NFTs
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For the love of the loot: Blockchain, the metaverse and gaming’s blind spot
The speed at which gaming has proliferated is matched only by the pace of new buzzwords inundating the ecosystem. Marketers and decision-makers, already suffering from FOMO about opportunities within gaming, have latched onto buzzy trends like the applications of blockchain in gaming and the “metaverse” in an effort to get ahead of the trend rather than constantly play catch-up.
The allure is obvious, as the relationship between the blockchain, metaverse and gaming makes sense. Gaming has always been on the forefront of digital ownership (one can credit gaming platform Steam for normalizing the concept for games, and arguably other media such as movies), and most agreed upon visions of the metaverse rely upon virtual environments common in games with decentralized digital ownership.
Whatever your opinion of either, I believe they both have an interrelated future in gaming. However, the success or relevance of either of these buzzy topics is dependent upon a crucial step that is being skipped at this point.
Let’s start with the example of blockchain and, more specifically, NFTs. Collecting items of varying rarities and often random distribution form some of the core “loops” in many games (e.g., kill monster, get better weapon, kill tougher monster, get even better weapon, etc.), and collecting “skins” (i.e., different outfits/permutation of game character) is one of the most embraced paradigms of microtransactions in games.
The way NFTs are currently being discussed in relation to gaming are very much in danger of falling into this very trap: Killing the core gameplay loop via a financial fast track.
Now, NFTs are positioned to be a natural fit with various rare items having permanent, trackable and open value. Recent releases such as “Loot (for Adventurers)” have introduced a novel approach wherein the NFTs are simply descriptions of fantasy-inspired gear and offered in a way that other creators can use them as tools to build worlds around. It’s not hard to imagine a game built around NFT items, à la Loot.
But that’s been done before … kind of. Developers of games with a “loot loop” like the one described above have long had a problem with “farmers,” who acquire game currencies and items to sell to players for real money, against the terms of service of the game. The solution was to implement in-game “auction houses” where players could instead use real money to purchase items from one another.
Unfortunately, this had an unwanted side effect. As noted by renowned game psychologist Jamie Madigan, our brains are evolved to pay special attention to rewards that are both unexpected and beneficial. When much of the joy in some games comes from an unexpected or randomized reward, being able to easily acquire a known reward with real money robbed the game of what made it fun.
The way NFTs are currently being discussed in relation to gaming are very much in danger of falling into this very trap: Killing the core gameplay loop via a financial fast track. The most extreme examples of this phenomena commit the biggest cardinal sin in gaming — a game that is “pay to win,” where a player with a big bankroll can acquire a material advantage in a competitive game.
Blockchain games such as Axie Infinity have rapidly increased enthusiasm around the concept of “play to earn,” where players can potentially earn money by selling tokenized resources or characters earned within a blockchain game environment. If this sounds like a scenario that can come dangerously close to “pay to win,” that’s because it is.
What is less clear is whether it matters in this context. Does anyone care enough about the core game itself rather than the potential market value of NFTs or earning potential through playing? More fundamentally, if real-world earnings are the point, is it truly a game or just a gamified micro-economy, where “farming” as described above is not an illicit activity, but rather the core game mechanic?
The technology culture around blockchain has elevated solving for very hard problems that very few people care about. The solution (like many problems in tech) involves reevaluation from a more humanist approach. In the case of gaming, there are some fundamental gameplay and game psychology issues to be tackled before these technologies can gain mainstream traction.
We can turn to the metaverse for a related example. Even if you aren’t particularly interested in gaming, you’ve almost certainly heard of the concept after Mark Zuckerberg staked the future of Facebook upon it. For all the excitement, the fundamental issue is that it simply doesn’t exist, and the closest analogs are massive digital game spaces (such as Fortnite) or sandboxes (such as Roblox). Yet, many brands and marketers who haven’t really done the work to understand gaming are trying to fast-track to an opportunity that isn’t likely to materialize for a long time.
Gaming can be seen as the training wheels for the metaverse — the ways we communicate within, navigate and think about virtual spaces are all based upon mechanics and systems with foundations in gaming. I’d go so far as to predict the first adopters of any “metaverse” will indeed be gamers who have honed these skills and find themselves comfortable within virtual environments.
By now, you might be seeing a pattern: We’re far more interested in the “future” applications of gaming without having much of a perspective on the “now” of gaming. Game scholarship has proliferated since the early aughts due to a recognition of how games were influencing thought in fields ranging from sociology to medicine, and yet the business world hasn’t paid it much attention until recently.
The result is that marketers and decision-makers are doing what they do best (chasing the next big thing) without the usual history of why said thing should be big, or what to do with it when they get there. The growth of gaming has yielded an immense opportunity, but the sophistication of the conversations around these possibilities remains stunted, due in part to our misdirected attention.
There is no “pay to win” fast track out of this blind spot. We have to put in the work to win.
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Dispo launches a test to gauge user interest in selling their photos as NFTs
Dispo, the photo-sharing app that emulates disposable cameras, started rolling out a test yesterday that will record user interest in selling photos as NFTs. Some users will now see a sell button on their photos, and when they tap it, they can sign up to be notified when the ability to sell Dispo photos launches.
CEO and co-founder Daniel Liss told TechCrunch that Dispo is still deciding how it will incorporate NFT sales into the app, which is why the platform is piloting a test with its users. Dispo doesn’t know yet what blockchain it would use, if it would partner with an NFT marketplace or what cut of sales Dispo would take.
“I think it’s safe to say from the test that there will be an experience native to the Dispo app,” Liss said. “There are a number of ways it could look — there could be a native experience within Dispo that then connects through an API to another platform, and in turn, they’re our partner, but to the community, it would look native to the Dispo app.”
Image Credits: Dispo
This marks a new direction for the social media app, which seeks to redefine the photo-sharing experience by only letting users see the photos they took at 9 AM the next morning. From Dispo’s perspective, this gimmick helps users share more authentically, since you take one photo and then you’re done — the app isn’t conducive to taking dozens of selfies and posting the “best” image of yourself. But though it only launched in December 2019, Dispo has already faced both buzzy hype and devastating controversy.
Until about a year ago, the app was called David’s Disposables, named after co-founder and YouTuber David Dobrik. The app was downloaded over a million times in the first week after its release and hit No. 1 on the App Store charts. In March 2021, the app dropped its waitlist and relaunched with social network features, but just weeks later, Insider reported sexual assault allegations against a member of Vlog Squad, Dobrik’s YouTube prank ensemble. In response, Spark Capital severed ties with the company, leading to Dobrik’s departure. Other investors like Seven Seven Six and Unshackled Ventures, which contributed to the company’s $20 million Series A round, announced that they would donate any profits from their investments in Dispo to organizations working with survivors of sexual assault.
Liss told TechCrunch in June, when the company confirmed its Series A, that Dobrik’s role with the company was as a marketing partner — Liss has been CEO since the beginning. In light of the controversy, Liss said the app focused on improving the product itself and took a step back from promotion.
According to data from the app analytics firm SensorTower, Dispo has reached an estimated 4.7 million global installs to date since launch. Though the app saw the most downloads in January 2020, when it was installed over 1 million times, the app’s next best month came in March 2021, when it removed its waitlist — that month, about 616,000 people downloaded Dispo. Between March and the end of August, the app was downloaded around 1.4 million times, which is up 118% year over year compared to the same time frame in 2020 — but it should be expected that this year’s numbers would be higher, since last year, the app’s membership was exclusive.
Image Credits: Dispo
Now, with the announcement that Dispo is pursuing NFTs, Liss hopes that his company won’t just change how people post photos, but what the relationship will be between platforms and the content that users create.
“Why NFTs? The most powerful memories of our lives have value. And they have economic value, because we created them, and the past of social media fails to recognize that,” Liss told TechCrunch. “As a result, the only way that a creator with a big following is compensated is by selling directly to a brand, as opposed to profiting from the content itself.”
Adding NFT sales to the app offers Dispo a way to profit from a cut of user sales, but it stands to question how adding NFT sales could impact the community-focused feel of Dispo.
“I think there is tremendous curiosity and interest,” Liss said. “But these problems and questions are why we need more data.”
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Arianna Simpson of a16z on Yield Guild Games, the firm’s newest bet on crypto + gaming
As one of four general partners at Andreessen Horowitz who are investing the venture firm’s new $2.2 billion crypto fund, Arianna Simpson is very focused on how to return that capital and much more to the firm’s limited partners.
Toward that end, she has been more focused of late on startups that combine crypto with gaming. Last month, for example, her team co-led an investment in Virtually Human Studio, the startup behind a digital horse racing service Zed Run, wherein users buy, sell and breed virtual horses whose value rises depending on their performance against other virtual horses. (Each is essentially a non-fungible token, or NFT, meaning it is unique.)
Simpson is relatedly intrigued with NFT-based “play-to-earn” models, wherein gamers can earn cryptocurrency that they can then cash out for their local currency if they so choose. Indeed, a16z is announcing today that it just led a $4.6 million investment in the tokens of Yield Guild Games (YGG), a decentralized gaming outfit based in the Philippines that invites players to share in the company’s revenue by playing games like “Axie Infinity,” a blockchain-based game where players breed, battle and trade digital creatures named Axies in order to earn tokens called “Small Love Potion” that they can eventually cash out. YGG lends players the money to buy the Axies and other digital assets to start the game, so they can start earning money. (The obvious hope is that they earn more than they have to pay YGG for the use of its assets.)
We talked yesterday with Simpson — who joined a16z after first backing some of the same startups, including the blockchain infrastructure company Dapper Labs and the global payment platform Celo — to learn more about what’s happening at the intersection of crypto and gaming. She also shared which platforms a16z tracks most closely to identify up-and-coming crypto startups. Our chat, edited for length, follows.
TC: Zed Run is really interesting. How did you first come across this digital horse racing business?
AS: I think it was crypto Twitter, which honestly is where we’re finding a lot of our gaming investments. The community on there is really incredible and often one of the first places where really exciting new projects are surfaced.
Zed really marks the advent of kind of a new type of more involved gameplay in crypto. If you look at [the collectibles game] CryptoKitties, it was one of the first NFT-based games that really caught the attention of people outside of the crypto sphere. Zed is definitely a derivative extension in the sense that you have a digital animal that you’re playing with, but the gameplay is much more complex, and the thing that’s been incredible to watch is just how excited the community is. People are putting together all kinds of very sophisticated guides around how to play the game, to read [race] courses, how to do all kinds of different things in the game, and tens of thousands of people all over the world [are playing].
TC: Maybe these already exist, but are there endless opportunities across verticals here, like, say, a digital car racing equivalent or a UFC-style equivalent, where people are buying and betting on digital fighters and hoping they’ll rise in value?
AS: There’s an incredibly broad range of possibilities in terms of what’s happening and what will happen in the universe of crypto games. I think at the core of this movement is really the idea of giving more of the value and ownership in these game assets back to the players. That’s something that has historically been a problem. You might spend years and years building up your arsenal of skins or in-game assets, and then a game will change the rules, take [some of your winnings] away from you or do any number of things that can leave players feeling very disappointed and kind of ripped off. The idea [with blockchain-based games] is to make them more open and allow players to have actual ownership in the space themselves.
TC: Which leads us to your newest investment, Yield Guild Games, or YGG. Why did this company capture the firm’s attention?
AS: During the pandemic, a lot of people were put out of work and not able to provide for themselves and for their families. This time kind of coincided with the rise of a game called “Axie Infinity,” one of the first games to pioneer a play-to-earn model, which is becoming a very important theme in crypto games.
In order to play “Axie Infinity,” you need to have three Axies, and generally speaking, that means you need
to buy them upfront. Obviously if you’re out of work, you have no money [so buying these digital pets] can become a very challenging proposition. So [YGG founder] Gabby Dizon in the Philippines, who played “Axie Infinity” started lending out his Axies so other people could play the game and earn tokens that could then be converted to local currency. And so basically YGG emerged as sort of the productization of what they were doing here, so YGG either purchases or breeds in-game assets that are yield-earning, then loans them to out “scholars,” who are the recipients of these in-game assets, and YGG then takes a small cut of the in-game revenue that the players generate over time.
TC: Does a “scholar” have to be a sophisticated player?
AS: There are managers who basically manage teams of scholars; they’re the ones who effectively decide who to bring into the guild.
TC: So these Axies can be cashed out for currency, but where, and who is buying them?
AS: They can be bought or sold on exchanges and other players are buying them if they need to breed in “Axie” and needs some [Axies]; others are buying them for investment purposes. Also, they aren’t necessarily selling the NFTs but they may be selling the tokens that they earn as part of the gameplay.
TC: There are now 5,000 of these scholars playing the game. Are they mostly in Southeast Asia?
AS: A majority of the players and scholars are in Southeast Asia, but we’re seeing really strong international growth as well, both for “Axie Infinity” and YGG, in particular. At this point, scaling internationally is definitely a core focus for the YGG team.
TC: You mentioned crypto Twitter. What about Discord and Reddit? Where else are you looking around for new crypto projects that are bubbling up and capturing people’s imagination?
AS: All of the above. Discord in particular is very actively used by the crypto community, and the thing that’s interesting there is it really allows you to get a pulse for how active a community is, how engaged people are, how frequently they’re talking, and what they’re talking about. It gives you a look into the community at large and that’s a very important thing to consider when looking to make an investment or assess the health of a project.
TC: One of the cofounders of YGG is known only as the Owl of Moistness. Why do we see these pseudonyms so often in this world?
AS: One of the things I love the most about crypto is that it’s a little bit weird. The industry doesn’t take itself too seriously. I actually think that’s really important in terms of allowing people enough creativity to build new things rather than copies of existing things.
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Cent, the platform that Jack Dorsey used to sell his first tweet as an NFT, raises $3M
Cent was founded in 2017 as an ad-free creator network that allows users to offer each other crypto rewards for good posts and comments — it’s like gifting awards on Reddit, but with Ethereum. But in late 2020, Cent’s small, San Francisco-based team created Valuables, an NFT market for tweets, and by March, the small blockchain startup was thrown a serendipitous curveball.
“We just wrapped up for the day, and I was about to go eat dinner, and all these people started texting me,” remembers CEO Cameron Hejazi. Then, he realized that Twitter CEO Jack Dorsey had minted Twitter’s first-ever Tweet through Cent’s Valuables application. “I was basically like, mildly shivering for the rest of the night. The whole team, we were like, ‘Okay, battle stations, prepare to get hacked!’ ”
Dorsey ended up selling his NFT for $2.9 million, and he donated the proceeds to Give Directly’s Africa Response fund for COVID-19 relief. But for Cent, it was as if the small company had just been handed a free marketing campaign. Now, about five months later, Cent is announcing a $3 million round of seed funding with investors like Galaxy Interactive, former Disney chairman Jeffrey Katzenberg, will.i.am and Zynga founder Mark Pincus.
On Valuables, anyone on the internet can place an offer on any tweet, which then makes it possible for someone else to make a counter-offer. If the author of the tweet accepts an offer (logging into Valuables requires you to validate your Twitter account), then Cent will mint the tweet on the blockchain and create a 1-of-1 NFT.
The NFT itself contains the text of the tweet, the username of the creator, the time it was minted and the creator’s digital signature. The NFT also includes a link to the tweet, though the linked content lives outside the blockchain.
Image Credits: Cent (opens in a new window)
There’s nothing proprietary about minting tweets as NFTs — another company could do the same thing that Cent is doing. Even Twitter itself has recently dabbled in giving away free NFT art, though it hasn’t tried to sell actual tweets as NFTs like Cent. Still, Hejazi sees Dorsey’s use of Cent like an endorsement — he thinks it would be difficult for Twitter to shut them down, since Dorsey made $2.9 million on the platform himself. After all, Dorsey chose Cent instead of taking a screenshot of his first tweet, minting the .JPG as an NFT and posting it on a larger NFT platform, like OpenSea.
“We’ve spoken with people at Twitter. I’m positive that we have a healthy relationship going,” Hejazi said (Twitter declined to comment on or confirm whether that’s true). “We thought about applying this approach to other social platforms, like Instagram and TikTok, but we hypothesized that this is particularly suited for Twitter, because it’s a conversation platform, and it’s where all of the crypto people are actually living.”
With Cent’s seed funding Hejazi hopes to continue building the platform. The company’s goal is to enable anyone creative to make an income through the use of NFTs — that means developing tools to make it simpler for its users to mint NFTs, but also, building out its existing creator-focused social network. The content people post on Cent is usually creative work, like art and writing, rather than short posts — it’s closer to DeviantArt than it is to Reddit. These are lofty goals for a $3 million seed funding round, but there are aspects of Cent’s Beta platform that make it promising.
“There’s already value in what we post on social media. It’s just being proxied through ad dollars, and it doesn’t have to be the case that there’s so much wealth concentration in a single entity. We can work toward a system that decentralizes that wealth,” said Hejazi. “These networks as they exist have monopolies on distribution — you can’t take your Twitter audience, download it as a .CSV and send them all an email.”
A screenshot of Cent’s social platform.
In addition to independent distribution lists, Hejazi wants to move away from the ad-supported internet. He references Substack as an example of a company where the creator has control of their list, and at the same time, the platform can remain ad-free, since the money that propels it comes from the users who pay to subscribe to newsletters (and also, venture capital helps).
But Cent does something different by allowing users to essentially invest in creators who they think have the potential to take off on their platform.
Users can “seed” a post, which is how you subscribe to a creator participating on the creatives side of Cent’s platform. As the seeder, you pay a set fee of at least one dollar per month. There’s an incentive to support up-and-coming creators on the platform, because seeders get a portion of the creators’ future profit — it’s like making a bet on them that they will continue to make great content in the future. Five percent of profits go toward Cent, but the remaining 95% is split 50/50 between the creator and all of their past seeders. Participating on this platform would allow creators to network and show support for one another, but doesn’t prevent them from more directly monetizing their work on other creator platforms, like Patreon.
In addition to seeding posts, users can also “spot” other people’s posts — Cent’s version of a “like” button. Each “spot” is the equivalent of one cent from the user’s crypto wallet. Cent’s argument is that getting 1,000 likes on a post on other platforms yields nothing but a vague sensation of social clout. But on Cent, if a user gets 1,000 “spots,” that’s $10. Still, a project like this can only work if enough people use the platform.
“When we started Cent, we chose cryptocurrencies because we loved the idea of someone being able to earn money with nothing more than their creativity and a crypto address,” Hejazi said. “Over time, we’ve found it to be limiting as a payment type — very few people actually own it and have it ready to spend. We’re working on ways to make payments to creators using Cent easier, and are exploring both crypto-native and non-crypto options.”
This mindset echoes other NFT startups like Yat, which allows payments via credit card as part of its “progressive decentralization” model. So much of these companies’ success depends on public buy-in toward an eventual decentralized, blockchain-based internet. But until then, companies like Cent will continue to experiment in reimagining how creatives can get paid online.
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DraftKings shares plans for launch of NFT collectibles marketplace
DraftKings is charging into the NFT game, announcing a marketplace aimed at curating sports and entertainment-themed digital collectibles for its audience of enthusiasts. The platform is “debuting later this summer,” and showcases another potentially lucrative expansion for the fantasy sports betting company.
DraftKings is entering a market that is both crowded and sparse — with plenty of NFT marketplace options for today’s niche group of collectors, though offerings are still light when considering the billions that have flowed through the space in the first several months of the year. This week, investors gave NFT marketplace OpenSea a $1.5 billion valuation. Dapper Labs, which makes NBA Top Shot, recently raised at a reported $7.5 billion valuation.
Dapper’s existing sway in the space will leave DraftKings pursuing opportunities outside exclusive league partnerships. NBA Top Shot allows players to buy “Moments” from NBA history, clips of actual game and player footage to which it has access via league and players’ association partnerships. In addition to the NBA, Dapper has already partnered with other leagues.
DraftKings’ foothold in the space will come from an exclusive partnership with Autograph, a newly launched NFT startup co-founded by quarterback Tom Brady. The company has inked exclusive NFT deals with some top athletes, including Tiger Woods, Wayne Gretzky, Derek Jeter, Naomi Osaka and Tony Hawk, hoping to build out its platform as the hub for sports personality collectibles.
Aside from the partnerships, DraftKings is hoping to get a leg up in the space by further simplifying the user onboarding process, allowing users to buy NFTs without loading a wallet with cryptocurrency, instead purchasing with USD. When the platform launches, users will be able to purchase NFTs from DraftKings and resell or trade them through the platform.
For DraftKings, which has raised some $720 million in funding since launch in 2012, the NFT expansion could offer an opportunity of funneling their existing audience into the new vertical. Few existing tech startups have made noteworthy expansions into the NFT world despite plenty of hype and investor interest. DraftKings co-founder Matt Kalish tells TechCrunch that the startup’s devoted community is its biggest asset to winning in the rising space.
“DraftKings has millions of people in our community who show up to out-platform every day and every week,” Kalish says. “We think our biggest advantage is the strength and size of our community… [We] will bring a lot of eyeballs to the table.”
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Mythical Games raises $75M to build an NFT game engine
Even as NFT sales dip below their most speculative highs, startups aiming to tap into their potential are still scoring big funding rounds from investors who believe there’s much more to crypto collectibles than the past few months of hype.
Mythical Games, an NFT games startup based out of Los Angeles, has banked a $75 million raise from new and existing investors betting on the startup’s aim to expand the ambitions of their first title and locate a substantial platform opportunity amid helping developers build blockchain-based gaming experiences.
The round was led by WestCap. Existing investors were joined by 01 Advisors and Gary Vaynerchuk’s VaynerFund in the Series B funding. The startup has raised a whopping $120 million to date.
The company has been building a title called Blankos Block Party that seems to be Fall Guys meets Roblox meets Funko Pop. The PC game capitalizes on a number of big social gaming trends around user-created content, while adding in a marketplace where users can buy avatar figures and accessories crafted by a variety of artists and designers that Mythical has partnered with. Users can buy or sell the limited run or open edition items through their marketplace. Unlike some other NFT platforms, the goods live on a private blockchain so they can’t be re-sold on public marketplace platforms like OpenSea.
Mythical Games is part of a growing movement to bring blockchain-based game mechanics mainstream while leaving behind elements of crypto platforms that are seen as less ready for primetime. Users can purchase avatars on the platform with cryptocurrency through BitPay but they can also pay with a credit card. Users don’t need to walk through the mechanics of setting up a wallet or writing down a seed phrase either.
While the company has big hopes for Blankos as it onboards more users, the bigger investor opportunity is likely in the game engine that the team is building. The startup’s “Mythical Economic Engine” is being designed to help budding game builders create NFT-based marketplaces that won’t get them in any regulatory trouble, marrying compliance across geographies and tools that help creators comply with anti-money laundering laws and know-your-customer frameworks.
“With any new market like [NFTs], it goes through all these different cycles,” Mythical Games CEO John Linden tells TechCrunch. “We think this will actually change gaming for the long haul. The more we talk to game studios, we’re finding more and more potential use cases.”
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Augmented reality NFT platform Anima gets backing from Coinbase
Augmented reality and non-fungible tokens, need I say more? Yes? Oh, well NFTs have certainly had their moment in 2021, but the question of what they do or what can be done with them has certainly been getting voiced more frequently as the speculative gold rush begins to cool off and people start to think more about how digital goods can evolve in the future.
Anima, a small creative crypto startup built by the founders of photo/video app Ultravisual, which Flipboard acquired back in 2014, is looking to use AR to shift how NFT art and collectibles can be viewed and shared. Their latest venture is an effort to help artists bring their digital creations to a bigger digital stage and help find what the future of NFTs looks like in augmented reality.
The startup has put together a small $500K pre-seed round from Coinbase Ventures, Divergence Ventures, Flamingo DAO, Lyle Owerko and Andrew Unger.
“As NFTs move away from being a more speculative market where it’s all about returns on your purchases, I think that’s healthy and it’s good for us specifically because we want to make things that are more approachable,” co-founder Alex Herrity says.
Their broader vision is finding ways for digital objects to interact with the real world, something that’s been a pretty top-of-mind concern for the AR world over the last few years, though augmented reality development has cooled more recently as creators have sunk into a wait-and-see attitude toward new releases from Apple and Facebook. Both the AR and NFT spaces are incredibly early, something Anima’s co-founders were quick to admit, but they think both spaces have matured enough that the gimmicks are out in the open.
“There’s a context shift that happens when you see AR as a vehicle to have a tactile relationship with something that you collected or that you see is a lifestyle accessory versus the common thing now where it’s a little bit more of an experiential gimmick,” co-founder Neil Voss tells TechCrunch.
The team has worked with a couple artists already as they’ve made early experiments in bringing digital art objects into AR and they’re launching a marketplace late next month based on ConsenSys’s Palm platform, where they hope to showcase more of their future partnerships.
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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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NFTs could bridge video games and the fashion industry
Non-fungible tokens (NFTs) offer new ways for consumers to collect, wear and trade fashion online, and now that most fashion shows have scaled back or gone virtual, they may become an important tool for the industry.
Because some of the most profitable NFTs are produced by celebrities with teams, it makes sense that music corporations, fashion brands and designers are venturing into the NFT market as well. Just this month, sneaker brand RTFKT Studios garnered $3.1 million in seven minutes by selling crypto collectibles. In December 2020, NFT startup Enjin partnered with Netherlands-based fashion house The Fabricant on a virtual collection. Real-life fashion brands use NFTs for marketing in virtual worlds like Minecraft, plus several Atari and Microsoft video games.
The fundamental value NFTs offer to bridge virtual fashion items with video games is the option to secure custody of the item for use in other games or mobile apps.
“Brands are coming up with some creative solutions because the pandemic is persistent, and fashion is something that is so close to our identities,” said Bryana Kortendick, Enjin’s VP of operations and communications. “You can snap a photo of yourself wearing your Atari-branded NFTs. You’ll also be able to wear them in video games.”
Breakout NFT star Beeple said he imagines a future where fashion NFTs could be redeemed for specific items in physical stores, especially at luxury retailers like his former client Louis Vuitton.
“You can relate NFTs to clothing in new and interesting ways,” he said. “This will be seen as the next chapter of digital art history. This is a continuation of digital art history that started decades ago, by that I mean art made on a computer and distributed through the internet.”
Fashion designers like Schirin Negahbani are already creating NFTs that represent actual clothing. Precisely because multimillion-dollar NFT sales are breaking records, spectators have been prompted to question the role speculative trading plays in this trend.
Textile designer Amber J. Dickinson says fashionable NFTs shouldn’t primarily be viewed as speculative trading opportunities. “The way I think fashion translates to the digital world is to view an NFT as a collectible piece of the garment for history,” said Dickinson, known for hand-made silk scarves and her work with Alexander McQueen. “I would only buy art as a piece that I liked. Whether digital or in the real world, I don’t take an investor’s point of view.”
There are many fashion fans who disagree with Dickinson, preferring to invest through assets like Birkin bags. They may have a different approach to NFTs. The DIGITALAX crypto fashion platform, for example, is being built with a plethora of trading features. As for Dickinson, she said she is still looking for her tribe of crypto-savvy artists on Twitter.
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Can you beat Google with Google’s brains?
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
Natasha and Danny and Alex and Grace were all here to chat through the week’s biggest tech happenings. Like every week, we had to leave a lot of great stuff on the cutting-room floor. But, we did get to touch on a bunch of news that we feel really matters.
Also we do wind up talking about a few Extra Crunch pieces, which is where our deeper analysis on news items lives. If the paywall is a bother, you can get access while saving 50% with the code “EQUITY.”
Here’s what we got into:
- Crypto-art and the NFT boom continue. Check out what Beeple just did. Danny has an opinion on the matter.
- The Roblox direct-listing does very little actually solve the IPO pricing issue. That said, well done Bloxburg.
- We talked about the Coursera S-1, which gave us the first financial peek into an education company revitalized by the pandemic.
- The numbers needed context, so our follow up coverage gives readers 5 takeaways from the Coursera IPO.
- Language learning has a market, and it’s big. We talked about Preply’s $35 million raise and why tutoring marketplaces make sense.
- Dropbox is buying DocSend, which makes pretty good sense. Even if the exit price won’t matter much for bigger funds. We’re still witnessing Dropbox and Box add more features to their product via acquisitions. Let’s see how it impacts their revenue growth.
- Zapier buys Makerpad. We struggled to pronounce Zapier, but did have some notes on the deal and what it might mean for the no-code space.
- Sticking the acquisition theme, PayPal bought Curv. If you were looking for more evidence that big companies are taking crypto seriously, well, here it is.
- And to close we nerded out about Neeva. Can a Google-competitor take on Google if it was founded by ex-Googlers?
The show is back Monday morning. Stay cool!
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!
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