Hiro Capital looks outside of Europe and US for the metaverse

The early stage investor raised $340 million for its second fund, which will continue to invest in gaming and metaverse-related start-ups.

London-based early-stage investor Hiro Capital raised $340 million for its second fund as it goes deeper into the metaverse and expands its global reach.

Hiro Capital Fund II will build on the work the venture fund has done with emerging gaming and metaverse founders and will invest in companies from seed to series B.

The fund said it plans to announce its first investment under Fund II in April.

Luke Alvarez, Hiro Capital co-founder, told Venture Capital Journal the second fund will double down on investing in platforms that will thrive in the metaverse by investing in game developers, creator and streaming platforms, and other start-ups working towards building the metaverse.

The metaverse combines both the real world and the virtual world. The idea is that people can interact with the virtual world in their offscreen lives.

“We’re in year two of what is a 20-year project, so our job is to pick potential winners and try to predict where the tech is going to go,” Alvarez said.

It starts with gaming

He added that much of the innovation for these emerging sectors normally starts with gaming since it’s the sector that first reaches consumers.

Alvarez and his team, including co-founders Ian Livingstone – who was recently knighted by Queen Elizabeth for services to gaming and was a former chairman of Tomb Raider developer Eidos – and Cherry Freeman, are deeply entrenched in the sector. This is one of the firm’s differentiating factors, he said.

While they are mainly interested in helping develop companies, Alvarez said the fund may also look to invest in tokens – essentially an asset running on a blockchain that represents a stake in a company.

“The majority of what we’ll be investing in will be equity, but picking up tokens makes sense,” Alvarez said. “Obviously, the point of tokens is to put ownership into the hands of the [game] players and the community but it’s important that the VC is part of that community, too, as long as a large part of the allocation remains available to players.”

Alvarez said the first fund mainly focused on Europe and the US, though Hiro Capital did make one investment in Asia. Its second fund expands its reach by allocating 15 percent to regions outside of Europe and the US. About a third of the fund goes to US-based investments and the rest will be for the UK and Europe.

Hiro Capital, founded in 2018, is named after a character from the novel Snow Crash, which first coined the term metaverse. It has made 21 investments into games and metaverse start-ups. Its investments include Seattle-based video game developer Polyarc, fitness platform FitXR, online gaming company FRVR and developers Keen Games and Snowprint. It also invested in an Indian company that helps gamers stream.

Hiro mainly invests in seed to series B stages, but it also co-led a $22 million consortium for a Series C round for women’s health start-up Elvie.

The firm also invested in a SPAC listed on the London Stock Exchange called Hiro Metaverse Acquisitions 1. Alvarez said it is one of the few SPACs on the London exchange and will target more later-stage companies within the gaming and metaverse sector.

Venture Capital Journal previously reported VCs are increasingly becoming interested in the metaverse, even as they are still defining what the metaverse looks like for them.