Inside This $15 Billion Metaverse Startup And Its Anonymous Multi-Billion Dollar Investor

Key Concepts:

• Infinite Reality: A company claiming to be a leader in digital media, e-commerce, gaming, social media, extended reality (XR), augmented reality (AR), and AI.
• Valuation vs. Revenue: The discrepancy between a company's perceived worth (valuation) and its actual earnings (revenue).
• Due Diligence: The process of verifying and validating information before making an investment or business decision.
• SPAC Deal: A merger with a Special Purpose Acquisition Company to go public.
• Sterling Select: A venture development firm affiliated with Sterling Equities, the real estate firm co-founded by the former Mets owners, the Wilpon and Katz families.
• Revenue Multiple: A ratio comparing a company's valuation to its revenue.

1. Company Overview: Infinite Reality

• Infinite Reality positions itself as a leader in next-generation digital media and e-commerce, with involvement in gaming, social media, and extended reality (XR)/augmented reality (AR) spaces.
• The company emphasizes its use of AI to personalize immersive experiences.
• Founded in 2019 after acquiring the assets of the bankrupt social network Sue TSU, which aimed to give creators 90% of revenue.
• Since early 2022, Infinite Reality has acquired numerous companies in the metaverse, XR, and AI sectors.
• The company aims to be a platform for businesses seeking to create immersive experiences for client engagement.

2. Valuation and Revenue Discrepancy

• In February, the CEO stated the company had a $3 billion investment and was worth $12 billion. By April, the company valued itself at $15.5 billion.
• Infinite Reality reported $75 million in revenue in 2024.
• The valuation is over 200 times its revenue, significantly higher than leading AI startups like OpenAI and Anthropic (under 50x).
• Private company valuations are based on agreements between the company and investors, with no strict regulatory oversight.

3. Market Perception and Industry Standing

• Infinite Reality has raised over $3 billion, which should make it a major player in the metaverse space.
• However, several investors and founders of leading companies in the metaverse space had not heard of Infinite Reality.
• One source stated that Infinite Reality "didn't make a ripple" in the industry.

4. Financial Issues and Lawsuits

• Contractors and businesses have sued Infinite Reality for non-payment.
• Lawsuits include claims ranging from tens of thousands to $3 million.
• The company's CMO stated that non-payment claims were sometimes unknown during acquisitions.
• A lawsuit was filed in March against the Drone Racing League (an Infinite Reality portfolio company), which is entering a default judgment due to non-response.
• Infinite Reality was supposed to pay a $7 million termination fee related to a terminated SPAC deal but had not paid it as of late March.

5. CEO John Akunto

• John Akunto previously ran AdSouth, an advertising media company.
• He also started Play Gigit in 2013, which created virtual concert experiences.
• There were past lawsuits against him for non-payment, which have been resolved.
• A bio claimed he attended Harvard and the University of Florida, but neither institution could find records of his attendance.
• Akunto stated the bio was a draft created when the company had few employees.

6. Investor and Partner Relationships

• Infinite Reality had a page listing notable investors, most of whom became investors through stock-for-stock acquisitions.
• One investor claimed they were unaware of the deal until it was announced and that Infinite Reality did not respond to requests for valuation documentation.
• The investor page has since been password-protected.

7. The Anonymous Investor: Sterling Select

• After the Forbes report, Infinite Reality announced that Sterling Select, an affiliate of Sterling Equities (co-founded by the former Mets owners, the Wilpon and Katz families), was the investor.
• Sterling Equities clarified that Sterling Select is a separate entity.
• Sterling Select is a venture development firm for early-stage companies.
• Sterling Select helped co-found WCT, a major Infinite Reality acquisition in 2022.
• The managing partner of Sterling Select stated they saw Infinite Reality's potential to change how we interact with media and exist in immersive spaces.

8. Conclusion

The investment in Infinite Reality raises questions due to the discrepancy between its high valuation and relatively low revenue, its lack of recognition within the metaverse industry, and past financial issues. The identity of the investor, Sterling Select, adds another layer of complexity, given its prior involvement with Infinite Reality acquisitions. The situation warrants further investigation to understand the rationale behind the investment and the future prospects of Infinite Reality.