Web3 game startup GFAL raises $3.3M from Supercell and Mitch Lasky
Elemental Raiders is the first game from GFAL.
Image Credit: GFAL
Web3 game startup GFAL has raised $3.2 million in a seed funding round from investors including Supercell and Mitch Lasky among others.
Barcelona-based GFAL has done a soft launch of its mobile game Elemental Raiders and it is steadily growing the Web3 game’s audience.
The $3.2 million seed funding round adds to the $4.4 million in capital GFAL raised from the successful launch of its $GFAL token back in Q1 2023. It has a market cap of $52 million today.
Led by Manel Sort, the GFAL team includes leadership who had previously held roles at leading industry players, including King Entertainment, Activision Blizzard, Electronic Arts, Netflix and Digital Chocolate.
“We have a team of very seasoned people in our company,” Sort said in an interview with GamesBeat. “We have all the people who are also very talented from working on several games in the past.”
Sort said, “We are incredibly grateful for the confidence that Supercell, Mitch Lasky, and Heinrich Zetlmayer, have placed in GFAL. Working on a project alongside Trip and Ilkka, with whom I shared many thrilling and successful years at Digital Chocolate, is a dream come true, and I can’t wait to show the world the high caliber of games we are building.”
GFAL is planning several soft launches for Q4 2024, which will convert to full releases in 2025.
Supercell is the leading game developer and publisher of Clash of Clans and other big hits, and Lasky is a partner at Silicon Valley venture capital firm Benchmark and a former entrepreneur and video game executive.
Other investors in the round included the former Co-Managing Director of esports giant ESL, Heinrich Zetlmayer, Bonduc Bioscience SL; BCNBCNLVC; and David Fernandez, CEO of Sandsoft. They join existing GFAL investors Bonsai Partners, Nekko Consulting and Inveready, among others.
GFAL is a video game development and publishing startup leveraging the latest technology to craft innovative, engaging and endless games. Founded by seasoned industry experts, GFAL fuses creativity
and the latest tech — from AI to Web3 — to shape the future of gaming.
Ilkka Paananen, CEO of Supercell, said: “I’ve had the pleasure of working together with the
team earlier in my career. We are excited to be part of their journey and see all the great things
they’ll achieve.”
The Web3 games studio is on a mission to build innovative, engaging and endless gaming experiences through new video game genres and business models. GFAL’s token has reached an impressive fully diluted valuation (FDV) of millions of dollars after one of the most impressive token launches of 2023.
“GFAL has really blossomed in the last year,” said Trip Hawkins, a GFAL cofounder and chief strategy officer for the company, in a statement. “I have incredible respect for Ilkka, Mitch, Heinrich and our team, and this investment proudly gives us a clear imprimatur. We are excited about the coming year and have the resources to deliver and continue our growth.”
The additional funding will help GFAL expand of Elemental Raiders. Elemental Raiders has a growing community of players and is seeing a steady improvement in the performance and the metrics of the game.
And Lasky, a veteran game investor, said in a statement, “I’ve been very impressed with the GFAL team’s design-centered approach to web3 gaming, and I am delighted to join my friends Trip Hawkins and Ilkka Paananen in this financing round to support Elemental Raiders and other titles.”
Origins
GFAL was founded in 2021 by Sort and a team of seasoned video game industry visionaries. Sort is the former first vice president at King and an expert in emerging video games business models. He joined forces with Hawkins, legendary founder and former CEO of both Electronic Arts and Digital Chocolate, and Javier León (Art Director), an Emmy Award Nominee.
Christian Gascons (COO) and Marc Tormo (CCO), both ex-Blizzard Entertainment, and entrepreneurs Carlos Blanco and Ernest Sánchez, leaders in new technologies, complete the founding team. Collectively, the GFAL founding members bring over 140 years of experience in building and growing video game
startups.
At the heart of GFAL’s endeavors is a vision to lead the next stage in the evolution of video games. The firm believes that the future of gaming lies in creating deeply engaging experiences that are profitable and sustainable. At GFAL we envision a new generation of video games based on ownership, tradeability, and standardization that increase player engagement to levels never seen before.
“It’s very easy to understand what we’re doing and why we’re doing it,” Sort said.
Web2’s decline
Sort believes that in the post-COVID years, the monetization from Web2, premium games and free-to-play business models has begun to shrink. The video game market is facing serious market saturation, with excess supply that has led to increased customer acquisition costs (CPA) and decreased lifetime value (LTV) figures. This situation is further aggravated by changes to new policies by major players like Apple and Google, which now favor user privacy over targeted advertising.
These changes have led to substantial layoffs within the industry, signaling a need for evolution, according to Sort. Many of the big names in gaming seem to think Web3 is the answer, even if no specific solution has been yet found: a CoinGecko report from December 2023 discovered that 70% of top gaming studios were investing in Web3 games either directly or indirectly.
He noted how free-to-play games changed the industry and became the main business model for gaming. But now the cost for acquiring a new user is increasing and margins are going down “massively.”
“The reality is the market is getting tough,” he said.
“Today we have a revolution where we have free-to-play games as a service,” he said. “We have the backbone of Web3, where we have ownership for players. That helps with retention and increases lifetime value.”
In the early years of non-fungible tokens (NFTs), there were too many “Ponzi” style scams, he said. With GFAL, you get a token for playing and you can use that token in different games. You give the rewards to the skillful players. If you give out rewards randomly, that’s gambling.
The rise of Web3 business models
As the first Web3 video games appeared, new monetization models began to gain traction, Sort said. The first Web3 business model was built around the ownership of NFT collectibles. This model was popularized by games like CryptoKitties, which reached a peak revenue of $30 million. The model’s limited revenue potential was that games relied on continuous player influx, which resulted in a lower Lifetime Value (LTV) than F2P games as a service models.
A few years later, the industry saw the arrival of a novel Web3 business based on tokenomics. This new model became well-known for its play-to-earn (P2E) mechanics, where crypto token rewards were awarded to drive player engagement.
Projects like Axie Infinity quickly became popular, with more than $1 billion in peak revenues. However, this model failed to increase revenues further. NFT features came with the same issues mentioned above, while tokenomics schemes complicated things further: awarding players by their skills or how much
they paid into the game killed retention. In some cases, randomly allocating rewards was seen as a solution, but this is gambling and comes with its own regulatory framework, well outside the video games industry.
A new approach: Ownership GaaS
GFAL is pioneering a bold new approach in the video games industry which evolves the proven and incredibly successful business model of F2P GaaS to incorporate, ownership, tradeability, and standardization.
“Ownership is great. We know from games like Magic: The Gathering that having ownership is very cool,” Sort said. He had to figure out how to integrate Web3 into the free-to-play model. He talked about this with Lasky at first and Lasky was skeptical. But he listened and Lasky decided to invest.
Meanwhile, the team created Elemental Raiders, a hero battle game with cards. Now the company is also working on Diamond Dreams and it has five titles in development. The GFAL token will be used across all the games in the shared marketplace.
All GFAL collectibles share the following characteristics:
Ownership: Players can acquire ownership of digital collectibles by purchasing or minting them. With this ownership, they receive a license to exploit the intellectual property (IP) rights of the collectible. This means that players have the authority to utilize and potentially monetize these collectibles beyond just the gaming environment.
Tradeability: GFAL collectibles are designed to be traded directly between players, facilitating a consumer-to-consumer (C2C) market in fiat currency. GFAL games include a GaaS-inspired seasonal system framework that solves the inflation issues associated with ownership models. Each season introduces new collectibles, with fusion mechanics that require the consumption of existing collectibles to level up.
Standardization: All GFAL games follow the same framework when it comes to collectibles. GFAL collectibles have rarity (how long it took to obtain the collectible) and level (how long the player has engaged with the collectible). The sum of the rarity and level of all the collectives owned by the player gives the collection level of the player. This GFAL collectibles time standardization also serves as price anchoring, based on the F2P formula that 1 hour of playtime is equivalent to $1.
The benefits of ownership GaaS
Sort believes that it’s a good time to launch because there is another bull market for bitcoin and that should make people feel like they’ve got money to spend.
“And there are a lot of technical advancements that have happened on blockchain,” Sort said.
In all GFAL games, ownership GaaS operates under principles designed to empower players and enrich their gaming experience. The benefits for players and gamedevelopers include:
Built on top of F2P GaaS: Ownership GaaS keeps all the good characteristics of previous leading models and improves it with innovative extra features.
An intuitive system: GFAL collectibles are particularly suitable for esports because of their standardization features and the tracked history attached to each of them.
Cross-game interaction: Within the GFAL ecosystem, players can transfer the time spent in game A to game B, something that has not been possible so far in video games.
Built on top of F2P GaaS: Ownership GaaS keeps all the good characteristics of previous leading models and improves it with innovative extra features.
A dynamic and social environment: Inspired by collectible games like Magic The Gathering, the ownership of GFAL collectibles enables C2C trading, which increases the fun and social interaction within the game and boosts player retention.
Fostered creativity and customization: With ownership, players can customize their digital assets, fostering creativity. This could lead to a more vibrant gaming community where players can express themselves and share unique creations, adding depth to the gaming experience.
Potential for new revenue streams: Ownership GaaS opens doors for diverse revenue streams. Besides in-game purchases, players can earn from trading collectibles or creating unique content. This flexibility could attract more developers and publishers to the platform, enriching the ecosystem.
Ever-engaging marketplace: GFAL has an always-active trading market and the fusion mechanics mentioned above ensure that collectibles from previous seasons are always in demand.
Time-based price anchoring: It’s straightforward for players to trade GFAL collectibles. Due to the rarity and level standardization across GFAL games, players always have a reference price for their collectibles.
The ownership GaaS approach doesn’t just alter how games are played; it transforms how they are owned and valued by players, enhancing their engagement, virality, and monetization opportunities.
Enhancing ownership GaaS with Web3 technology
The ownership GaaS approach can potentially be adopted by Web2 games, but GFAL believe its benefits can be maximized by applying Web3 technology.
The company calls the application of blockchain technology to the ownership GaaS approach to video games Web3 GaaS. In GFAL games, Web3 GaaS comes with two significant advantages:
$GFAL Token: The $GFAL token facilitates player-to-player transactions, removing many of the frictions and complexities associated with fiat exchanges.
NFTs: NFTs increase transparency and security. They also enable the trading of digital assets beyond the GFAL ecosystem, allowing players to leverage their investments across different markets and platforms. This enhances the utility and potential value of each NFT.
Having said that, the Web3 environment is still in flow, and GFAL is carefully monitoring both the $GFAL token and NFT situation:
Token regulation: The regulatory landscape for utility tokens is still developing. Issues such as the value-added tax (VAT) treatment and classification of these tokens (whether they are considered securities, for instance) vary significantly across different countries. This variability presents a challenge for consistent global operations.
NFT compliance: The challenges with NFTs are even more complex, particularly concerning their classification as securities and adherence to tax compliance requirements. These factors complicate the integration of NFTs into global markets and demand careful navigation of the evolving legal frameworks.
GFAL is working closely with regulators and industry leaders to solve these issues.
The GFAL vision for Web3 GaaS
The company has around 38 staff and contractors. The goal is to create outstanding games that retain players.
GFAL believes the Web3 GaaS model can replace the previous models because it offers a more rounded-up and enjoyable experience for the players.
GFAL’s commitment to the Web3 GaaS approach is currently being tested in two distinct game types:
ElementalRaiders: A free-to-play turn-based hero battler game akin to Clash Royale, focusing on strategic asset deployment.
Diamond Dreams: A completely free-to-play model, similar to Candy Crush, emphasizing time investment and item collection.
Both games are part of our broader strategy to test and refine the Web3 GaaS model, ensuring it can adapt to different gaming formats and player expectations.
The company is planning several soft launches for Q4 2024, which will convert to full releases in 2025.
“I think the most important thing we’re doing is the change in the business model that’s very core,” he said. “You know about Magic: The Gathering. What if this card could be alive? We’re doing things that go beyond just ownership.”
