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Mobile bank Current raises $220 million Series D, triples valuation to $2.2B
U.S.-based challenger bank Current, which has now grown to nearly 3 million users, announced this morning it has raised a $220 million round of Series D funding, led by new investor Andreessen Horowitz (a16z). The funding swiftly follows Current’s $131 million Series C at the end of last year, at which point the company had doubled its user base over just six months to more than 2 million users.
As a result of the new round, the fintech company has roughly tripled its valuation in five months, to $2.2 billion.
Other participants in the round include returning investors Tiger Global Management, TQ Ventures (the fund managed by media executive Scooter Braun), Avenir, Sapphire Ventures, Foundation Capital, Wellington Management and EXPA. David George, who led the round with a16z, will become a Current board member.
Current began its life as a teen debit card controlled by parents, but later expanded to offer personal checking accounts powered by the same underlying banking technology. Like a range of modern-day “neobanks,” or digital banks, the Current app offers a baseline of standard features like free overdrafts, no minimum balance requirements, faster direct deposits, instant spending notifications, banking insights, free ATMs, check deposits using your phone’s camera and more. It also last year launched a points rewards program in an effort to better differentiate its service from the growing number of competitors and became one of the first banks to transfer the early round of stimulus payments during the pandemic.
These days, Current is partnering with creators, like the recently announced MrBeast (aka Jimmy Donaldson), who said last week on his YouTube channel that he will personally send $1 to the first 100,000 people who sign up using his Creator code. MrBeast is also an investor.
Like other fintechs in its same space, Current has benefitted from the younger generation’s adoption of mobile banking apps instead of larger, traditional banks, which they feel don’t serve their interests. Its average customer age is 27, for example. Digital banks can keep costs down by not having to pay for the overhead of brick-and-mortar locations, allowing them to roll out benefits like reduced or zero account fees and other consumer-friendly protections.
Current today continues to offer teen banking, in a challenge to mobile banking app Step, which has also leveraged social media influencers to get the word out with a younger demographic. But Step today is appealing to the 13 to 18-year-old crowd directly, offering banking services and a secured card. Current, meanwhile, targets its service to the parents.
Its teen account costs $36 per year, while personal checking is available both as a free and premium ($4.99/mo) service. The company in the past has said its primary focus is the more than 130 million Americans who live paycheck to paycheck. This continues to be its main drive today, though the mission may attract a broader slice of the American population over time.
“We are still focused on onboarding people to the financial system, making sure that everyone has access to everything, and then democratizing — or going out and getting that value — in this new world that’s being rewritten and bringing it back to as many people as possible,” says Current CEO and founder Stuart Sopp. “Now, in that increase of scope and time. I think we’re going to pick up more and more people.”
Current says the new funds will be used to grow the company and its member base as it expands it range of banking products. One key area of new investment will be cryptocurrency, it says, which will involve a partnership and an educational component to help Current’s users better understand the crypto market.
As it turns out, Sopp’s background includes crypto, in addition to Wall Street trading. In fact, an early version of Current designed by Sopp and CTO Trevor Marshall involved crypto.
“A little-known fact is that Current started with Bitcoin wallet addresses and Ripple gateways,” he says. But the team realized the technology was a little too nascent at the time, and moved to mobile banking. “We have this background, and this knowledge of how it all works. Now do we need to build it ourselves? No, I don’t think we need to build it all ourselves. There’s lots of good companies out there,” he says.
Crypto fits into Current’s vision of democratizing access to financial systems to those in the U.S. who are today underserved by traditional banking and investing products and services.
“There’s a ton of value being created [in crypto] and we want to make sure we have this nexus of providing safe, and trustworthy financial services in that world, as well as what we already exist in,” notes Sopp. “And then, lending, credit cards,” he adds, noting how important these moves are “done safely, in a respectful way for our demographic — because traditionally most of our members have a FICO score of 650.”
In addition, Current will use the new funds for hiring across all roles, including marketing, product, engineering, finance, customer success, fraud and risk, and, of course, crypto. The company today has 100 employees, and plans to grow to around 200 or 300 in the next 18 months.
Current’s fundraise remarkably falls on the same day that competitor Step and Greenlight, both which focus on families, also raised new rounds.
“This new generation of customers doesn’t want to bank in physical branches,” said a16z’s David George, in a statement. “We believe there will be a shift in the next 10 years to mobile and consumer-focused banking services powered by innovation in technology, and with Current’s exceptional growth over the past year, they’ve clearly demonstrated they’re at the forefront of this trend. Their product is among the best in the market, and they have proven an ability to reach customers who previously were unserved or underserved by traditional banks,” he said.
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Brazil’s Loft adds $100M to its accounts, $700M to its valuation in a single month
Nearly exactly one month ago, digital real estate platform Loft announced it had closed on $425 million in Series D funding led by New York-based D1 Capital Partners. The round included participation from a mix of new and existing investors such as DST, Tiger Global, Andreessen Horowitz, Fifth Wall and QED, among many others.
At the time, Loft was valued at $2.2 billion, a huge jump from its being just near unicorn territory in January 2020. The round marked one of the largest ever for a Brazilian startup.
Now, today, São Paulo-based Loft has announced an extension to that round with the closing of $100 million in additional funding that values the company at $2.9 billion. This means that the 3-year-old startup has increased its valuation by $700 million in a matter of weeks.
Baillie Gifford led the Series D-2 round, which also included participation from Tarsadia, Flight Deck, Caffeinated and others. Individuals also put money in the extension, including the founders of Better (Zach Frenkel), GoPuff, Instacart, Kavak and Sweetgreen.
Loft has seen great success in its efforts to serve as a “one-stop shop” for Brazilians to help them manage the home buying and selling process.
Image Credits: Loft
In 2020, Loft saw the number of listings on its site increase “10 to 15 times,” according to co-founder and co-CEO Mate Pencz. Today, the company actively maintains more than 13,000 property listings in approximately 130 regions across São Paulo and Rio de Janeiro, partnering with more than 30,000 brokers. Not only are more people open to transacting digitally, more people are looking to buy versus rent in the country.
“We did more than 6x YoY growth with many thousands of transactions over the course of 2020,” Pencz told TechCrunch at the time of the company’s last raise. “We’re now growing into the many tens of thousands, and soon hundreds of thousands, of active listings.”
The decision to raise more capital so soon was due to a variety of factors. For one, Loft has received “overwhelming investor interest” even after “a very, very oversubscribed main round,” Pencz said.
“We have seen a continued acceleration in our market share growth, especially in São Paulo and Rio de Janeiro, the two markets we currently operate in,” he added. “We saw an opportunity to grow even faster with additional capital.”
Pencz also pointed out that Baillie Gifford has relatively large minimum check size requirements, which led to the extension being conducted at a higher price and increased the total round size “by quite a bit to be able to accommodate them.”
While the company was less forthcoming about its financials as of late, it told me last year that it had notched “over $150 million in annualized revenues in its first full year of operation” via more than 1,000 transactions.
The company’s revenues and GMV (gross merchandise value) “increased significantly” in 2020, according to Pencz, who declined to provide more specifics. He did say those figures are “multiples higher from where they were,” and that Loft has “a very clear horizon to profitability.”
Pencz and Florian Hagenbuch founded Loft in early 2018 and today serve as its co-CEOs. The aim of the platform, in the company’s words, is “bringing Latin American real estate into the e-commerce age by developing online alternatives to analogue legacy processes and leveraging data to create transparency in highly opaque markets.” The U.S. real estate tech company with the closest model to Loft’s is probably Zillow, according to Pencz.
In the United States, prospective buyers and sellers have the benefit of MLSs, which in the words of the National Association of Realtors, are private databases that are created, maintained and paid for by real estate professionals to help their clients buy and sell property. Loft itself spent years and many dollars in creating its own such databases for the Brazilian market. Besides helping people buy and sell homes, it offers services around insurance, renovations and rentals.
In 2020, Loft also entered the mortgage business by acquiring one of the largest mortgage brokerage businesses in Brazil. The startup now ranks among the top-three mortgage originators in the country, according to Pencz. When it comes to helping people apply for mortgages, he likened Loft to U.S.-based Better.com.
This latest financing brings Loft’s total funding raised to an impressive $800 million. Other backers include Brazil’s Canary and a group of high-profile angel investors such as Max Levchin of Affirm and PayPal, Palantir co-founder Joe Lonsdale, Instagram co-founder Mike Krieger and David Vélez, CEO and founder of Brazilian fintech Nubank. In addition, Loft has also raised more than $100 million in debt financing through a series of publicly listed real estate funds.
Loft plans to use its new capital in part to expand across Brazil and eventually in Latin America and beyond. The company is also planning to explore more M&A opportunities.
This article was updated post-publication to reflect accurate investor information.
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Clubhouse closes an undisclosed $4B valuation Series C round, as tech giants’ clones circle
Buzzy “social audio” app Clubhouse has raised a Series C funding round, reportedly valuing the company at $4 billion. Clubhouse said the new round of financing was led by Andrew Chen of Andreessen Horowitz, with participation from DST Global, Tiger Global and Elad Gil. This round means Clubhouse has tripled the valuation it attained in January when Andreessen Horowitz led its Series B funding round.
The funding comes as Twitter, Spotify, Facebook, Telegram, Discord and LinkedIn are all prepping similar features to Clubhouse’s live audio streaming rooms, which has attracted attention for hosting live chats with the likes of Elon Musk and Mark Zuckerberg. Indeed, Vox reported that Facebook will announce a series of “social audio” products only today.
But, unusually for such a late stage of funding, the company has not revealed the amount raised. Industry sources say that this is probably because the Series C funding round is “multi-stage” and therefore not officially closed. Alternatively, the company is “hyping” itself ahead of a sale, as is often the case with “hot” startups. Twitter reportedly broke off talks to acquire the startup at a $4 billion valuation, according to Bloomberg.
And despite appearances that this funding round has been timed to coincide with the launch this week of Facebook’s Clubhouse clone, one well-placed source told me “this funding round has been in the works for the last 1.5 months” and that some offers have been “above 2x” the $4 billion valuation. In other words, there are some investors out there who think Clubhouse is worth more than $8 billion.
So far Clubhouse is demurring on all this, and declining to comment more directly to the media. The company disclosed the news about the funding during its weekly “town hall” chat last Sunday night and in a blog post, the company said the fundraising will support a fresh burst of growth for the app.
“While we’ve quadrupled the size of our team this year, stabilized our infrastructure, launched Payments in beta to help creators monetize, and readied Android for launch, there is so much more to do as we work to bring Clubhouse to more people around the world. It’s no secret that our servers have struggled a bit these past few months, and that our growth has outpaced the early discovery algorithms our small team originally built,” said the post.
Noting that “it’s important to us to be building all of this with people who are invested in the community and who represent a diverse set of backgrounds and voices,” Clubhouse has, however, been struck by a wave of problems in the last few days, when anti-Semitic audio rooms seemed to proliferate on the platform. Clubhouse has previously been criticized for its seeming inability to moderate extremism on the app.
The year-old platform, which has reported 10 million weekly active users, has thrived during the pandemic while people were locked down and therefore unable to chat easily in person.
Tech news site The Information first reported details on the Clubhouse funding on Friday.
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Lowkey raises $7 million from a16z to help game streamers capitalize on short-form video
While the growth of game-streaming audiences have continued on desktop platforms, the streaming space has felt surprisingly stagnant at times, particularly due to the missing mobile element and a lack of startup competitors.
Lowkey, a gaming startup that builds software for game streamers, is aiming to build out opportunities in bit-sized clips on mobile. The startup wants to be a hub for both creating and viewing short gaming clips but also sees a big opportunity in helping streamers cut down their existing content for distribution on platforms like Instagram and TikTok where short-form gaming content sees a good deal of engagement.
The startup announced today that they’ve closed a $7 million Series A led by Andreessen Horowitz with participation from a host of angel investors including Figma’s Dylan Field, Loom’s Joe Thomas and Plaid’s Zach Perret and William Hockey.
We last covered Lowkey in early 2020 when the company was looking to build out a games tournament platform for adults. At the time, the company had already pivoted after going through YC as Camelot, which allowed audiences on Twitch and YouTube to pay creators to take on challenges. This latest shift brings Lowkey back to the streaming world but more focused on becoming a tool for streamers and a mobile hub for viewers.
Twitch and YouTube Gaming have proven to be pretty uninterested in short-form content, favoring the opportunities of long-form streams that allow creators to press broadcast and upload lengthy streams. Lowkey users can easily upload footage captured from Lowkey’s desktop app or directly import a linked stream. This allows content creators to upload and comment on their own footage or remix and respond to another streamer’s content.
One of the challenges for streamers has been adapting widescreen content for a vertical video form factor, but CEO Jesse Zhang says that it’s not really a problem with most modern games. “Games inherently want to focus you attention on the center of the screen,” Zhang tells TechCrunch. “So, almost all clips extend really cleanly to like a mobile format, which is what we’ve done.”
Lowkey’s desktop app is available on Windows and their new mobile app is now live for iOS.
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NBA Top Shot maker Dapper Labs is now worth $2.6 billion thanks to half of Hollywood, the NBA and Michael Jordan
From the early success of Crypto Kitties to the explosive growth of NBA Top Shot, Dapper Labs has been at the forefront of the cryptocurrency collectible craze known as NFTs.
Now the company is reaping the benefits of its trailblazing status with a new $305 million financing led by some of the biggest names in Hollywood, sports and investing.
The new round values the company at a whopping $2.6 billion, according to multiple media reports, and comes at a time when NFTs have captured the popular imagination.
Leading the company’s financing was Coatue, the financial services firm that’s behind many of the biggest later-stage tech deals. But heavy hitters from the entertainment world also took their cut — these are folks like NBA legend Michael Jordan as well as current players and funds including Kevin Durant, Andre Iguodala, Kyle Lowry, Spencer Dinwiddie, Andre Drummond, Alex Caruso, Michael Carter-Williams, Josh Hart, Udonis Haslem, JaVale McGee, Khris Middleton, Domantas Sabonis, Klay Thompson, Nikola Vucevic and Thad Young and Richard Seymour’s 93 Ventures.
Entertainment and music heavyweights including Ashton Kutcher and Guy Oseary’s Sound Ventures, Will Smith and Keisuke Honda’s Dreamers VC, Shawn Mendes and Andrew Gertler’s AG Ventures, Shay Mitchell and 2 Chainz also bought in on the action.
And from the venture world comes other strategic investors like Andreessen Horowitz, The Chernin Group, USV, Version One and Venrock.
The company said it would use the funds to continue building out NBA Top Shot and expanding the updated digital trading card platform to other sports and a broader creator community.
Top Shot has already notched over $500 million in sales for its animated trading cards featuring things like LeBron James dunking, and the sky (at least for now) is seemingly the limit for the collectible applications of blockchain.
It’s like the one thing that cryptocurrency can do really well and it’s been embraced far beyond the world of sports collectibles. The recent $69 million sale of a digital piece of art at Christies also marks a watershed moment for the art world.
“NBA Top Shot is successful because it taps into basketball fandom — it’s a new and more exciting way for people to connect with their favorite teams and players,” said Roham Gharegozlou, CEO of Dapper Labs. “We want to bring the same magic to other sports leagues as well as help other entertainment studios and independent creators find their own approaches in exploring open platforms. NFTs unlock a new model for monetization that benefits the fans much more than advertising or sponsorships.”
Powering the Top Shot system and Dapper Labs’ other offerings is a new blockchain protocol called Flow, which purports to handle mainstream consumer applications at scale, and can support mass adoption.
Flow also allows for transactions using fiat currency and credit cards, and provides a much needed ease of cryptocurrency, and can keep customers safe from the fraud or theft common in cryptocurrency systems, according to a statement from Dapper Labs.
Flow enables NFT marketplaces and other decentralized applications that need to scale to handle mainstream demand without extremely high transaction costs (“gas fees”) or environmental concerns, the company said.
“NBA Top Shot is one of the best demonstrations we’ve seen of how quickly new technology can change the landscape for media and sports fans,” said Kevin Durant, co-founder of Thirty Five Ventures. “We’re excited to follow the progress with everything happening on Flow blockchain and use our platform with the Boardroom to connect with fans in a new way.”
Already companies like Warner Music Group, Ubisoft, Warner Media and the UFC, as well as thousands of third-party developers, artists and other creators, are using the Flow mainnet to sell collectible cards and develop custodial wallets.
Additional investors in the round include: MLB players like Tim Beckham and Nolan Arenado; NFL players Ken Crawley, Thomas Davis, Stefon Diggs, Dee Ford, Malcom Jenkins, Rodney McLeod, Jordan Matthew, Devin McCourty, Jason McCourty, DK Metcalf, Tyrod Taylor and Trent Williams; team ownership, including Vivek Ranadivé (Kings); and notable sports investors Bolt Ventures.
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Entertainment payroll startup Wrapbook raises $27M round led by a16z
Wrapbook, a startup that simplifies the payroll process for TV, film and commercial productions, has raised $27 million in Series A funding from noteworthy names in both the tech and entertainment worlds.
The round was led by Andreessen Horowitz, with participation from Equal Ventures and Uncork Capital, as well as from WndrCo (the investment and holding company led by DreamWorks and Quibi founder/co-founder Jeffrey Katzenberg) and from CAA co-founder Michael Ovitz.
“It’s time we bring production financial services into the 21st century,” Katzenberg said in a statement. “We need a technology solution that will address the increasing complexities of production onboarding, pay and insuring cast and crew, only exacerbated by COVID-19, and I believe that Wrapbook delivers.”
Wrapbook co-founder and CEO Ali Javid explained that entertainment payroll has remained a largely old-fashioned, paper-based process, which can be particularly difficult to track as cast and crew move from project to project, up to 30 times in single year. Wrapbook digitizes and simplifies the process — electronically collecting all the forms and signatures needed at the beginning of production, handling payroll itself, creating a dashboard to track payments and also making it easy to obtain the necessary insurance.
Wrapbook founders Cameron Woodward, Ali Javid, Hesham El-Nahhas and Naysawn Naji
Although the startup was founded in 2018, Javid told me that demand has increased dramatically as production resumed during the pandemic, with COVID-19 “totally” changing the industry’s culture and prompting production companies to say, “Hey, if there’s an easier, faster way to do this from my house, then yeah let’s look at it.”
Javid also described the Wrapbook platform as a “a vertical fintech solution that’s growing really fast in an industry that we understand really well and not many others have thought about.” In fact, he said the company’s revenue grew 7x in 2020.
And while Wrapbook’s direct customers are the production companies, co-founder and CMO Cameron Woodward (who previously worked in filmmaking insurance and commercial production) said that the team has also focused on creating a good experience for the cast and crew who get paid through the platform — a growing number of them (12% thus far) have used their Wrapbook profiles to get paid on multiple productions.
Image Credits: Wrapbook
The startup previously raised $3.6 million in seed funding. Looking ahead, Javid and Woodward said that Wrapbook’s solution could eventually be adopted in other project-based industries. But for now, they see plenty of opportunity to continue growing within entertainment alone — they estimated that the industry currently sees $200 billion in annual payments.
“We’re going to double down on what’s working and build things out based on what customers have asked for within entertainment,” Javid said. “To that end, we’re working towards hiring 100 people in the next 12 months.”
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Eco raises $26M in a16z-led round to scale its digital cryptocurrency platform
Eco, which has built out a digital global cryptocurrency platform, announced Friday that it has raised $26 million in a funding round led by a16z Crypto.
Founded in 2018, the SF-based startup’s platform is designed to be used as a payment tool around the world for daily-use transactions. The company emphasizes that it’s “not a bank, checking account, or credit card.”
“We’re building something better than all of those combined,” it said in a blog post. The company’s mission has also been described as an effort to use cryptocurrency as a way “to marry savings and spending,” according to this CoinList article.
Eco users can earn up to 5% annually on their deposits and get 5% cash back when transacting with merchants such as Amazon, Uber and others. Next up: The company says it will give its users the ability to pay bills, pay friends and more “all from the same, single wallet.” That same wallet, it says, rewards people every time they spend or save.
After a “successful” alpha test with millions of dollars deposited, the company’s Eco App is now available to the public.
A slew of other VC firms participated in Eco’s latest financing, including Founders Fund, Activant Capital, Slow Ventures, Coinbase Ventures, Tribe Capital, Valor Capital Group and more than one hundred other funds and angels. Expa and Pantera Capital co-led the company’s $8.5 million funding round.
CoinList co-founder Andy Bromberg stepped down from his role last fall to head up Eco. The startup was originally called Beam before rebranding to Eco “thanks to involvement by founding advisor, Garrett Camp, who held the Eco brand,” according to Coindesk. Camp is an Uber co-founder and Expa is his venture fund.
For a16z Crypto, leading the round is in line with its mission.
In a blog post co-written by Katie Haun and Arianna Simpson, the firm outlined why it’s pumped about Eco and its plans.
“One of the challenges in any new industry — crypto being no exception — is building things that are not just cool for the sake of cool, but that manage to reach and delight a broad set of users,” they wrote. “Technology is at its best when it’s improving the lives of people in tangible, concrete ways…At a16z Crypto, we are constantly on the lookout for paths to get cryptocurrency into the hands of the next billion people. How do we think that will happen? By helping them achieve what they already want to do: spend, save, and make money — and by focusing users on tangible benefits, not on the underlying technology.”
Eco is not the only crypto platform offering rewards to users. Lolli gives users free bitcoin or cash when they shop at over 1,000 top stores.
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Autonomous drone maker Skydio raises $170M led by Andreessen Horowitz
Skydio has raised $170 million in a Series D funding round led by Andreessen Horowitz’s Growth Fund. That pushes it into unicorn territory, with $340 million in total funding and a post-money valuation north of $1 billion. Skydio’s fresh capital comes on the heels of its expansion last year into the enterprise market, and it intends to use the considerable pile of cash to help it expand globally and accelerate product development.
In July of last year, Skydio announced its $100 million Series C financing, and also debuted the X2, its first dedicated enterprise drone. The company also launched a suite of software for commercial and enterprise customers, its first departure from the consumer drone market where it had been focused prior to that raise since its founding in 2014.
Skydio’s debut drone, the R1, received a lot of accolades and praise for its autonomous capabilities. Unlike other consumer drones at the time, including from recreational drone maker DJI, the R1 could track a target and film them while avoiding obstacles without any human intervention required. Skydio then released the Skydio 2 in 2019, its second drone, cutting off more than half the price while improving on it its autonomous tracking and video capabilities.
Late last year, Skydio brought on additional senior talent to help it address enterprise and government customers, including a software development lead who had experience at Tesla and 3D printing company Carbon. Skydio also hired two Samsara executives at the same time to work on product and engineering. Samsara provides a platform for managing cloud-based fleet operations for large enterprises.
The applications of Skydio’s technology for commercial, public sector and enterprise organizations are many and varied. Already, the company works with public utilities, fire departments, construction firms and more to do work including remote inspection, emergency response, urban planning and more. Skydio’s U.S. pedigree also puts it in prime position to capitalize on the growing interest in applications from the defense sector.
a16z previously led Skydio’s Series A round. Other investors who participated in this Series D include Lines Capital, Next47, IVP and UP.Partners.
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What the NFT? VC David Pakman dumbs down the digital collectibles frenzy and why it’s taking off now
Non-fungible tokens have been around for two years, but these NFTs, one-of-one digital items on the Ethereum and other blockchains, are suddenly becoming a more popular way to collect visual art, primarily, whether it’s an animated cat or an NBA clip or virtual furniture.
“Suddenly” is hardly an overstatement. According to the outlet Cointelegraph, during the second half of last year, $9 million worth of NFT goods sold to buyers; during one 24-hour window earlier this week, $60 million worth of digital goods were sold.
What’s going on? A thorough New York Times piece on the trend earlier this week likely fueled new interest, along with a separate piece in Esquire about the artist Beeple, a Wisconsin dad whose digital drawings, which he has created every single day for the last 13 years, began selling like hotcakes in December. If you evidence of a tipping point (and it’s amply available), the work of Beeple, whose real name is Mike Winkelmann, was just made available through Christie’s. It’s the venerable auction house’s first sale of exclusively digital work.
To better understand the market and why it’s blowing up in real time, we talked this week with David Pakman, a former internet entrepreneur who joined the venture firm Venrock a dozen years ago and began tracking Bitcoin soon after, even mining the cryptocurrency at his Bay Area home beginning in 2015. (“People would come over and see racks of computers, and it was like, ‘It’s sort of hard to explain.’”)
Perhaps it’s no surprise that he also became convinced early on of the promise of NFTs, persuading Venrock to lead the $15 million Series A round for a young startup, Dapper Labs, when its primary offering was CryptoKitties, limited-edition digital cats that can be bought and bred with cryptocurrency.
While the concept baffled some at the time, Pakman has long seen the day when Dapper’s offerings will be far more extensive, and indeed, a recent Dapper deal with the NBA to sell collectible highlight clips has already attracted so much interest in Dapper that it is reportedly right now raising $250 million in new funding at a post-money valuation of $2 billion. While Pakman declined to confirm or correct that figure, but he did answer our other questions in a chat that’s been edited here for length and clarity.
TC: David, dumb things down for us. Why is the world so gung-ho about NFTs right now?
DP: One of the biggest problems with crypto — the reason it scares so many people — is it uses all these really esoteric terms to explain very basic concepts, so let’s just keep it really simple. About 40% of humans collect things — baseball cards, shoes, artwork, wine. And there’s a whole bunch of psychological reasons why. Some people have a need to complete a set. Some people do it for investment reasons. Some people want an heirloom to pass down. But we could only collect things in the real world because digital collectibles were too easy to copy.
Then the blockchain came around and [it allowed us to] make digital collectibles immutable, with a record of who owns what that you can’t really copy. You can screenshot it, but you don’t really own the digital collectible, and you won’t be able to do anything with that screenshot. You won’t be able to to sell it or trade it. The proof is in the blockchain. So I was a believer that crypto-based collectibles could be really big and actually could be the thing that takes crypto mainstream and gets the normals into participating in crypto — and that’s exactly what’s happening now.
TC: You mentioned a lot of reasons that people collect items, but one you didn’t mention is status. Assuming that’s your motivation, how do you show off what you’ve amassed online?
DP: You’re right that one of the other reasons why we collect is to show it off status, but I would actually argue it’s much easier to show off our collections in the digital world. If I’m a car collector, the only way you’re going to see my cars is to come over to the garage. Only a certain number of people can do that. But online, we can display our digital collections. NBA Top Shop, for example, makes it very easy for you to show off your moments. Everyone has a page and there’s an app that’s coming and you can just show it off to anyone in your app, and you can post it to your social networks. And it’s actually really easy to show off how big or exciting your collection is.
TC: It was back in October that Dapper rolled out these video moments, which you buy almost like a Pokemon set in that you’re buying a pack and know you’ll get something “good” but don’t know what. But while almost half it sales have come in through the last week. Why?
DP: There’s only about maybe 30,000 or 40,000 people playing right now. It’s growing 50% or 100% a day. But the growth has been completely organic. The game is actually still in beta, so we haven’t been doing any marketing other than posting some stuff on Twitter. There hasn’t been attempt to market this and get a lot of players [talking about it] because we’re still working the bugs out, and there are a lot of bugs still to be worked out.
But a couple NBA players have seen this and gotten excited about their own moments [on social media]. And there’s maybe a little bit of machismo going on where, ‘Hey, I want my moment to trade for a higher price.’ But I also think it’s the normals who are playing this. All you need to play is a credit card, and something like 65% of the people playing have never owned or traded in crypto before. So I think the thesis that crypto collectibles could be the thing that brings mainstream users into crypto is playing out before our eyes.
TC: How does Dapper get paid?
DP: We get 5% of secondary sales and 100% minus the cost of the transaction on primary sales. Of course, we have a relationship with the NBA, which collects some of that, too. But that’s the basic economics of how the system works.
TC: Does the NBA have a minimum that it has to be paid every year, and then above and beyond that it receives a cut of the action?
DP: I don’t think the company has gone public with the exact economic terms of their relationships with the NBA and the Players Association. But obviously the NBA is the IP owner, and the teams and the players have economic participation in this, which is good, because they’re the ones that are creating the intellectual property here.
But a lot of the appreciation of these moments — if you get one in a pack and you sell it for a higher price — 95% of that appreciation goes to the owner. So it’s very similar to baseball cards, but now IP owners can participate through the life of the product in the downstream economic activity of their intellectual property, which I think is super appealing whether you’re the NBA or someone like Disney, who’s been in the IP licensing business for decades.
And it’s not just major IP where this NFT space is happening. It’s individual creators, musicians, digital artists who could create a piece of digital art, make only five copies of it, and auction it off. They too can collect a little bit each time their works sell in the future.
TC: Regarding NBA Top Shot specifically, prices range massively in terms of what people are paying for the same limited-edition clip. Why?
DP: There are two reasons. One is that like scarce items, lower numbers are worth more than higher numbers, so if there’s a very particular LeBron moment, and they made 500 [copies] of them, and I own number one, and you own number 399, the marketplace is ascribing a higher value to the lower numbers, which is very typical of limited-edition collector pieces. It’s sort of a funny concept. But it is a very human concept.
The other thing is that over time there has been more and more demand to get into this game, so people are willing to pay higher and higher prices. That’s why there’s been a lot of price appreciation for these moments over time.
TC: You mentioned that some of the esoteric language around crypto scares people, but so does the fact that 20% of the world’s bitcoin is permanently inaccessible to its owners, including because of forgotten passwords. Is that a risk with these digital items, which you are essentially storing in a digital locker or wallet?
DP: It’s a complex topic, but I will say that Dapper has tried to build this in a way where that won’t happen, where there’s effectively some type of password recovery process for people who are storing their moments in Dapper’s wallet.
You will be able to take your moments away from Dapper’s account and put it into other accounts, where you may be on your own in terms of password recovery.
TC: Why is it a complex topic?
DP: There are people who believe that even though centralized account storage is convenient for users, it’s somehow can be distrustful — that the company could de-platform you or turn your account off. And in the crypto world, there’s almost a religious ferocity about making sure that no one can de-platform you, that the things that you buy — your cryptocurrencies or your NFTs. Long term, Dapper supports that. You’ll be able to take your moments anywhere you want. But today, our customers don’t have to worry about that I-lost-my-password-and-I’ll-never-get-my-moments-again problem.
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The carbon offset API developer Patch confirms a $4.5 million round led by Andreessen Horowitz
Patch, the carbon offset API developer, has raised $4.5 million in financing to build out its business selling customers a way to calculate their carbon footprint and identify and finance offset projects that capture the equivalent carbon dioxide emissions associated with that footprint.
Confirming TechCrunch reporting, Andreessen Horowitz led the round, which also included previous investors VersionOne Ventures, MapleVC and Pale Blue Dot Ventures.
Patch’s application protocol interface works for both internal and customer-facing operations. The company’s code can integrate into the user experience on a company’s internal site to track things like business flights for employees, recommending and managing the purchase of carbon credits to offset employee travel.
The software allows companies to choose which projects they’d like to finance to support the removal of carbon dioxide from the atmosphere, with projects ranging from the tried and true reforestation and conservation projects to more high-tech early-stage technologies like direct air capture and sequestration projects, the company said.
Patch founders Brennan Spellacy and Aaron Grunfeld, two former employees at the apartment rental service Sonder, stressed in an interview that the company’s offset work should not be viewed as an alternative to the decarbonization of businesses that use its service. Rather, they see Patch’s services as a complement to other work companies need to do to transition away from a reliance on fossil fuels in business operations.
Patch co-founders Brennan Spellacy and Aaron Grunfeld. Image Credit: Patch
Patch currently works with 11 carbon removal suppliers and has plans to onboard another 10 before the end of the first quarter, the company said. These are companies like CarbonCure, which injects carbon dioxide into cement and fixes it so that it’s embedded in building materials for as long as a building lasts.
“Carbon removal credits can help to dramatically accelerate the deployment of technologies like CarbonCure’s, which are absolutely critical to helping us reach our global climate targets. Demand for high-quality, permanent credits is sky-rocketing, and listing credits on Patch will help us to attract a broader range of buyers,” said Jennifer Wagner, president of CarbonCure Technologies, in a statement.
It also has around 15 customers already using its service, according to earlier TechCrunch reporting. Those buyers include companies like TripActions and the private equity firm EQT, which intends to extend the integration of Patch’s API from its own operations to those of its portfolio companies down the road, according to Spellacy.
Grunfeld said that the company would be spending the money to hire more staff and developing new products. From its current headcount of six employees, Patch intends to bring on another 24 by the end of the year.
As the company expands, it’s looking to some of the startups providing carbon emissions audit and verification services as a channel that the company’s API can integrate with and sell through. These would be businesses like CarbonChain, Persefoni and another Y Combinator graduate, SINAI Technologies.
“An increasing number of businesses are taking leadership positions in an effort to reduce emissions to try to counteract global warming,” said Jeff Jordan, managing partner at Andreessen Horowitz. “Patch makes it much easier for companies to add carbon removal to their core business processes, aggregating verified carbon-removal supply and offering turn-key access to it to companies through an easy-to-implement API.”
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