71 million in 2023. According to TechCrunch’s analysis, the company is not expected to achieve typical IPO revenue levels until sometime in 2024.

In essence, InfiniteWorld is communicating to investors its expectation of a dramatic revenue surge. This would involve moving from minimal revenue this year to a nine-figure income within the next three years. While such rapid growth is uncommon, the company operates within burgeoning markets where substantial earnings have already been realized by competitors.

OpenSea, for instance, has generated significant revenue by collecting a 2.5% commission on NFT transactions through its platform. As illustrated above, NFTs are a key component of InfiniteWorld’s projected revenue growth. The company details its revenue streams as follows:

Revenue from NFT activity is anticipated to be highly profitable, as it involves the exchange of digital assets for conventional currency. Platform and subscription revenue are expected to resemble software-based income, also yielding strong gross margins. The final category, potentially requiring more manual effort, is likely to generate lower-margin revenue, consistent with historical trends for service-oriented businesses compared to software sales.

However, the combined revenue streams are projected to result in gross margins exceeding 60% over time, as stated by the company. This is considered acceptable, though not outstanding, for a company operating in a high-technology sector.

InfiniteWorld represents an intriguing company, though it appears relatively new for a public listing. A potential benefit of SPACs is their ability to facilitate listings for younger companies. This situation exemplifies a more extreme case.

The investment proposition is clear: there is a possibility that InfiniteWorld will unlock substantial growth within the metaverse. Should this occur, its current enterprise value of $700 million could seem quite modest in retrospect. Conversely, the company’s business history is minimal, indicating significant risks alongside the potential for substantial rewards.

The performance of its stock will be closely watched.