Rec Room Raised $145 Million at a Valuation of $3.5 Billion
The social gaming platform Rec Room raised $145 million at a valuation of $3.5 billion.
The funding round announced on December 20, 2021, came about 9 months following the company’s $100 million fundraising at a valuation of $1.25 billion. The huge fundraising raises good prospects for user-generated content as well as a boom in game investments.
Rec Room positions itself as a future metaverse, a universe of interconnected virtual worlds. The latest gaming boom has taken the users-as-creators format with the user-generated content platform Roblox going public. Overwolf also raised $127-5 million in two funding rounds this year for helper apps and PC gaming mods.
Rec Room itself has seen tremendous growth over the past few years from a small collection of mini-games into a global platform with virtual millions of experiences that have been created by the community. Rec Room has grown into a platform where users can come together to indulge in meaningful connections, create communities and share their creativity with the community. According to Rec Room CEO Nick Fajt, the platform still wants to do more in the coming year including building more experiences, expanding into new platforms, investing in the best trust and safety systems as well as continuing to expand on the platform’s creator tools.
Rec Room’s funding round was led by Coatue Management. Existing investors also participated in the funding round including Index Ventures, Sequoia Capital, and Madrona Venture Group.
Rec Room began as a free-to-play experience back in 2016. It has since grown into a community with 37 million lifetime users.
It has been a long journey for the platform. Rec Room’s initial focus was virtual reality headsets which were massively hyped in 2016 but real growth proved slower than expected and Rec Room eventually pivoted to other platforms such as PCs, game consoles as well as mobile devices. In November 2020, Rec Room’s monthly user count increased by close to 450% while mobile users rose tenfold in the same period. Rec Room is currently available on a multiplicity of platforms including game consoles, iOS headsets, Android headsets, mobile devices, PlayStation, Oculus, Steam, and Xbox.
There are more than 12 million rooms that you can explore in Rec Room. Millions of players on the platform have generated content over the past year or so. The company’s VP for business development Mike Schmid says Rec Room has seen “real traction” in performance marketing over the past six months or so.
This performance marketing was boosted in 2021 by Brian Sapp who was previously in charge of marketing at the mobile gaming firm Jam City.
Users in Rec Room can party up with their friends worldwide. They can also create different types of content such as battle royale islands, escape rooms, birthday parties, and adventure games.
2021 has been particularly significant for Rec Room’s growth. The company launched on Android in August. A month later, the platform launched Rec Rally which is a fully-realized multiplayer vehicle experience for its massive global community which allows players to race with up to six of their friends.
Rec Room is open to different kinds of users with different skill sets and interests. It includes casual spaces where the newer users can hang out and it also includes opportunities for the more experienced users looking to leverage skills and earn some money in the process from selling their creations in Rec Room.
Rec Room currently has close to 200 employees up from approximately 60 employees in 2020. Rec Room transformed itself into a remote company during the pandemic and is currently recruiting employees from across the globe. With the new infusion of cash, Rec Room currently has the war chest to grow and expand its capabilities at the same time.
Rec Room might also do some acquisitions but it is not necessarily creating its own portfolio of games as its users are providing most of that.