Virtual girlfriends and beyond: Fatfish to acquire 51% stake in AI Gaming Co for $2.8m to enter genAI gaming

If you’re even somewhat acquainted with the AI gaming space, you’ve probably heard of virtual girlfriends, AI avatars and more. Gamers have lapped up AI content, with its popularity set to surge. In keeping with that, internet venture investment company Fatfish (ASX: FFG) has progressed with its proposed acquisition of a strategic stake in AI Gaming Co (AIGC), announced last month. 

The share agreement confirms Fatfish’s intention to invest in AIGC, underlining its confidence in the latter’s vision and potential to emerge as a market leader in the gaming industry through innovative applied AI technologies. 

AIGC is a Singapore-based start-up that develops digital entertainment. It harnesses advanced AI to forge immersive, dynamic gaming experiences. AIGC’s maiden game is Tatarot (tatarot.ai), an AI-powered tarot reading app that merges traditional tarot practices with AI technology and personalised art to provide users a gamified, unique experience.

AIGC is currently developing its second game, The Waifu Maker, which uses Generative AI to transform Neo-Tokyo art into a virtual girlfriend immersive experience. 

With this acquisition, Fatfish aims to use its expertise in incubating and propelling start-ups to provide AIGC with the necessary resources and guidance to accelerate its growth trajectory and enhance profitability through synergetic benefits and scalability. 

The agreement will see a series of investments by Fatfish, amounting to about $2.8 million in return for up to 51% of in AIGC. Its initial investment in AIGC will comprise $111.8k in cash, and $2.2 million in services to be provided to AIGC by Fatfish. For one, it will provide technical support in game development, including game mechanics design, troubleshooting, bug fixing, and performance optimisation. 

Secondly, it will provide training and knowledge transfer, including organising technical and corporate-related workshops and mentoring programs. Third, it will offer strategic consulting services, including strategic advice on the project roadmap, planning, feature prioritisation, and market positioning. Finally, it will provide corporate advisory in relation to the operation of the corporate vehicle, including corporate project management, and legal and compliance support. 

Then there’s a $447.4k additional investment via the exercise of an Option over the six months following the Initial Investment. 

If Fatfish completes the initial investment, it will own approximately 46.49% of AIGC. If it completes the initial investment and exercises its Option, it will own 50.85% of AIGC. The Company has sufficient cash to fund the cash component of the Initial Investment and the exercise of the Option. 

Fatfish is a tech venture firm that incubates early-stage startups in digital entertainment, fintech and e-commerce, as well as the application of Generative AI technologies in these sectors. In keeping with its strategic objectives and commitment to long-term partnerships, the Company has formalised its relationship with AIGC and its existing shareholders by signing a shareholders’ agreement. 

The acquisition presents opportunities for potential collaborations and/or corporate exercises, such as capital fundraising, mergers and acquisitions, future spin-outs and initial public offerings.