Team Coco Sells for $150M, a16z’s $5.1B Web3 & Gaming Bet, and Firework Raises $150M

May 26, 2022 by  wearerockwater

What We’re Reading

5 articles + RockWater analysis to make you a better investor and operator.

———

SiriusXM Acquires Conan O’Brien’s Team Coco Podcast Company for $150 Million
TechCrunch, 5.23.22

Team Coco just sold to SiriusXM for $150 million. No surprise here, this was one of the most premium content assets still available on the market. Checks all the boxes for a premium IP / content studio sale… 👇👇

  • A+ talent in Conan O’Brien
  • Excellent leadership and operating team
  • 180 million annual downloads makes it one of the last remaining independent scaled podcast platforms (though it took some smart deal guys to separate it from the Conan / WarnerMedia JV)
  • Tentpole show in Conan O’Brien Needs a Friend…
  • …Which was used to incubate a fast-growing creator network. Just look at how Sona, Conan’s assistant, became a breakout hit
  • Large digital footprint driving 1 billion annual video views across Facebook and YouTube, and 17 million social media followers
  • Large back catalog of content from Conan’s late-night TBS show

Shout-out to Adam Sachs, William Navarre, Steve Beslow and the rest of the amazing people over there. Such a great win.

The RockWater Take by Chris Erwin

Clearly this deal was in the works for a bit, as headlines represent months, if not years, of work. Of note, Team Coco had a longstanding commercial partnership with Stitcher, which was acquired by SiriusXM in 2020. And yes, most M&A is the result of long-term relationship building…trend lines VS singular data points! All you current business builders, take note 😉

Furthermore, it’s an impressive feat that Team Coco leadership got this done during growing macro market headwinds: a global pandemic, 20+% drop in equity markets, rising interest rates, supply chain shocks, et al….this deal could have easily fallen apart. We expect more deals that are “just getting over the finish line” to be announced over the next month, and then we expect a slow down in M&A. Likely many deal talks are coming to a halt, as investors don’t like committing capital during market instability.

Lastly, the deal also surprised some in that SiriusXM had signaled they were focusing on mid-tier deals. But the acquisition shows that premium assets, and leadership, will stand out to buyers in both up and down markets…the number of deals may go down during a downturn or correction, but overall activity will increase amongst more premium asset classes in a flight to safety / certainty of ROI.

 

———

Coppola-Backed Decentralized Pictures Launches Web3 Film Funding Platform
Decrypt, 5.17.22

  • Launched this week at Cannes, Decentralized Pictures is a DAO-style film funding platform backed by some of Hollywood’s most influential names like Francis Ford Coppola, Steven Soderbergh, and more.
  • Filmmakers are invited to submit proposals for review, paying a small submission fee in the project’s native token, FILMCredits.
  • Built on a “slightly tweaked” version of the Tezos blockchain, the platform has ambitions of eventually evolving into a “virtual studio,” in which blockchain technology will play a part in every step of the production process.

The RockWater Take by Alex Zirin

While this is not the first DAO-style film financing vehicle we’ve seen out in the market (See: HollywoodDAO), it is certainly the one with the most credible backing. American Zoetrope is a very well-respected production studio with major credits to its name (The Godfather Trilogy, Apocalypse Now, American Graffiti, Marie Antoinette). As with most on-chain applications of existing / antiquated industries, validation of estabished industry leaders like Coppola and Soderbergh give this effort a healthy dose of credibility.

The independent film market has seen tough times over the last decade. Between the decline of movie theater audiences pre and post-COVID (cinema revenues are still 40-50% below pre-COVID rates), and the recent turmoil in the capital markets, especially regarding streaming services, times ahead aren’t looking much better. Streamers will still have appetite for quality content, but the low-budget indie is becoming more endangered by the year. Platforms like this, intended to bring the “producer” decision-making to a broader community, have breathed new life into the medium. Unlike many of the headline-making DAOs of late (BuyTheBroncos DAO, LinksDAO, and more), the amount of capital needed to produce an independent film is much more reasonable. Excited to see how this one pans out.

 

———

Proofs of Attendance are Web3’s New Status Symbol
Vogue Business, 5.17.22

The RockWater Take by Michael Booth

Great write up by Vogue Business on proof-of-attendance-protocols (POAPs). Essentially, they are NFTs that are granted to an event attendee (think virtual ticket stub).

This leads me think about all of the applications for IRL events — POAPs would be a compelling memento to give to concert-goers, sports season ticket holders, fashion week attendees, etc. This feels like the natural evolution of the “I Was There” t-shirt, but with better practicality — easy to display across socials or metaverses, and simple to trade on fan-to-fan resale marketplaces.

Some compelling use cases for the creator economy as well. One excerpt from this article that really got my wheels spinning was that Influencer “Gmoney” carries a card with an NFC chip in it. Anyone he physically meets with can scan the card to collect his own personal POAP, somewhat like an on-chain autograph. In the future, he can offer special perks to those people. Already, people with his POAP enjoyed special access to the Adidas NFT. He also designed a Miami scavenger hunt.

I’m keeping my eye out to see how more brands leverage POAPs as their digital and IRL offerings continue to blur.

 

———

Firework Closes $150M SoftBank Vision Fund 2-Led Series B to Continue to Build the Future of Commerce
PR Newswire, 5.24.22

  • Livestreaming commerce leader receives major leg-up in bid to redefine customer experience and engagement for Web 3.0
  • With the newly acquired funds, Firework aims to accelerate growth across a variety of metrics in pursuit of a bold, long-term vision to reshape the digital landscape with its decentralized infrastructure on which organizations can engage and transact with customers and audiences on their own properties and terms
  • The outcome of Firework’s Series B funding round can be attributed in large part to a litany of successes stretching back to Q1 2021. With multiple blockbuster customer and partner acquisitions — such as ITC Foods, Sugar Cosmetics, Big Bazaar, Boat, Fab India, The Man Company and Omnicom Media Group — a strategic investment partnership with American Express Ventures, and numerous high-profile leadership hires, Firework has emerged as the clear frontrunner in the race to lead India’s still-nascent livestream commerce market”

The RockWater Take by Andrew Cohen

Another huge data point for the expansion of livestream commerce beyond China. Notably, this is the first 9-figure valuation we’ve seen for a white label solution. To date, the major valuations in livestream shopping have been attached to “Destination Platforms” like WhatNot, Popshop Live, and NTWRK. We wrote about this distinction in our last report (linked here).

 

———

Andreessen Horowitz Commits $5.1B to GamingWeb3 Investments Despite Poor Macro Outlook and Crypto Market Turmoil
TechCrunch, 5.18.22 & 5.23.22

  • a16z launched a $600 million gaming fund and a $4.5 billion Web3 fund within the last week
  • Crypto Fund IV is more than twice the size of Crypto Fund III, which launched less than a year ago
  • The new gaming fund is a16z’s first gaming-focused vehicle and is backed by execs from major gaming companies including Roblox, Riot Games, Zynga, and others

The RockWater Take by Eric Kenigsberg

Despite inflation ravaging the value of the dollar and a challenging macro outlook, dry powder levels remain high and eager investors are still out there.

This concept is made abundantly clear through a16z’s launch of two massive funds…though one is significantly more massive than the other. One is a $600 million gaming-specific fund, the first of its kind for a16z. The other is a $4.5 billion Web3 fund.

The Web3 fund launches while the broader market demonstrates a growing level of skepticism for the future of blockchain. The global crypto market cap has crashed over 55% from its $3 trillion high in November 2021. On top of that, investors are seeing crypto’s continued increase in correlation with the broader tech public markets, instilling a level of fear that crypto is nothing but a tech-like bubble, when it was thought of, for years, to be a hedge asset.

All that is to say that the timing for the fund’s launch inevitably puts it in the way of market headwinds but maybe a16z is actually correct for doing so? While many other funds will pull back from Web3 investments by being sucked into the market pessimism, a16z will keep its foot on the gas, seizing opportunities to invest in promising blockchain-native companies at low multiples. Upstart execs are being told to prep for the worst in an environment where raising capital may be difficult, so expectations have to be lowered. Plus, Web3 is clearly a space that a16z is excited about, as demonstrated by the sheer size of the fund and a whopping one-third of its capital being committed to seed-level deals – heightening its exposure to the forefront of blockchain-related innovation.

Furthermore, the aforementioned gaming fund that a16z just launched may have hefty linkage to Web3 as the two spaces have grown to adjacency. Many of the case studies of Web3 utility go back to gaming, whether it be the AR / VR gaming integrations that we’ve seen from Oculus and Snap lenses, or play-to-earn gaming models, or the metaverse concept as a whole which, in the current state, exhibits significant gamification.

So, even though the crypto and Web3 markets are not as rosy as they once were, it’s somewhat relieving to know that investor appetite remains and there’s plenty of capital dedicated to their continued development. Such commitments will put those markets in the best position to weather the storm.

 

———

If these insights are relevant to projects you are thinking through, ping us at hello@wearerockwater.com. We’re always excited to riff through ideas!

Related Posts

Get RockWater’s latest insights on Media, Tech, and Commerce straight to your inbox