Seattle just gained another tech unicorn. On Wednesday, virtual hangout and gaming platform Rec Room announced that it raised $100 million in a new funding round, which now values the company at $1.25 billion. Sequoia Capital and Index Ventures led the funding round, with participation from Madrona Venture Group. All three VCs have previously invested in the company.
The new funding also comes just three months after Rec Room’s $20 million Series C round. Rec Room has seen some explosive growth as of late, which could be why the company is gathering capital.
Rec Room is a social gaming platform that can be played across mobile, PC, console and virtual reality. There, players are able to create virtual rooms, challenge others in mini games or just hang out and chat with friends online. As a whole, the platform offers a fun way to spend time with other people virtually, while allowing people to get creative and design virtual spaces.
For that reason, the company achieved a surge in popularity in 2020, while the COVID-19 pandemic was forcing people to stay indoors and friends to stay apart. And that popularity continues to grow in 2021.
Last December, Rec Room announced that it surpassed 10 million members. Now, that number sits above 15 million — a 50 percent increase in just three months. The company has also seen revenue grow 566 percent year over year.
The new funding will help the company continue to go after new users. One strategy to do that is its Creator Compensation program, which will pay out over $1 million total to creators who build virtual rooms within its platform. Virtual rooms are a big component of the platform, whether they’re created by users or Rec Room itself. By encouraging users to design their best rooms with financial incentives, Rec Room is giving users a reason to keep coming back.
Altogether, there are over five million rooms on the Rec Room platform, and over two million users have created in-game content of their own.
“Rec Room was founded with the goal of bringing people together and giving them tools to express their creativity. Every day we see the Rec Room community creating friendships, making memories, and launching new digital entrepreneurs,” co-founder and CEO Nick Fajt said in a statement. “We think providing those opportunities are more important now than ever. Rec Room is only at the beginning of its journey, and we’re excited to use this funding to help more people connect, create and play.”