IPO Corner: Decoding The Metaverse

There’s a lot of fuss about the metaverse, but the questions remain. Who cares and why should we care?

The answer is simple and compelling: The value of the global metaverse will swell to well over $1 trillion by the year 2030 according to some estimates and was already valued at $210 billion as of last year. And the breadth of the space is vast . . . so let’s dive in.

What The Metaverse Is . . . And Isn’t

If you have had any exposure to the metaverse thus far, it has likely been from Facebook, as they’ve tried to rebrand themselves as “Meta” in an effort to dominate the conversation regarding this burgeoning space, but Facebook… or should I say Meta, is not representative of what the metaverse is or could become, not by a long shot.

Firstly, the word metaverse simply refers to a real-time virtual world that exists alongside our own, a virtual space where people can interact just like they do in real-life, but they need special hardware and software to do so. The beauty of the metaverse is that it has the potential to eliminate barriers that currently keep people separated, such as time, distance, language, and even the physical limitations of the human body. Presently, individuals and businesses are just starting to find their footing and figure out how to leverage and benefit from this digital world.

The Mechanical Parts

Just to dispel some of the “techy” language and hype around the metaverse, let’s bring it down to earth a little bit and talk about the bits and pieces that make up the space.

On the hardware side, we have displays, eXtended reality (XR) hardware, haptic sensors & devices, smart glasses, omni treadmills, and AR/VR headsets. These are primarily what make up the special, physical equipment needed to interact with the metaverse. Then there is the software side, things like tools to create digital assets and programming engines. And we also need all the little pieces that exist to connect the space, like digital asset marketplaces, financial services, virtual platforms, and avatars (which is a digital representation of a person in the metaverse).

But what are the opportunities within the metaverse? What can be done there? Well… anything… gaming, online shopping, content creation, socializing, events like concerts and conferences, education, banking, business deals, meetings, advertising, parties, workshops. And what industries could flourish? You name it… media and entertainment, retail, automotive, defense, aerospace, and even the food industry (imagine going to dinner in the digital world with your best friend).

Some notable non-FB companies that are already dipping their toes into the space include Tencent Holdings (TCEHY), NVIDIA (NVDA), Roblox (RBLX), Microsoft (MSFT), Globant (GLOB) and still-private Magic Leap. They, and companies like them, are in the space launching products, conducting research and development, performing mergers and acquisitions, and advancing technologies. It’s pretty easy to imagine all the innovative ways a limitless, connected space could be used to grow products and services.

Where It Gets “Meta”

There are qualifications for what makes “the metaverse”. In fact, there are six.

Persistent, or in other words, it needs to go on in perpetuity and be available at all times (regardless of the end or beginning of individual pieces within the space, like if a virtual shop closes) as long as someone has the devices and network connection necessary to connect to it.

Live, meaning that the metaverse should happen in real time for all involved, all at once.

A complete economy, meaning that people are able to own, trade, and invest in anything in the environment such as goods and services (and yes, there are actual jobs within the metaverse that people go to just like they would a job outside the metaverse… a good example is a salesclerk at a virtual shoe store).

Next is unlimited user capacity, just like the internet. When you want to hop online, you don’t think about how many other people might be using it, because it doesn’t matter. It’s the same principle here.

Inter-usage of data and assets, which means that you should be able to take your digital assets with you wherever you go within the environment (maybe your avatar is wearing those virtual shoes you got an employee discount on at your virtual job, for instance).

Finally, populated by diverse creators, and all this really means is that anyone and everyone has access to the space and is able to work, create, and play freely.

The Business Opportunity

While it’ll be a good five or ten years before the metaverse in its ideal form exists, companies and creators (both centralized and decentralized) are racing to develop the space… and that means that opportunities abound for those with eyes to see.

We’re already seeing nursing homes used VR headsets to connect people to their families and take them on virtual tours so residents can live fuller lives, gamers are finding exciting new ways to play in the virtual world, concerts are being held there (complete with advertisements for vodka and 50 story avatar veejays towering over concert goers), and workplaces are starting to hold conferences and meetings in this space to help combat Zoom fatigue and bring displaced colleagues closer together for collaboration. So, we have our eyes on some IPOs around this exciting space.

Where The Deals Are

Emotional Intelligence Ventures is just as interesting as the metaverse itself, a surprising venture for a surprising space. The company has married mental health, botanical psychedelics and technology… a sentence you don’t expect to read anywhere but here.

The company formed with the goal of exploring the use of psychoactive compounds and technology in order to improve mental wellness, they want to deliver government-approved treatment options through the medium of technology to help treat, and even reverse, mental health disorders. While it may seem a bit unorthodox, the time is right for these therapies as the pandemic and stresses of the economy have wreaked havoc of mental health globally. It’s a really smart move, and they have their eyes squarely on the metaverse, which is exciting.

The group is engaging in pre-IPO activities at the moment, focusing proceeds on their envisioned “utopian space in the metaverse”, PSLY.COM, as well as their psychedelics pipeline. According to CEO, David Nikzad, they own the second or third largest, most expensive parcel in the metaverse where they are building an AR/VR platform and have already raised more than $25 million.

Another company that is just starting to appear on our radar is H2L. While an IPO with this company is just rumor at the moment, they are worth looking at because they are doing something in the space that has yet to be done… and if they do it right, it could put them on the map.

H2L wants to bring pain to the metaverse… well, not just pain, but that’s an attention grabber for sure. They want to bring physical sensation to the space. The company’s focus is on developing Virtual Reality (VR) and Bodysharing devices, and they have developed technology that conveys weight and resistance feelings to users through sensors that identify muscle movements. Essentially, the technology uses electrical stimulation to control muscles, which allows users to “feel” sensations around their avatar.

Bringing mental health services to the masses through technology and allowing users to “feel” physical sensations are just a few of the promises of the metaverse. Maybe soon we’ll see a company bringing the ability to smell and taste virtual food… the sky really is the limit. Be sure to keep coming back for future issues to see if these cool companies end up on our Buy List and what we dig up next. Let’s explore the possibilities together!