If you’re wondering where the virtual reality investors have gone, Amitt Mahajan is a good example. He is the cofounder of the Presence Capital, which made millions of dollars of investments in 40 VR startups. Now he’s gone crypto.
Mahajan has put the VR fund on hold for a bit while joining Rare Bits as a full-time cofounder and chief technology officer. Rare Bits has started a store where you can buy and sell cryptocurrency virtual goods, from CryptoBots to CryptoKitties. It’s a secondary market for blockchain game assets, which are based on public ledger technology where item ownership is easily identified.
“I decided my heart is in being operational,” said Mahajan said. “I really enjoyed working with my previous cofounder and wanted to work with him again, and so we started this thing together and decided to go full-time.”
The Presence Capital fund is still operating and it may make more small investments. But Mahajan said that raising a second version of the fund is on hold until Rare Bits runs its course.
Asked if this means crypto will be bigger than VR, he said, “I don’t think that at all. We are still very bullish on VR. Enterprise VR is going well. The consumer side is slower. That was expected based on cost and form factor of the first generation of technology. Things like Oculus’ Santa Cruz (prototype, which will be wireless and not connected to a PC) will help.”
Mahajan has a knack for jumping on things fast. He helped start MyMiniLife, which was acquired by Zynga and, in a matter of weeks, churned out the wildly successful Facebook game FarmVille. He also cofounded Red Hot Labs, which was acquired by Google in 2015.
The cofounders of Rare Bits also include the CEO Dave Pekar, Danny Lee, and Payom Dousti. They originally got together to make a blockchain game, like a Hearthstone for blockchain. They started to realize that they had an opportunity for a marketplace for blockchain characters and items, as they go from one game to another.
“There needs to be a way for that to happen and that’s why we started Rare Bits,” Mahajan said. “My background was Zynga and FarmVille. As gamers, we have seen virtual goods as living in a silo. Items you accumulate live within the servers of the company that owns them. They say it belongs to you. But the reality is it is the company’s item and they let you use it for a while.”
As for VR, Mahajan doesn’t believe that crypto trumps VR. He said that it will do well in the long term, and he sees particular promise now in enterprise VR. The initial Presence Capital fund will have invested more than $10 million by the time all is said and done.
Rare Bits is akin to an aggregator.
“We’re more similar to eBay, where people buy and sell on our site,” he said.
Some CryptoKitties characters have sold for more than $200,000, using Ethereum cryptocurrency.
“People are putting real money into this stuff,” Mahajan said. “They view it as an asset. The closest analogy to this is people buying rare Magic: The Gathering cards. We think we are on the cusp of something really big here.”
Rare Bits has had a store up for a while, and within a month it had $100,000 in transactions. It has items from more than 500,000 assets from 12 games available so far. It’s kind of like eBay, where users can post items to sell, and others can buy them. Right now, Mahajan said Rare Bits is taking no fees.
“If you sell on other markets, you play 1.3 percent to 4 percent of your selling price,” he said. “We think we can make money in other ways through advertising or services for developers.”
Rare Bits has eight people. A big company like eBay could come into the market.
“That’s a risk with any startup,” Mahajan said. “But they would have to consider it a priority and see how it fits in their overall strategy. They need a team to build it. All we think of all the time is how to build the best possible asset site.”