5 Reasons Why We Invested in the Web3 Sleep App "Sleepagotchi"
On January 18, 2023, Emoote announced our investment in the Web3 lifestyle project "Sleepagotchi," which aims to solve sleep and healthcare challenges using entertainment and gaming.
This round also involves well-known global Web3 VCs, such as 6th Man Capital and Sfermion, who were early investors in "STEPN," which gained significant attention globally last year.
This newsletter will unravel the five reasons why we invested in Sleepagotchi and what is needed for future Web3 entertainment.
Emotional Attachment: Essential for Web3 Entertainment
Strength of the founding team
High product level seen on social media
Scalability created by simple actions
The Potential of Japanese Culture and Market
We hope that showing how VCs view Web3 projects, will be helpful to entrepreneurs.
Emoote is a Web3 VC fund based in Singapore that invests in consumer businesses (Entertainment, Media, and Lifestyle). Our portfolio includes STEPN, BreederDAO, EthSign, and YGG Japan.
Table of Contents
What is Sleepagotchi?
Sleepagotchi is a lifestyle app that promotes "Sleep2Collect" and addresses sleep and healthcare challenges using entertainment and gaming.
As of January 30, 2023, the app is only available for iOS on the App Store.
As you can see from the screenshots above, the app features a very cute visual design. The main game cycle is as follows:
Get sleep
Receive NFTs or in-game points based on sleep results
Decorate your room using NFT furniture
Level up NFTs using NFTs or in-game points
If you replace "sleep" with "running," you'll find that the game cycle is very similar to that of STEPN. Please visit their website or whitepaper for details on the game system and tokenomics. And, most importantly, try playing the app.
Now, let's explain the five reasons why Emoote invested in Sleepagotchi.
Emotional attachment: Essential for Web3 Entertainment
One thing lacking in current Web3 entertainment, led by GameFi, is "emotional attachment."
In simple terms, actions such as "holding onto a trading card because I like the character" or "spontaneously tipping during a live stream of a talent" are driven by this "emotional attachment."
While the "earning" aspect of "Play2Earn" is an essential external motivation, the token-based ecosystem is more likely to collapse without developing internal motivation.
Sleepagotchi has adorable characters, cute digital goods (NFTs), and the ability to customize (decorate) your room.
As users play the game, they become attached to their goods, room, and pets (not yet implemented), such as "I got my favorite digital goods," "I customized my room in a fun way with unique items," or "my pet grew to like this."
This leads to seemingly irrational economic activities, such as "I could get xx points for selling this item, but I don't want to because I like it" or "I'll pay xx points to get that item."
This is what we call "emotional attachment," and we believe it's one of the essential keywords for realizing sustainable tokenomics in Web3 entertainment.
For those interested in "emotional attachment", please refer to our previous substack, where we have detailed information.
The strength of the founding team
I had multiple discussions with Anton, one of the co-founders, before investing. Topics ranged from game design, tokenomics, team-building, marketing, to fundraising.
What I felt during this process was the strength of the founding team. In particular, I was impressed by their ability to accept advice from their discussion partners, even when their opinions clashed, and flatly rebuild their thoughts.
What stood out was their deep understanding of tokenomics. They are not necessarily a team with extensive experience developing and operating crypto or Web3 projects. However, they have solicited opinions from many people, including us at Emoote and other investors, other projects, and advisors, exchanged discussions, and updated their whitepaper at a relatively high frequency.
I felt the same thing with the Sleepagotchi team as I did when I first met the STEPN team and observed their first few months.
It's not just about tokenomics. In essential aspects of advancing a project such as game design, development, and community building, quick improvements have been made with the involvement of investors. The team's overall strength was a significant factor in deciding to invest.
Whether it's Web2 or Web3, B2C or B2B, ultimately, it's about the "people" and the team. Emoote invests in strong management teams.
High product level seen on SNS
During the investment consideration phase, Sleepagotchi had a limited release app on Testflight. Even though it was a closed version, the user experience was excellent from the beginning. Specifically, this included digital goods, room graphics, app UI/UX, out-game design, and retention measures.
As proof of this, tweets sharing screenshots of users' rooms and acquired items stood out from the beginning. What left a strong impression was the number of tweets related to "self-expression," rather than "earning" something.
This connects to the earlier discussion of "emotional attachment", but I see these tweets on SNS as evidence of fostering intrinsic motivation. At the same time, I felt that it demonstrated the high level of the product.
Scalability generated by simple actions
Everyone walks every day (with some special exceptions). STEPN was innovative in turning the daily action of walking/running into a game.
Sleepagotchi is similar. Everyone sleeps every day. Thus, the target population is all 8 billion people on Earth, and anyone can start easily. By gamifying simple behavior habits, a scalable future can be envisioned in the medium to long term. This is a significant difference from hardcore games.
Jogging and running are common knowledge for good health, and many people challenge themselves to continue. However, the reality is that many people cannot continue for various reasons, such as running being painful, or being too busy with work or family to secure time.
STEPN introduced a token-based incentive economy, drawing out users' motivation for jogging and running.
In the case of sleep, irregular bedtime and sleep duration due to lifestyle habits, poor physical condition, or various temptations cause unstable sleep quality. Sleepagotchi changes daily sleep behavior by introducing a (broadly defined) incentive economy.
Japanese Culture and the Potential of the Japanese Market
When I first saw Sleepagotchi, I thought it resembled Japanese miniature garden games. Talking with Anton, the co-founder, it became clear how much they love Japanese culture.
One characteristic of those games is their high retention rate. Players can create their own original spaces and enjoy communication with friends.
It is said that painter Vincent van Gogh was amazed by the depiction of "rain" in ukiyo-e, and the Japanese people are sensitive to the "subtleties of the heart" and the "changing of the seasons." In Sleepagotchi, I felt Japanese culture that enjoys the subtle changes of everyday life. Although it may not be flashy, there is a long-lasting "play" element here.
Moreover, since its initial release, Sleepagotchi has had a high ratio of Japanese users, which also overlaps with the path STEPN has taken. Needless to say, the high demand for digital entertainment, such as mobile games, manga, and anime is prominent on a global scale. Japan holds great appeal as a major market for Web3 entertainment.
Promoting games and services like Sleepagotchi that can take advantage of Japanese culture and values to the world and expanding into the Japanese market is our goal. As a Web3 VC fund born in Japan, Emoote actively supports such projects.
In conclusion
I have outlined the five reasons why we invested in Sleepagotchi. If you are even slightly interested, I would be happy if you could try playing the app. Also, they share the latest information on Twitter, so please follow them and check for updates.
Emoote invests in projects and companies that update entertainment and lifestyle sectors with digital ownership, incentive economy, and Web3 concepts and technologies like DAOs, such as Sleepagotchi.
In the future, we will continue to tweet about our investments in the latest Web3 projects like this newsletter, updates on our portfolio companies, tokenomics insights, global Web3 conference information, and the update in Singapore, so please subscribe my newsletter and Twitter if you're interested! m(_ _)m
Emoote (Emoote) Website: https://emoote.com/