NFT startups Dapper Labs and Sorare raise over $900 million
LeBron James #23 of the Los Angeles Lakers drives to the basket against the Phoenix Suns during the 2021 NBA Playoffs on June 3, 2021.
Adam Pantozzi | National Basketball Association | Getty Images
Two start-ups in the red-hot NFT market raised a combined $930 million this week, highlighting continued appetite from investors for cryptocurrency companies as the industry experiences massive growth.
Dapper Labs (which makes virtual basketball trading cards) announced Wednesday that it raised $250m in a round of funding led by Coatue. Bond, an investment firm headed by Mary Meeker and Singaporean sovereign asset fund GIC, supported the round.
A person who is familiar with the situation said that the round now values Vancouver’s Canadian-based firm at $7.6 trillion. This information was not available to the public.
Sorare, a French fantasy soccer game that incorporates NFTs, also announced Tuesday that it bagged $680 million in a bumper cash injection led by SoftBank. Venture capital companies Atomico, Bessemer Ventures and IVP also invested, along with investment firms D1 Capital and Eurazeo.
Sorare is also owned by Rio Ferdinand, an ex-English soccer player and Antoine Griezmann, a French soccer superstar.
Sorare now has a value of $4.3 billion. This makes it the most valued private tech company in France, and the biggest start-up in Europe.
What is a NFT?
NFTs, or non-fungible tokens, are a new but fast-growing phenomenon in the crypto industry. These digital tokens represent the ownership of virtual items, like works of art. The blockchain is a digital ledger that records ownership.
Like bitcoin, NFTs cannot be exchanged with other crypto currencies. NFTs cannot be traded with each other like gold or dollars. Each NFT is unique and acts as a collector’s item that can’t be duplicated — however, the underlying media can still be viewed by someone else on the internet.
Nicolas Julia, Sorare’s CEO, said that most collectibles have little utility. You can put them into an album, which is nice, but it limits your options.
You can use them in games, for example, if you convert it to NFTs digitally. Collectors will also love the fact that you have proven scarcity.
NFTs saw a spike in prices earlier this year. Sales reached a new record of $2.5 billion for the first half 2021. High-profile transactions include a record $69 million artwork sold by digital artist Beeple at a Christie’s auction and the $2.9 million sale of the first-ever tweet by Twitter CEO Jack Dorsey.
Investors are looking for the next great thing in cryptocurrency. This is evident by the large sums of money that have been flowing into Sorare and Dapper Labs.
CNBC has seen crypto- and blockchain startup receive $19B in venture funding this year. This is almost three times the $6.4B raised in 2020 according to Pitchbook data.
NFTs, just like any other asset in the fledgling cryptocurrency industry, have been vulnerable to misuse by criminals. Last week, digital collectibles marketplace OpenSea disclosed that insider trading had occurred on its platform.
NFTs enter the world of sport
Several sports organizations are turning to NFTs and other crypto assets as a way of making additional revenue.
Manchester City’s English Premier League team has two NFTs. Meanwhile, a number of soccer clubs have launched “fan tokens” that allow holders to vote on mostly minor club decisions and receive certain perks.
Dapper Labs NBA Top Shot platform allows you to trade or collect highlight videos from your favorite basketball games in the form of NFTs. NBA licenses the highlights or “moments” and receives royalties for each transaction.
Dapper Labs has also created its own NFT-friendly blockchain, called Flow. It had previously used Ethereum but shifted away from that network after its popular digital pet game CryptoKitties in 2017 led to slower transaction processing. It is currently migrating CryptoKitties from Ethereum to Flow.
Dapper Labs announced Wednesday its latest funding and also revealed a partnership agreement with LaLiga in Spain, the top soccer league. This will allow soccer fans a similar experience as NBA Top Shot. Dapper Labs plans to use part of this cash to fund new experiences such as paid tickets to major games.
Roham Gharegozlou of Dapper Labs, CEO said that part of the funds will be used to expand functionality of NBA Top shot and develop a mobile product. This would connect the digital collection experience with the fan experience at live games or by supporting them on social media.
It comes a week after LaLiga announced a separate partnership with Sorare to add digital player cards from the league.
Sorare will also be stepping up its rivalry to Dapper Labs. It plans to open an office in the USA and expand on the ground. CNBC’s CEO said that Sorare had been approached by many U.S.-based sports organisations.
Sorare plans to create a mobile application and sign up all 20 top soccer leagues by 2022. Sorare and Dapper Labs indicated they want to make use of the massive social media followings of top sports players to promote their platforms.