Investors remain bullish on metaverse

NEW YORK, January 31, 2023 — The majority of venture capital and institutional investors plan to increase their metaverse investments over the next five years, according to a new survey from KPMG LLP.^[1] Although U.S. adults have yet to fully embrace a metaverse lifestyle, over 90% of investors predict the metaverse is the next phase of the internet and envision a future in which it is increasingly utilized for work meetings, trainings and learning experiences.

“If history is our guide, this next phase of the internet is going to evolve in ways we have not anticipated,” said Cliff Justice, U.S. leader of Enterprise Innovation, KPMG. “While broad adoption of the metaverse may be years away, investors are playing the long game with their metaverse strategies.”

It has yet to be seen which metaverse platforms and capabilities will have the most sticking power. Further, much of investor confidence hinges on factors like the prospects of improved interoperability across metaverse platforms, broader workplace adoption and more affordable hardware options.

Regardless, more than half of investors surveyed see a benefit in early investment, particularly venture capitalists (63%), as technologies and experiences continue to evolve. Investors also see a great deal of benefit in early investment. About one-third (36%) of investors say they have missed windfall opportunities from not investing or investing too little in metaverse technologies.

Client demand is driving institutional investors and venture capitalists to look past current economic factors and consumer adoption rates,” said Anu Puvvada, KPMG U.S. Studio Leader and Metaverse Center of Excellence Leader. "We’re confident in the metaverse's potential to transform the way we work and how we engage with each other."

For half of the investors surveyed, a single metaverse investment averages between $1M-$9.9 million. Overall, 70% of investors expect the size of individual investments to increase in the long-term.

Top findings:

• Despite macroeconomic conditions and sluggish consumer engagement, metaverse VC and institutional investor investments currently make up nearly half (45%) of investor assets, with the expectation to increase over the next five years.
  
• The vast majority of investors (90%) believe the metaverse is the next phase of the internet and imagine a future in which it is utilized for work meetings, trainings and learning experiences.
  
• More than half of investors surveyed see a benefit in early investment, particularly venture capitalists (63%), as technologies and experiences continue to evolve.
  
• Seventy-five percent of investors plan to maintain or increase their metaverse investments over the next five years.

Investment drivers:

• Investors see a great deal of benefit in early investment, possibly due to one-third (36%) having missed windfall opportunities from not investing or investing too little in metaverse technologies.
  
• Client interest is the core reason driving investors to increase or maintain their metaverse investment strategies (64%), followed by efforts to explore emerging technologies (59%) and interest in reaching new audiences and clients (58%) are also priorities.
  
• Venture capital funds are particularly interested in keeping up with emerging tech, with 72% citing that as the reason for increasing or maintain their metaverse investments over the next five years.

Diversity Equity & Inclusion (DEI):

• DEI remains at the forefront of investors’ minds, with 38% of investors citing providing more access to affordable metaverse technologies as key to creating an inclusive metaverse experience.
• The second and third most important factors for ensuring DEI in the metaverse include the ability to customize avatars to represent people of all backgrounds (34%) and establishing acceptable forms of governance through a combination of encoded rules and social norms (33%).

Potential concerns:

• Recent media coverage is also driving a more cautious approach. Most investors – primarily commercial investors – report the news on the metaverse has had a medium to high impact on their investing.

As part of its strategic innovation roadmap, KPMG in the U.S. partnered with KPMG in Canada to launch its metaverse collaboration hub where employees, clients and communities can connect and engage. The firm has formed a dedicated team to help clients develop and execute their own metaverse strategies. Visit the KPMG metaverse page to learn about the firm’s consulting capabilities. Click here to read the full KPMG metaverse investor report.

About KPMG LLP

KPMG LLP is the U.S. firm of the KPMG global organization of independent professional services firms providing audit, tax and advisory services. The KPMG global organization operates in 143 countries and territories and has more than 265,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

KPMG is widely recognized for being a great place to work and build a career. Our people share a sense of purpose in the work we do, and a strong commitment to community service, inclusion and diversity and eradicating childhood illiteracy. Learn more at www.kpmg.com/us.

Footnotes

1. KPMG’s survey features insights from 302 institutional investors (commercial banks, funds, etc.) and 103 venture capital firms/funds. Titles had to be director and above with decision-making responsibility for investment strategies. Only firms managing $500M or more in assets that are headquartered in the U.S. were surveyed. The survey was fielded from November 28 through December 16, 2022.