You want to “dig gold metaverse”, but investors find that the “shovel” for mining has not been built yet

Yunxiu capital believes that many technologies run faster than you think, but the public does not see them, such as 3D modeling, 3D digital assets, etc., which will become the basis for the outbreak of “metaverse” in the future.

Author Yu Weilin

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Topic map | provided by respondents

The big boy who has no sustenance in reality puts on VR glasses and jumps into the virtual world called “oasis” from the dull reality – it is all inclusive, and the bustling city hides no less than the secrets of the real world

This is the “virtual world” created by Spielberg in the number one player, which is often called “metaverse” since 2021.

We see that more and more enterprises are beginning to “dream metaverse”, and the discussion in the market has never stopped. Compared with the highly sought after metaverse concept stocks in the secondary market, investors in the primary market are more calm and restrained to look at the vigorous development of “metaverse”.

According to the analysis data of Rui beast, in the past two years, the number of financing events of AR / VR track, which is the most implemented in the metaverse concept, has not increased significantly, but its total financing has increased significantly. In 2021, the total financing of the track exceeded 50 billion yuan, with a year-on-year increase of 80%, four times that of 2016, when AR / VR investment and financing was the hottest. This is consistent with the feedback from industry insiders collected by venture state: “investors are actively looking at the metaverse project, but they are relatively cautious.”

AR / VR financing trend chart. Source: Rui beast analysis

Yunxiu capital believes that the future world depicted in “number one player” is too far away. The scene of 100000 players’ collective online combat needs to transmit an extremely large amount of data, which is almost impossible to achieve at present. In other words, you want to “dig gold metaverse”, but the “shovel” for mining has not been built yet.

As a high-quality investment bank and investment institution in the science and technology industry, Yunxiu capital has long paid attention to the new opportunities brought by the second half of digital upgrading. They believe that if a project is defined as metaverse entrepreneurship, it is inevitable that it will be scrutinized more severely. If we want to win the favor of small and micro investors, we need to be limited to the products that can bring about change.

It is clear that before the advent of metaverse era, the barbaric growth of underlying technology is accelerating until it provides sufficient nutrients and foundation for the outbreak of the industry. This is also what investors are most concerned about.

In this issue of “metaverse investment observation”, we interviewed Yunxiu capital. From the perspective of FA, they have insight into metaverse entrepreneurship and help enterprises finance. There are many layouts in relevant tracks. What is their methodology and logic of looking at the project?

Computing power will be the first

The core of the future metaverse debate

Entrepreneurial state: How did Yunxiu cut into the metaverse track?

Yunxiu capital: Yunxiu will not pursue the so-called tuyere. Our logic is to look at the project from the “second half of digital upgrading”, which is bound to involve two-dimensional to three-dimensional overall innovation, including technological innovation, mode innovation, application innovation, etc.

Over the past few decades, from PC Internet to mobile Internet, the overall technological innovation has brought digital changes. At present, with the maturity of underlying infrastructure such as 5g network and cloud native, a new generation of changes came into being, and there will be many new upgrade methods. The subsequent characteristics of the times may be the “metaverse” now.

We believe that metaverse is a digital space created through scientific and technological means with the further development of digitization. In essence, it is a process of virtualization and digitization of the real world.

Venture capital: in the category of metaverse, which sub tracks does Yunxiu pay more attention to?

Yunxiu capital: Yunxiu will focus on three lines, which are mutually based and progressive.

The first line is the change of computing power at the bottom. The transition from two-dimensional to three-dimensional may involve the change of computing power from single digit order of magnitude to thousands of orders of magnitude. Can computing power support such a huge amount of computation? This is the first underlying problem to be solved. Taking the project “Moore thread” we cooperated with before as an example, the full-function GPU they focus on is the key computing engine for technical implementation, which can be considered as one of the important computing platforms of metaverse. In fact, computing power may first become the core of the future metaverse debate. This is also the first time we started the layout, probably from 2019.

The second line is based on the computing power of the first line and extends the large technical framework. It is divided into several levels. One is where the data is placed and how to combine virtual and real, such as cloud native; Another level is how to transmit data and secondary development, which may include engines, authoring tools, etc.

With computing power and infrastructure, how can we better present or interact with users in content? Then there is a third line. This actually involves two directions. One is the hardware level. As the entrance and carrier, XR is the direction we will focus on. Another direction is the overall content application, games, cultural content, etc., but in this direction, we generally believe that the time has not come, and the current time is more suitable to see the basic layer of the underlying content.

Entrepreneurial state: when a entrepreneurial project is defined as metaverse, will it be treated more harshly?

Yunxiu capital: This is natural. Now too many projects package themselves as metaverse, but they are actually “old wine in new bottles”. “Metaverse” is not a new thing, but a brand-new change brought about by some technology upgrades and mode upgrades. It has been labeled “metaverse” by some projects. If you look at it, many of them do not have any underlying logical innovation, and do not solve the problem of “neck sticking” like chips and robots.

We and investors as a whole will actively look at metaverse’s project, but at the same time, we will also take a lot of questions and thoughts, and will be relatively cautious and conservative.

Venture capital: what kind of investment preference does such a cautious attitude bring?

Yunxiu capital: from the perspective of “value investment”, we pay less attention to the external “emotions”, but more to the core of the team and enterprise.

Based on this, our layout in this field will focus on the early and middle-term projects, because we have the opportunity to accompany for a longer time and verify the cycle ability of the project. In contrast, for projects in the middle and later stages, we will pay more attention to the commercialization ability, unless there is a better benchmark for overseas development.

conceptual diagram of “singularity approaching” glasses intellectualization of Yunxiu project

Before the outbreak

The underlying technology began to “grow savagely”

Entrepreneurial state: can we expect a landmark event in the outbreak of metaverse?

Yunxiu capital: it’s hard to say that there will be a so-called landmark event. This is more like the “5g” and “Internet of things” in previous years. We can’t say that 5g has broken out now.

But this does not mean that there is nothing to do around this field. Looking back on the Internet era, you will now think that the first computer and the first iPhone are landmark events and a cross era time node. However, before they were born, there were already a lot of technical foundations supporting them, but computers and mobile phones made some visual presentations of these technologies.

It may take a few years for metaverse’s hardware technology, but it will take a few years for this node. Before that, many technologies will run faster than you think, or they are growing silently, but the public does not see it. It may not be presented from the perspective of consumption level, such as “three-dimensional modeling”, which turns two-dimensional maps into three-dimensional maps. Now the government has been supporting it; “3D digital assets” have been directly used in many games and movies, which may not be familiar to the general public, but these technologies are indeed growing and will become a basis for the outbreak of “metaverse” in the future. This is what we want to layout now.

Entrepreneurial state: what segments of metaverse have underestimated entrepreneurial opportunities and encourage entrepreneurs to try more?

Yunxiu capital: now many people are doing every subdivision track. It can’t be said that which is underestimated. We can say that there are some relatively promising directions, perhaps because the technical threshold is relatively high and there are relatively few people doing it.

For example, VR hardware has been relatively mature. On this basis, some people are developing VR content, digital people, etc. many people participate, the competition will be fierce, and long-term ecological planning is also needed.

However, some underlying hard core technologies and rigid requirements, such as chips, AI underlying platforms, some architecture layer and tool layer, require a lot of data accumulation and years of precipitation, and there will be fewer players.

But this is the direction we will focus on, because once a good team has built the moat, the realization value and reusability will be stronger in the future. We hope to encourage entrepreneurs to really take root and invest in these areas that need technical research.

Entrepreneurial state: will such a track encourage people from scientists to try?

Yunxiu capital: not necessarily scientists. There are indeed some entrepreneurs from scientific research institutes, but they may not all have such a background. There are also entrepreneurs from overseas platforms such as Microsoft, Google and Facebook (meta) with strong algorithm ability. There are also entrepreneurs from large factories such as Alibaba and Huawei in China. They are all people who can create value in this field.

Because they not only have the ability of technology research and development, but also have experienced the industrial cycle and understand what users need, including industry-level users and consumer level users. The entrepreneurial team with pure scientific research will be more cutting-edge in technology direction, and the commercial landing may be longer. However, if it focuses on user development to serve, it is better to have a team with complex background and formed into an organic system.

Reject the micro innovation of “small fight and small trouble”

Venture state: according to Yunxiu observation, what kind of metaverse project will be more favored by investors?

Yunxiu capital: first of all, we should look at the institutional portrait. Different institutions have different preferences for the project itself, but generally speaking, they should have several characteristics:

The first point is to find out what you are doing. This is actually very important. You can’t hang a “metaverse” concept. Investors are more concerned about which link of the whole industrial chain you are in.

Second, what value can you bring in the upper, middle and lower reaches of the whole industrial chain, and how much market can you leverage behind this value? In fact, many investors in metaverse have previously invested in TMT and consumption. They are very concerned about whether entrepreneurs can bring changes to the times. If it’s just a little fuss and do some micro innovation, it’s definitely not their preference.

Third, we should return to the strength of the entrepreneurial team itself. For example, how strong is the underlying technical strength? How much technical value can you create and how high are the barriers? Entrepreneurs in this field have good resumes, but can your previous experience be reused in new fields? Do you have a very complete thinking logic about this area? wait.

Venture capital: you might as well take the projects that Yunxiu has done as an example?

Yunxiu capital: let me give an example from two aspects: hardware and software.

First of all, they have done a great job in integrating the product architecture and technology of the flagship team, and they have done a very good job in the all-weather product supply chain, which represents the strength of the all-weather team.

But this is only the foundation. More importantly, they design products not only from the perspective of technology, but also from the perspective of user needs. What is the pain point of smart glasses? It should be light enough, convenient enough and consumers are willing to wear it. They visited many users to determine their own technical path and product design, rather than extending the product from a single point of view. Such a prediction of the future and understanding of products are more in line with our ideas.

Second, we are also cooperating with a company that makes 3D digital assets. They now have the volume of the world’s top three databases. By the middle of this year, the amount of data may be the first in the world, which is a very strong accumulation. In the future, these data are needed for the collection and presentation of 3D data and then to the platform rendering.

Now the whole team has generalized and standardized the underlying format of their entire digital assets. In this way, no matter ordinary users, small b-end users or large b-end users, they can get their 3D data assets and directly do secondary development without doing a lot of data cleaning related work. Therefore, for this company, we feel that there is a very comprehensive logic in terms of forward technology research and development, overall data accumulation, and future application development tools.

Product concept diagram of “Li Weike” of Yunxiu project

Venture capital: in the process of service projects, will enterprises be more recommended to take the money of the industry or the money of financial investors?

Yunxiu capital: financial investors and industrial investors bring different values to enterprises. For example, a well-known content company invested in several technology companies a while ago, which is very valuable. Because it does content itself, it can provide a very good soil for technology companies, such as providing them with requirements, so as to accelerate business iteration. However, if their own technology is not strongly related to the industry, it is useless to take the money from the industry, because there is no way to achieve synergy.

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