NFT and VC deals


Last year trend were the NFTs… NFTs everywhere, by now we don’t talk about anything else! But what are they really about? How many venture capital funds are investing in these new devices?

What are NFTs?

The NFTs (Non Fungible Token) are certificates of digital property, represented by cryptographic tokens, which represent a unique digital work. Attention, with “work” we mean anything kind of work, in the widest sense of the term: videos, photos, GIFs, audios… even a videoclip of an NBA match can be translated into an NFT.

Let’s analyze together the meaning of these words:


  • Non Fungiible: it means anything of irreplaceable. Let’s take, for example, 1 euro: a one euro coin has the same value as another one euro coin. And the NFTs? Each NFT, even if similar, has a unique value, so it is not fungible.

  • Token: each NFT is cryptographic and identified in a unique manner, unequivocal, irreplaceable.

NFT Market The entire market of the NFTs is favored by the blockchain: it is the backbone which assures the correct functioning of the system. However, other devices intervene, not analyzed here, as the hashing technique.

However, actually, what guarantees the true functioning of the entire system is the elapsing relation between the seller and the buyer: who guarantees that Tizio (the maker of the talent work) doesn’t realize, in the future, identical copies for which Caio bought the digital identity? So, it is really the trust bond between the main characters of the market who guarantee the functioning and the sustainability.

Source "GoogleTrends"

The entire market of the NFTs blew at the end of 2020 when, following some important acquisitions of startups working in the market of exchange of taken not fungible.

Following, every corporation decided to create a small asset of NFTs to prepare itself to the explosion of the platform: NBA with its videoclips of LJ’s dunks, Nike with its sneakers, it gave born to entire categories of digital artists.

Many sports leagues have plunged into offering NFTs. In 2019, North America’s National Basketball Association partnered with crypto company Dapper Labs to launch “Top Shot” ⁠ — 12-second highlights encrypted on the blockchain and then sold to fans as digital cards. One of these, a clip of a LeBron James dunk, was resold for $200,000, even though a similar video can be viewed on YouTube for free. 


Following this trend, also the main Football Championship in the World, Premier League, decided to be concentrated in NFTs: some recent declarations affirm that Premier League investors are looking to plan a strategy for NFT marketoplaces.

It’s not over: Formula 1 has been inspired by NBA’s experiments and the first in-game NFT F1 car sold for what was then the equivalent of $113,000.

Source "Cnet"

The typologies of NFTs which are mainly triumphing on the market are the CryptoPunks: recently, in fact, it happened the greatest transaction of the non-fungible token market regarding the funny CryptoPunk. The sum? Well, “only” $523 million (cfr. “CryptoPunk NFT sold for 530mln Dollars”, Cnet).

These funny gadget has raised last summer 1 billion in sales: this is insane (cfr. “Cryptopunks NFT Collection Joins Axie Infinity and Opensea

by Hitting $1 Billion in Sales”).

INVESTORS

Following the NFTs market boom in 2020, many digital investors (but not only) entrust themselves to the NFT blockchain.

However, the most interesting thing is the quantity of VC funds and startups which were born developing competences in this highly expanding market.

NFT investments” (cfr. https://www.nftinvest.pro/) is a UK PLC that is purpose to engage, partner, incubate and develop NFT, companies and right. Lots of Stars and firms declared that they have invested money in NFT objects: Eminem, JAYZ, Marc Benioff, Google Ventures, Andreessen Horowitz… (cfr. “VC investments in NFT marketplaces”, BNY Mellon).


Here you can see a list of Venture Companies and funds that has invested millions of dollars in this new digital platform.

So, it’s evident that the tech investors are focusing a lot on this market as much in expansion as uncertain and still a bit unripe. Sure, is that especially many youngsters and risk-lovers are attracted by it.

It’s very interesting to signal that also the NFTs market is strictly correlated to the Cryptocurrencies world; it is sufficient to think about that the big part of transactions concerning the purchases and sales of non-fungible tokens happen through Ethereum.

NFTs and Sports: Sorare start-up

It’s really interesting analyse how NFT objects has affected football World. In September 2021, SoftBank leads a $680m investment into French start-up Sorare. 



Source "Sorare"

Sorare is a French Startup, founded in 2018 by Nicolas Julia e Adrien Montfort, and it consists of online gaming that allows fans to pick an imagined team of real footballers, earning points according to their performance on the pitch each week. Players of the fantasy game can earn or buy NFT digital football cards, which can also be traded as unique items.


The firm is now valued at $4.3bn and it has been recorded as one of the largest fundraising rounds for a European technology start-up this year!

The new investment is led by SoftBank, including other VC actors as Atomico and Bessemer, as well as football stars such as FC Barcelona’s Gerard Piqué and former Manchester United defender Rio Ferdinand. Sorare works following the idea that physical and material property of cards has moved on: so, they decided to be inspiring by Panini’s success and translate the sports cards market to Non Fungible Token. Obviously, the idea was promoted and supported by the crypto success and diffusion.


The risk is that NFTs represent a shortlived fad, with accusations that some crypto groups have targeted sports fans with the idea that they can net financial returns by speculating on NFT sales. Sorare’s Julia said: “You will never see in [our] marketing that you can make money. Like in the physical world, some people will do like [they do] with Panini cards. Some of them sell for millions and way more than NFT cards today. But the core experience is the game.”

We can understand that the idea of Sorare is not inspire cards owner to speculate with cards but using this platform to fun as well as playing a game. Julia said Sorare has achieved $150m in revenues so far this year, with the latest investment to be spent expanding in the US and securing new deals. Last week, it announced a contract with Spain’s La Liga competition, and is in talks with the English Premier League, the world’s most watched domestic football contest.

References


  1. https://www.theguardian.com/technology/2021/feb/26/art-amulets-cryptokitties-new-frontier-cryptocurrency-non-fungible-tokens-nft

  2. https://www.cnet.com/news/this-cryptopunk-nft-just-sold-for-530-million-kind-of/#:~:text=CryptoPunk%20%239998%2C%20part%20of%20a,for%20%24530%20million%20on%20Thursday.&text=It's%20the%20most%20expensive%20NFT,ethereum%20%2D%2D%20about%20%24532%20million.

  3. https://www.nftinvest.pro/

  4. https://www.bnymellon.com/us/en/insights/all-insights/venture-capital-investment-in-nft-marketplace.html

  5. https://www.cnbc.com/2021/03/25/nft-boom-vcs-pump-millions-into-digital-collectibles-start-ups.html

  6. https://www.ilsole24ore.com/art/venture-capitalist-e-altri-investitori-finanziano-marketplace-nft-AEfTQ9b

  7. https://news.bitcoin.com/cryptopunks-nft-collection-joins-axie-infinity-and-opensea-by-hitting-1-billion-in-sales/

  8. https://www.ft.com/content/9b247322-fc83-4e7b-bd03-c66eaf1dc762