CryptoKitties, a game built on top of the Ethereum blockchain, raises $12M Series A led by a16z and USV, and will be spun out of Axiom Zen game studio
CryptoKitties became a sensation after it debuted in November as a collectible game built on top of a blockchain and the Ethereum cryptocurrency.
Context & Ripple Effects
CryptoKitties went from novelty to network event within weeks of its November launch, briefly becoming the top app on Ethereum by transaction count as users traded and bred virtual cats. The $12M Series A from a16z and USV converts that spike into a company: the game is being spun out of incubator Axiom Zen so it can be run as a standalone business rather than a studio side project.
The bet looks early-stage risky even at signing — by mid-year the game would post a sharp drop in daily active users, transactions, and average kitty prices — but the round buys the spun-out team room to build beyond a single congested smart contract on someone else's chain.
First-order effects
- Axiom Zen loses its breakout product but gains a focused company with institutional backing; a16z and USV get their position in consumer blockchain before the category has a proven revenue model.
Second-order effects
- The spin-out sets up the follow-on financing arc: the same team returns months later for a $15M second round of 2018, and eventually raises for Flow, its own proof-of-stake chain built to escape Ethereum's throughput limits.
Third-order effects
- If collectible-game economics keep lapping the underlying platform's capacity, consumer crypto apps will consolidate around purpose-built chains and licensed IP partnerships — the pattern later visible in Dapper Labs' Flow raise and its toy partnership behind Cryptoys' $23M Series A.
The trend: Consumer blockchain games are graduating from experiments on shared chains to venture-backed companies that build their own infrastructure.