OpenSea has raised $23m to scale its non-fungible token marketplace as the NFT craze continues to gain momentum.
The startup has been around since 2017 when CryptoKitties, virtual cats powered by the Ethereum blockchain, became the biggest trend in the NFT space. While OpenSea managed to raise $2m from Founders Fund and a smattering of crypto-centric firms just a few months after its inception, only the biggest crypto fans tapped into the nascent market back then.
Fast forward to today and the news is awash with NFT stories. Most of the headlines relate to how artists like Grimes and Captain Kirk himself – William Shatner – have sold digital art or memorabilia for eye-watering prices. For example, the artist Beeple sold a piece of digital art for $69.3m at a Christie’s auction in March.
However, NFT supporters claim that focusing on those bizarre multi-million price tags misses the point. Instead, they champion the digital asset’s potential to create new revenue streams for businesses, artists and influencers whilst enabling them to also prove their ownership of the products.
Bigger firms may soon be joining the crypto Twitterati in backing these assets. Some believe that Square could be one of the first to do so. Since the fintech acquired music-streaming platform TIDAL earlier in March for $297m, the rumour mill has run hot with speculation that the partnership is a precursor for introducing NFTs into the mix. Neither of the companies have confirmed those rumours.
The potential of NFTs and the deluge of high-publicity deals have drummed up a wave of interest in the fledging market. Over $100m worth of NFTs are trading hands every week, with OpenSea claiming that transactions on its marketplace have grown 100 times in the past six months.
The New York-headquartered startup is now setting a course to capitalise on the trend with its new $23m cash injection.
“Over the coming years, billions of people will be introduced to digital ownership, and we’ve built OpenSea as a trusted entry point into that world,” said Devin Finzer, co-founder and CEO of OpenSea.
“And we don’t want to do it alone. As we like to say: build an ocean, not an aquarium. Any NFT project or creator can plug into our marketplace without being wedded to a particular platform. The 20 million+ NFTs you can trade on OpenSea are not owned by OpenSea, they are owned by users. This is a huge paradigm shift and the first glimpse into a world where users, not corporations, control their own data.”
Andreessen Horowitz – which has previously backed BuzzFeed, Clubhouse and Coinbase – led the raise, sermonising that the time for the new blockchain asset has come.
“NFTs are breaking out to more mainstream audiences and represent an entirely new economy based on digital ownership,” said Katie Haun, general partner at Andreessen Horowitz.
“Despite the massive opportunity, NFTs had been somewhat confusing for ordinary consumers, much like the internet in the days before the browser. There was no marketplace that allowed creators and collectors to easily search for and view unique digital assets across different platforms and no easy way to buy them. It also wasn’t straightforward to discover their origin and history. OpenSea provides the link between the consumer layer and the infrastructure layer for the digital goods economy and is a key utility in this new world of digital ownership.”
A slew of angel investors also backed the round, including AngelList founder Naval Ravikant, celebrity investor Mark Cuban, early-stage Facebook and Uber investor Tim Ferris, Airbnb and PayPal board member Belinda Johnson, and Scalar Capital co-founder Linda Xie.
Previous backers 1Confirmation, Pascal Capital, Blockchain Capital, Regan Bozman, Kevin Hartz and Dylan Field from Figma also participated in the raise.