Rec Room, a social-gaming startup based in Seattle, announced Wednesday it has landed $100 million in new funding, giving it a valuation of $1.25 billion.
Founded in 2016, Rec Room says it has attracted 15 million lifetime users, and its year-over-year revenue soared more than sixfold in 2020 from players making in-game purchases.
Nevertheless, Rec Room remains unprofitable, according to The Wall Street Journal. “Profitability isn’t a focus for us,” Nick Fajt, the company’s co-founder and CEO, told the publication. “We’re trying to grow the user base and engagement right now.”
Rec Room’s platform enables users to create and play video games online with others via virtual reality headsets, game consoles, personal computers and mobile devices. Many users are teens playing games with friends, although the company also touts itself as a place for anyone, offering online spaces for digital hangouts, creative classes and even weddings.
Sequoia Capital and Index Ventures led the new funding, with participation from Seattle-based Madrona Venture Group; all three were existing investors.
“We’re thrilled to continue working with them to build a safe and welcoming community for all, and to make Rec Room the digital third place for kids at heart,” Stephanie Zhan, a Sequoia partner and Rec Room board member, said in a statement.
Rec Room has about 90 employees, with plans to exceed 150 by next year, Fajt told GeekWire.