How to invest in the metaverse

Jeff Spiegel Feb 15, 2023 Equity


  • The metaverse is a virtual, shared space in which people and organizations can communicate, play games, attend virtual events, shop, and even work or learn together.
  • Rising public interest and technological capabilities are prompting tech, consumer, and media firms to pour billions into development across user content, user hardware, digital platforms, governance protocols, and infrastructure hardware.
  • Investors seeking exposure to the metaverse may want to consider ETFs that target its value chain, from companies developing enabling technologies to those using the metaverse to innovate their business models.


    A metaverse is a shared space that uses virtual reality (VR) and/or augmented reality (AR) to bridge the divide between the physical and the digital worlds. The word “metaverse” first appears in Neal Stevenson’s 1992 novel, Snow Crash — a story that depicts a future in which characters can access a digital world through user-worn goggles. But the concept of bridging virtual and physical realities has deeper roots, both in science fiction and the physical world, going back to the first flight simulators used to train pilots in the late 1920s.1

    When science fiction meets real life

    Science fiction

    Real innovations

    • 1935

      Pygmalion’s Spectacles

      A visionary book that first predicted VR technology.2


      Link Trainer

      The first flight simulator, a rudimentary machine later used to train WWII pilots.3

    • 1959 – 1964

      Twilight Zone

      A sci-fi anthology series introduced many viewers to common science fiction and fantasy tropes.4


      Sensorama Simulator

      A booth that simulated a 3D bike ride through Brooklyn, along with stereo sound, smell and movement.5

    • 1982

      Disney’s Tron

      One of the first films to use computer graphics to portray a virtual world.6


      MS Flight Simulator 1.0

      The first virtual flying simulator to show color scenery.7

    • 1990

      Total Recall

      A sci-fi film that imagines a future in which virtual vacations are available for purchase.8


      Virtuality Arcade

      The first VR arcade gaming machine distributed through video arcades.9

    • 1999 – 2021

      The Matrix Series

      A sci-fi film series in which perceived reality is actually a simulated one called “the Matrix”.10


      Oculus Rift

      The first widely known VR headset is made available for purchase.11

    • 2011 – Present

      Black Mirror

      A sci-fi anthology series that explores a twisted, high-tech future.12



      Facebook’s company name is changed to Meta, reflecting metaverse ambitions.13

    The above timeline does not represent all innovations and fictional representations of virtual reality between 1929 and 2022. For illustrative purposes only.


    Description: The timeline shows milestones in both real life and science fiction, such as Pygmalion’s Spectacles (1935), Sensorama (1956), Microsoft Flight Simulator (1982), and Oculus Rift (2016), just to name a small fraction of respective cultural milestones in each category.

    While the metaverse is still being defined, both on paper and in practice, advancements in virtual reality, 3D rendering, simulation software, and wearable technology suggest a potential new wave of digital disruption is possible. Facebook changing its name to Meta in 2021 — and committing $10 billion to its Reality Labs division (which makes user hardware such as VR goggles) — is just one, highly visible, example of the investments being made.14

    All told, year-over-year investment in the metaverse has grown from $1.5 billion in 2020 to $57 billion in 2021 and $120 billion in 2022.15  A recent report by Citigroup claims that, at this rate, the metaverse addressable market could reach $13 trillion by 2030.16  Private equity and venture capital firms comprise 6% of total deployed capital, internal corporate investment — e.g., organic software development — sits at about 16% of all metaverse investments; the vast majority, 78%, or $100 billion in 2022, has come through acquisition.17



    A shared space that uses virtual reality (VR) and/or augmented reality (AR) to bridge the divide between the physical and the digital worlds.

    Virtual Reality (VR)

    Any simulated experience that immerses the user in a digital setting. While this is commonly used to describe visual immersion, all five senses are fair game — “VR goggles” and surround sound have been the first foray into this world, with haptic feedback devices — wearables that offer physical feedback like vibration — quickly following, and taste and smell within reach.

    Augmented Reality (AR)

    Unlike virtual reality, which immerses the user in a world other than his or her present, physical location, augmented reality adds virtual layers to that physical location — visual, auditory, or otherwise. AR-based visualizations, like determining if that sectional will actually fit through the doorframe or those filters that make Snapchat users’ eyes look so big and beautiful, are just the beginning.

    The fact that mega-cap firms are driving the bulk of metaverse spending via acquisitions and internal investment can be a red herring for equity investors. Some of these companies have the focus and resources to be metaverse leaders in the mid- to longer-term; however, small- and mid-sized companies that focus all or most of their business on the metaverse should be most sensitive to the theme in the short-term. Therefore, diversified exposure to the metaverse requires owning a range across the market capitalization spectrum.

    Investors interested in accessing companies at the frontier of metaverse use and construction may want to consider ETFs which hold firms contributing to the full range of its development, as well as the potential opportunities detailed below.


    It is difficult to predict just how vast the set of use cases for the metaverse will become over the next five to ten years. Imagine a vast, interconnected network of virtual environments where people can communicate, play games, attend virtual events, shop, exchange goods, and even work or learn together. These environments can range from realistic simulations of real-world locations (your office) to entirely fantastical worlds (your office if it were located on the surface of Mars and your coworkers all looked like Martians). Users can navigate the metaverse using avatars, which are digital representations of themselves, and interact with the virtual world and other avatars using hand gestures, voice commands, or specialized controllers — e.g., gloves or body suits.

    Whatever our wildest imaginations can conjure, there are plenty of tangible, real-world use cases emerging today:


    With more than three billion users globally, and a total value of more than $200 billion, the gaming sector is one of the core adopters and investors in the metaverse.18 The online gaming platform Roblox reached over 55 million daily active users in 2022, Microsoft acquired Activision Blizzard for $69 billion, while Andreessen Horowitz, a leading venture investment firm, earmarked $600 million in funding for metaverse infrastructure and gaming.

    Aside from immersive gaming — and the appeal of bridging our own reality with visual characters and artifacts — the metaverse can also offer gamers a play-to-earn option. By giving users the ability to earn in-game items or rewards that hold value in real life, the metaverse has the potential to revolutionize the incentive structure for game development and player adoption.19


    Augmented reality can add layers to your physical setting and your physical self. This means that consumers will no longer have to choose between the convenience of around-the-clock, at-home online shopping and the benefits of experiencing goods prior to purchase at a brick-and-mortar location. Being able to try on an outfit in your living room at 3:00 AM or seeing how a table would look in your dining room before committing to white or red oak has major implications for consumers and suppliers alike.

    Remote work and life

    What if your work-from-home days and in-office days were not mutually exclusive? By offering simulated office spaces and hyper-realistic digital representations of ourselves, and our coworkers, the metaverse can break down barriers of physical distance to enable new forms of collaboration, interaction, and productivity. Simulated reality has the added benefit of offering scaled learning experiences to students in remote areas that were previously impossible to experience digitally, like lab or field work.


    Hyper-realistic patient avatars, and a medical professional’s ability to see or feel them in real time and diagnostic services across the globe. It can also widen access to the hands-on educational experiences needed to train new medical professionals, which could help address the global medical professional shortage.


    A fully realized metaverse exceeds our current computing and network capabilities; for investors, this creates a range of opportunities to invest in the firms looking to change that. Graphics and concurrency limitations (constraints on the number of users within one virtual world), for example, offer a significant opportunity for firms leading advances in graphics processing unit (GPU) manufacturers and 3D rendering services. High latency and low-bandwidth buffering highlight the need for enhanced edge computing capabilities alongside cloud and 5G expansion. Perhaps most critically, metaverse access today exists primarily through monitors (tablets, smartphones, and PCs) — meaning there is massive room for growth amongst AR/VR technology and the next wave of haptic immersion.

    We identify six areas that offer the most exciting opportunity for innovation and value creation:

    Metaverse platforms

    Metaverse platforms provide infrastructure and tools to create, operate, and monetize virtual worlds and experiences. They allow creators and developers to build and manage virtual environments; they provide users with a seamless way to access and interact.

    Enhanced social media

    Social media platforms provide users with a way to connect, communicate, and interact. Enhanced social media features, such as avatars, chat, and shared virtual spaces, are necessary for creating a sense of presence and community.

    Immersive gaming

    Immersive gaming provides users with engaging and interactive experiences. These experiences can range from simple games to complex simulations and can be used to explore and learn in a variety of fields including education, entertainment, and occupational training. 

    3D rendering and simulation software

    3D rendering and simulation software are critical for creating realistic and immersive virtual environments. These tools allow creators and developers to build and manipulate 3D models, textures, and animations, and to simulate physics and other real-world phenomena. 

    Wearable technology & AR/VR

    Wearable technology and AR/VR are essential for providing a fully immersive experience. These technologies allow users to interact with virtual environments in a natural and intuitive way, providing a sense of presence and immersion that is not possible with traditional screen-based interfaces.

    Digital assets & Payments

    Digital assets and payments are necessary to support the economy within the metaverse. Users will need to be able to buy and sell virtual goods and services, as well as exchange digital assets. Without a robust system for digital assets and payments, the metaverse would not be able to sustain an economy at scale.


    In short, there are few corners of the world that will potentially remain unchanged as metaverse capabilities advance and adoption accelerates. Holding a diverse basket of names can help provide investors pure-play access to the value being created without the concentration risk associated with individual stock selection.


    Jeff Spiegel

    Jeff Spiegel

    Head of U.S. iShares Megatrend and International ETFs

    Kyle R. Chapman