Animoca Brands to acquire stake in AI accelerator Zeroth
Deal worth over $1 million will also see Animoca underwrite investment of $2 million into Zeroth
HONG KONG, 2 October 2018: Animoca Brands (ASX:AB1, the "Company") has entered into an Earn-In Agreement with Zeroth founder Tak Lo to acquire a 67% stake in Venture Classic Limited ("Venture Classic"), the operational company for the artificial intelligence accelerator Zeroth SPC (both companies together: "Zeroth"). Total consideration for the transaction is approximately US$1.08 million (A$1.5 million), consisting of US$0.72 million (A$1 million) in cash earn-in and approximately US$0.36 million (A$0.5 million) in Animoca Brands shares.
Additionally, Animoca Brands has committed to underwrite investment into Zeroth SPC totalling up US$2 million. This investment will provide participants with Limited Partner status and grant them claims on proceeds from the cohorts of AI and blockchain startups accelerated by Zeroth.
Separately, Sun Hung Kai & Co, a leading investment firm based in Hong Kong, entered into a Memorandum of Understanding to develop a deeper strategic partnership with Zeroth SPC. This partnership may include direct investments and further potential investment into Zeroth SPC or its segregated portfolios. Sun Hung Kai & Co previously invested in Animoca Brands.
Zeroth is the first accelerator in the world to focus on artificial intelligence and machine learning. Zeroth was founded by Tak Lo, previously a director at Techstars, the prominent US-based technology accelerator program. Zeroth invests in high-potential start-ups and provides operational, strategic, and networking support to investee companies as they develop their businesses. Separately from its acceleration programme, Zeroth has made a number of investments in blockchain-focused companies.
To date, Zeroth has accelerated three cohorts totalling 33 companies, obtaining an average 6% stake in each, and has made eight investments in companies focused on blockchain technology. Various of these companies went on to raise funding after graduating from the Zeroth acceleration programme, including from prominent venture capital firms Horizons Ventures (invested in Fano Labs, now Accosys), Mizuho Venture Capital (invested in Laboratik), Portag3 Ventures (invested in Planto), KB Investments (invested in Seoul Robotics), and Aeternity Ventures (invested in Utu).
FamFit, the spin-off of Animoca Brands that was later rebranded as OliveX, is a graduate of the Zeroth acceleration programme. The AI capabilities gained through the Zeroth program helped OliveX to win a US$0.55 million Hong Kong government grant to develop an AI exercise app, and led to OliveX establishing a commercial relationship with leading fitness blockchain company Lympo. Lympo went on to invest approximately US$0.36 million (A$0.5 million) in Animoca Brands and has committed to lead a future funding round into OliveX.
Animoca Brands expects that acquiring a stake in Zeroth will extend its capabilities and reputation in product acceleration, especially in the areas of AI and blockchain as well as corporate incubation; increase its visibility and exposure to relevant technologies; and contribute to the Company's strategic development and growth as it advances further in the AI and blockchain ecosystems.
Yat Siu, co-founder and chairman of Animoca Brands, commented: "We were impressed by Zeroth's rise to one of the most influential AI accelerators in Asia as well as a major investor in blockchain. As Animoca Brands continues to expand its AI and blockchain initiatives, Zeroth provides us with an excellent strategic match, invaluable resources, and access to high-potential ventures and technologies."
Tak Lo, the founder of Zeroth, commented: "I am very excited at the chance to work with Animoca Brands to scale up Zeroth. We believe that AI will be the biggest force multiplier for technology companies in the next five years, and our trajectory is rapidly establishing Zeroth as one of the world's most active AI investors. The strategic and managerial skillsets of Animoca Brands will greatly increase Zeroth's operational discipline and development opportunities as we expand efforts in the AI and blockchain industries."