On the heels of Roblox going big with its user-generated gaming content platform, another startup has landed a major funding round to build out its own user-generated platform focused on immersive experiences. Rec Room, a free to download and play cross-platform social gaming company, has raised $145 million, funding it will use to expand its tools and audience of gamers who use them to create their own experiences on mobile devices, game consoles, PC and VR headsets (supported OS/platforms include iOS, Xbox, PlayStation, Oculus, Steam, and as of August Android).
The financing, led by Coatue Management, with participation from existing investors Sequoia Capital, Index Ventures and Madrona Venture Group, comes at a valuation of $3.5 billion.
This is a significant increase from its valuation earlier this year, in March, when it raised $100 million led by Sequoia at a valuation of $1.25 billion. During that period, it has experienced very impressive growth. It noted that 2 million people were playing and creating content in March; now, it said it has 37 million.
The funding stems from very significant growth and scale for the Rec Room, amid a broader environment where there is suddenly a lot more focus on VR and immersive experiences, especially companies building content (or vehicles for content) that users involving those media. (Just to be sure, one of the main bottlenecks so far has been that there wasn’t really enough compelling content to merit investment and use of clunky VR headsets and other advanced technology.)
Rec Room is a “social gaming” company in a number of ways: the key to its growth, interestingly enough, has not only been its ability to create games and play games made by others and participate in rooms to to play together (which is perhaps the most obvious “social” aspect), but the ability to provide a well-used, virtual social space for users to hang out outside of the game.
Unlike many other social gaming companies — who have relied on other platforms like Facebook to run the social aspect of their gaming experiences — Rec Room says it’s already been used for virtual weddings, corporate gatherings, and more casual gatherings, all of them. activities most likely received an extra virtual boost as a result of the Covid-19 pandemic and the damper it has had on face-to-face social encounters and travel. Die Rec Room offers a variety of experiences for both beginners and more experienced gamers, making it and the “Rec Life” concept a very low barrier to entry with both user demographics.
Rec Room has only been around for five years (launched 2016 in Seattle), and it has — at least for now — avoided the meteoric rise/steep fall that characterized so many other social gaming hits. It has now accumulated 37 million users who build and play games in “rooms” where they virtually hang out with other users. There are already some 12 million rooms on the platform, Rec Room said.
While it’s not clear how many active users there are of those 37 million, Rec Room said its monthly user base has grown nearly 450% in the past year (since November 2020) and mobile users are driving some of that growth, increasing tenfold in that period.
“It was great to see Rec Room grow from a small collection of minigames into a global platform with millions of community-built experiences. The platform has become a place where people can come together to form meaningful connections, build communities and share their creativity,” Rec Room co-founder and CEO Nick Fajt said in a statement. “There’s so much more we want to do, and as we move into 2022, we’re excited to build more experiences, expand into new platforms, invest in best-in-class trust and safety systems and our creative tools.” to expand further. ”
The company won’t release revenue figures today, but in March it said it paid about $1 million to game makers on its platform.
“We love the world Rec Room has created for friends to build and play together,” Coatue Management’s Matt Mazzeo said in a statement. “From phones to VR, millions of players hang out in Rec Room, and we’re excited to partner with the team to make the digital world more fun and immersive.”