Seattle-based Rec Room has raised $100 million in new funding. The sport improvement startup is now valued at $1.25 billion after an explosive yr of development by which gamers used the platform to attach throughout the COVID-19 pandemic. It’s the most recent Seattle-area startup to succeed in “unicorn” standing with a $1 billion valuation or extra.
On a video name from the hospital the place he and his spouse welcomed a child boy over the weekend, CEO and co-founder Nick Fajt was excited in regards to the 5-year-old startup he’s been elevating right into a unicorn in Seattle, the place a majority of prime tech corporations function in enterprise software program or cloud computing.
“I’m actually excited for Seattle as a startup ecosystem,” Fajt stated. “I feel you’re seeing increasingly more massive, compelling corporations rising in Seattle. We’re one in all many, and we’re excited so as to add a client social firm to that blend.”
The way it works: Rec Room is a free obtain which lets gamers use a group of instruments to make digital rooms, objects, and playable video games, resembling paintball and laser tag, with an enormous quantity of community-created content material that’s rising on a regular basis.
When GeekWire visited the corporate’s workplace and examined Rec Room in 2017, the startup was targeted on digital actuality. However lower than half of its customers at the moment are utilizing VR. Rec Room initially premiered in June 2016 on the Steam digital storefront, however has since grown to incorporate a number of different platforms, together with iOS, PlayStation 4, Xbox and Oculus. The corporate plans to launch an Android app later this yr.
Traction: Rec Room has attracted 15 million lifetime customers and over 2 million folks have created content material on the platform. Yr-over-year income development of 566% was fueled partly by the pandemic and developments towards social gatherings on-line. The corporate is just not but worthwhile.
“We noticed plenty of development final yr. And truthfully that wasn’t an atypical yr for us,” stated Fajt, who beforehand was at Microsoft as a producer and program supervisor on HoloLens. “We’ve mainly had 4 years now of double digit or 100% development.”
Although lots of its customers are teenagers, Rec Room’s customization makes it appropriate for features past gaming. It’s a go-to spot for all types of digital hangouts together with lessons, firm conferences, weddings, household reunions, group remedy periods, e-book golf equipment, and so on.
Gaming firm or social firm? When requested whether or not Rec Room is a sport, a social app or a user-generated content material platform, Fajt stated the reply the corporate usually offers is … sure.
“It may be any of these issues,” he stated. “These entities, which in all probability was once distinct, we’re type of seeing them merge collectively. I feel in plenty of methods gaming is the brand new social.”
And Rec Room is capitalizing on customers’ dissatisfaction with conventional social media, which Fajt says predates the pandemic and can in all probability stick after the pandemic.
“On the finish of the day social media is just not tremendous social — it’s you in isolation, scrolling via a feed. And I feel it creates this want for folks to have actual time social connection,” he stated.
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One other large participant: “Roblox” is maybe the best-known gaming hit that’s constructed round user-generated content material. The corporate, which simply went public and is valued at round $45 billion, is an “unbelievable enterprise” that has woken lots of people as much as the probabilities within the vertical, based on Fajt. However Rec Room likes the best way its customers can create within the app itself and change from being a participant to a creator, a number of instances throughout a session.
“The best way you’re constructing in Rec Room is much more like constructing in ‘Minecraft,’” Fajt stated. “You are able to do that and you may publish it on all these completely different platforms with out figuring out easy methods to code, with out figuring out easy methods to use 3D modeling instruments, with out understanding how networking authority works.”
Rec Room’s launch of the Creator Compensation Program is aimed toward paying out greater than $1 million in bonuses to Rec Room customers who’ve made in particular standard content material for the sport.
Traders: Rec Room has raised $149 million in whole funding and the brand new spherical comes just some months after the corporate raised $20 million in December. The brand new funding was led by present traders Sequoia Capital and Index Ventures, with participation from present investor Madrona Enterprise Group, based mostly in Seattle. Sequoia Capital’s Stephanie Zhan advised the Wall Avenue Journal that Rec Room plans to finally go public. Different backers embody First Spherical, Acequia, Vulcan, Maveron, Anorak, Betaworks, The Enterprise Actuality Fund, and angel traders.
Acquisition goal? “I’d be mendacity if I stated there weren’t conversations that occur now and again,” Fajt stated about whether or not his firm has attracted curiosity from large tech or gaming corporations. “Our focus is how can we construct Rec Room into the largest standalone enduring firm … that’s actually going to final, actually going to affect tradition, actually going to have a constructive affect on folks’s lives.”
Worker depend: “We’re hiring up a storm,” Fajt stated of Rec Room, which is No. 140 on the GeekWire 200, our ranked index of Pacific Northwest startups. With simply greater than 90 workers now, Fajt stated the plan is to get to effectively over 150 by subsequent yr, and it’s a giant a part of the place the brand new funding will go.
New workplace area: Shortly earlier than workers scattered to work remotely at first of the pandemic, Rec Room was settling into a brand new workplace in Elliott Bay Workplace Park, after years within the Belltown neighborhood. The constructing can also be dwelling to Zipwhip. Fajt stated he’s uncertain what the longer term holds with regards to the place folks work and the way typically, however he’s open to hiring distant.
“We’ve got people all over, however I feel we in all probability will keep some kind of workplace presence as a result of I feel some folks like that,” he stated. “I don’t suppose we’ll mandate that they need to be there 5 days per week, however it’s obtainable to them. If you wish to get round a whiteboard and draw one thing up, hopefully that’s a factor that we are able to present.”