A Little-Known Metaverse Company Is Going Public: Here's What Investors Need to Know

The metaverse is proving to be an increasingly compelling space for investors that is brimming with opportunity and looks poised to deliver high levels of growth in the years ahead. While companies like Meta Platforms, formerly known as Facebook, are the first that come to mind when discussing the metaverse, new and lesser-known companies are continuing to enter this space.

In this segment of Backstage Pass, recorded on Dec. 14, 2021, Fool contributors Rachel Warren, Asit Sharma, and Demitri Kalogeropoulos discuss a newer entrant to this space that's about to go public. 

Rachel Warren: Yeah, this was really interesting. We've been talking about the metaverse and I still personally struggle to wrap my head around [laughs] the complexity of what that is. But we're seeing a lot of companies entering the space in unique ways.

I saw this article on Yahoo! Finance, that a metaverse infrastructure platform called Infinite Assets, also known as InfiniteWorld, is set to go public in a merger via SPAC. The combined company is going have a pro forma equity value of $700 million.

It's going to trade on the Nasdaq under the ticker JPG. But essentially, according to Yahoo! Finance, "InfiniteWorld helps brands create and monetize digital assets and non-fungible tokens, also known as NFTs, and engage with consumers and fans." "InfiniteWorld says that it has partnered with over 75 creators and brands. The company recently combined with strategic partner DreamView, which was founded by a team that had pioneered technologies at Lucasfilm and Disney."

Chairman Thane Ritchie, of Aries (RAM), had said, "With up to $15 trillion of wealth expected to flow into digital assets over the next 10 years, we are witnessing the birth of a new global asset class and economic system. InfiniteWorld's unparalleled technology infrastructure underscores the transition of commerce to the digital world." Just a few notes from InfiniteWorld's press release.

It's interesting, you can invest in NFTs, but now you have this opportunity to potentially invest in a company that's providing the infrastructure on which NFTs will be built off of. "InfiniteWorld's platform provides a bridge between the physical and digital worlds", according to the company, "with leading infrastructure and marketplace solutions, as well as world-class content production platforms for digital content, including digital assets and NFTs."

InfiniteWorld's comprehensive and fully digital platform provides a whole suite of end-to-end solutions. This includes asset creation and it provides the technical capabilities needed to create high-quality digital assets and content, as well as engagement. "InfiniteWorld helps brands create fully immersive and reconfigurable digital environments for brands to engage with consumers through which metaverse experiences."

Upcoming debut to the public markets via SPAC worth $700 million. It's interesting, I've never heard of a company like this. It's a new way to potentially invest within this space, maybe not investing in the digital assets, but the companies that are providing the platform solutions and services to launch those digital assets. I don't know, what do you guys think?

Asit Sharma: I'm fascinated by this, because I think it could go either way. It could just be a company that's capitalizing on the rush to play in a new space or it could be providing something very useful, and it should be a fun prospectus to read.

Maybe the next IPO show, you can bring it to [laughs] that just to walk through that prospectus. But here you have, there's so many brands that want to participate in the gold rush, if it is a gold rush, and they are used to having these digital dashboards for everything they do.

For example, if I want to advertise right now, let's say a company that's trying to further my brand, I'll enlist in agency. The agency will work with maybe The Trade Desk, which we're all familiar with. The people at the agency though have a very nice dashboard, in fact, that's been made even better by Trade Desk recently, which gives you a lot of analytical power. This is something that buyers for companies, whether they exist within those companies or they're employed as agents, are already quite familiar with.

We don't necessarily have to understand the technology, just give us that visual interface and we can play. So, so many brands just jumped into the programmatic advertising space and hence the success of companies like The Trade Desk and Magnite, PubMatic, the list goes on. If this is something similar, if the technology is pretty robust and they make it simple for, let's say, Kalogeropoulos, Warren, Sharma, that's a terrible brand-name, [laughs] KWS.

Warren: I was thinking maybe the initials would be good. [laughs]

Sharma: Let's do that. If they make it easy for KWS to have its first NFT, which is going to consist of birds, a keyboard, and this lovely Christmas tree behind [laughs] Rachel. You can turn that into this wonderful JPEG and then sell it. What if we don't want to mess with this technology?

Do we just want to dashboard like, OK, we'll give you the image, we'll drag and drop it here, you create the NFT, you'll get part of the royalty stream, we'll get part of it and we'll grab some more people for our brand, some more followers maybe on our social media. Things like this are actually persuasive; they work when you start thinking about how people buy their brand exposure.

Now it's increasingly digital. It's no longer that you sit down with an advertising agency and sketch out this long print campaign. That could be persuasive if the technology is good. Those are my thoughts at first blush. Demitri, how does this strike you?

Demitri Kalogeropoulos: I think it's really interesting. It seems like a couple of companies are merging together in this thing, which is like you've got the metaverse infrastructure company merging with this digital content creation and branding company. I guess the combination there could be powerful, but like you said, I think they packed in all six massive buzzwords into one sentence. We had a SPAC, IPO, NFT, metaverse all in one sentence. Like you said that it is a gold rush situation there.

But I was thinking about this in terms of when the digital sales phenomenon hit over the last 30 years or so, companies basically all created their own infrastructure and their own websites and everything for that in most cases, most of these big brands. But what's possible in the metaverse potentially is maybe they don't do that.

Maybe they do go to companies like this and they say, this is in the "too hard" pile for us and we'll let you do this. What's interesting in the press release is that they mentioned some pretty big names. This isn't just smaller brands that are working with the company.

I'm seeing Disney, Wayfair, Target, Warner Brothers, and they mentioned Amazon. I'm not sure exactly how much they are working with each of these companies, but in that case, that is interesting. If companies don't decide to build their own infrastructure as they did with the digital selling world, Web 2.0, whatever we're calling the current iteration, that would be a whole different approach. That's what I find interesting about this one.

Warren: Another thing is interesting is we look at, what is the metaverse? And it can encompass so many different things. But one of the things that stuck out to me in this press release was a quote from the COO of InfiniteWorld, Nathaniel Hunter, and he was saying "branded content will be king in the metaverse, and we're proud to partner with some of the world's most notable companies to engage with their consumers in a growing digital environment."

One of the things about InfiniteWorld's infrastructure is that it enables essentially "the secure transfer of ownership of digital assets by providing an irreplicable digital watermark, which is fully authenticated and single-sourced on the blockchain" according to this press release.

All of those concerns that companies might have if maybe they don't have the teams that they need to build these digital assets as part of the metaverse expansion. You go to accompany like this and they already have the resources, the platform, and the know-how ready to go, so you can get that part of your business rolling. I just think it's fascinating that this is something that we're talking about now.

This is a way that companies are potentially drawing new customers is by offering NFTs. It's just fascinating. This is one I'm going to definitely follow now then I know that this is an option.

NFTs in and of themselves have really interested me, particularly the collectible art craze. But this new side of it, I think could be an area for investing that maybe hasn't been discussed as much investing in the infrastructure of NFTs and even not so much the NFTs themselves.

Sharma: I think we should definitely discuss the viability of investing in NFTs, the pros and cons. Actually, my opinion has changed overtime. I see it as a much more tangible vehicle than I did before. I tended to dismiss it earlier on. Still has, I think some potential pitfalls, but very interesting space.