Follow investor money—it’s leading directly to the metaverse

Enterprise leaders suffering from metaverse hesitancy should take inspiration from KPMG’s metaverse investor perspectives survey. Follow the money to the metaverse, prioritize the delivery of better employee and customer experience, and enhance data usage with digital twins.

HFS data has already shown how almost half of Chief Marketing Officers (CMOs) prioritize enterprise spending on metaverse-related technologies, but only around 35% of CEOs do the same (see CMOs and CX leaders must fight for metaverse investment or face the boot). CMOs and CIOs have their work cut out to convince the 65% of CEOs dragging their heels, especially in 2023’s tough economic environment. Focusing hard on return on investment (ROI) will be key, but evidence of support from the investor community, as KPMG’s report demonstrates, will provide welcome ammunition.

Investors agree that EX, CX, and digital twins are the biggest metaverse winners

The report shows investors align with service providers and enterprise customers in Exhibit 1 when it comes to expecting where the biggest metaverse wins will come from in the near term. Those wins all fit in the three buckets of employee experience (EX), customer experience (CX), and digital twins, which HFS called out as the fastest routes to metaverse value in 2023 in our POV, Your metaverse honeymoon will fizzle out if you can’t demonstrate ROI.

Enterprise leaders seeking a guide on prioritizing their metaverse activities may find it useful to note the order in which investors think the opportunities should be ranked in Exhibit 1.

Almost all investors see a long-term upside to metaverse spend

KPMG conducted its survey of venture capitalists (VCs) and institutional investors at the end of 2022 and concluded that nearly all investors felt there was a long-term upside to investing in the metaverse and that the metaverse was the next phase of the internet. Only 2% disagreed.

The hype around the metaverse has been relentless, and VCs (less so institutional investors) are notorious for hunting in packs. Where bubbles grow, VCs are often eagerly there to inflate them. We saw this with the dotcom bubble of the late 1990s, again with blockchain in 2018, and arguably the same drivers impacted robotic process automation (RPA) when UiPath hit a price-to-sale ratio of 87.5:1 in February 2021.

Exhibit 1: EX, CX, and digital twins dominate the biggest opportunities identified by investors—a further steer for enterprise decision makers on where to place their metaverse bets

Sample: Data from KPMG metaverse investor perspectives survey, 2023
Source: HFS Research, 2023

The difference with the metaverse is its rise comes at a time when money not as cheap as it was. The interest rates of 2023 demand greater discipline from investors, suggesting enterprise leaders can have more confidence in where the investors are placing their bets.

The KPMG report says VC funds identify their top three reasons for increasing or maintaining metaverse investment over the next five years as increasing demand from clients (64%), the need to stay up with emerging tech (59%), and the ability to reach new audiences and clients (58%).

Confidence will increase as interoperability and workplace adoption rises and hardware costs fall

What could hold investment back? The jury remains out among those who feel they don’t know enough about the metaverse or believe the metaverse is still too immature to back. While upsides are widely accepted in the long term, some investors expressed concerns that near-term investments present too much risk. Investors say confidence will increase as interoperability increases (between metaverse platforms), workplace adoption increases, and hardware costs fall.

It’s no surprise then that the hottest tech attracting investment, among those surveyed, are technologies that enhance interoperability, augmented reality (AR) and virtual reality (VR), digital avatars and consumer journeys, collaboration tools, and real estate in the metaverse. Just over half of investors see benefits from investing early.

There will be losers. More than half (53%) prioritize metaverse investments over other technologies, with cryptocurrency (44%), cloud (43%), artificial intelligence (42%), social media (41%), IoT (40%), business applications such as CRM and ERP (38%), cybersecurity (37%), and even ESG and decarbonization technologies (39%) among the bigger losers. Even blockchain is being deprioritized by 26% to make room for increased metaverse investment.

The Bottom Line: The metaverse is a safe bet in the long term and a decent one right now if you focus on EX, CX, and digital twins.

Investors should never be your only steer, but their intentions will always closely reflect the sentiment of the market. That is one serious alarm bell it would be wise not to ignore. If big investor money is shifting toward the metaverse, enterprise leaders will know this is an important data point to include in their own deliberations. Every enterprise stands to gain from engagement in the multiverse in the long run. The C-suite is likely pondering how hard and how fast they need to go now. Our advice remains, and it’s further validated by KPMG’s investor survey: Go hardest and fastest on EX, CX, and digital twins.