10 NFT Startups Investors are Flocking To

Published on August 11, 2021 at 2:11 pm by Usman Kabir in Hedge Funds, News

In this article, we discuss the 10 NFT startups investors are flocking to.

The mainstreaming of cryptocurrencies in the past two years has helped fuel a roaring trade in non-fungible tokens (NFTs) – a digital representation of real-world objects that are bought and sold online. Although around since 2017, they have started to gain more traction as online trade increases. Digital analytics firm DappRadar, which tracks NFT sales, estimates that NFT trade has raked in $2.5 billion in the first six months of 2021. This money is being funneled through NFT marketplaces like OpenSea, Axie Infinity, and CryptoPunks, among others.

These startups are already dealing with hundreds of thousands of traders on their platforms and handling transactions worth millions. According to DappRadar, OpenSea has 214,789 traders on the platform and a volume of $1.6 billion, Axie Infinity has 363,153 traders and a volume of $1.2 billion, while CryptoPunks just 4,187 traders but a volume of over $678 million. These numbers highlight the growth potential offered by the NFT industry that is still in infancy but rapidly increasing in value in tandem with the digitization of the world at large.

Some of the famous NFT stocks presently trading on the market include Dolphin Entertainment, Inc. (NASDAQ: DLPN), Takung Art Co., Ltd. (NYSE: TKAT), and ZK International Group Co., Ltd. (NASDAQ: ZKIN), among others discussed in detail below. Investors looking for inroads in the NFT space should explore gaming and entertainment firms dealing with NFTs, since a business in collectibles – evidenced by the sale of artworks by Beeple and Edward Snowden for $69 million and $5.4 million respectively – is booming.

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Our Methodology

With this context in mind, here is our list of the 10 NFT startups investors are flocking to. These were compiled keeping in mind the valuation, the money raised so far, and the quality of the products or services offered. Special importance was assigned to the NFT-related capabilities of each firm as well as the growth potential in terms of gaming and entertainment, two of the largest NFT-related areas of interest.

NFT Startups Investors are Flocking To

10. Sorare

Sorare is a global fantasy football game. It is different from other fantasy football games because it allows players to play, trade, and buy using official digital cards. It was founded in 2018 by Adrien Montfort and Nicolas Julia in Paris. It has so far managed to raise close to $60 million in funding over three rounds. The latest round, held in February, brought in $40 million in funding. The lead investor in the startup is Benchmark. Accel has also invested in the project. News publication Business Insider reports that the startup could be valued at $3.8 billion soon.

For those looking for an inroad into NFT investing, Twitter, Inc. (NYSE: TWTR), the social networking firm based in California, is a great option. Twitter, Inc. (NYSE: TWTR) chief Jack Dorsey was one of the biggest names that backed NFTs at the start of the NFT craze earlier this year, selling his first tweet as an NFT for close to $3 million.

At the end of the first quarter of 2021, 107 hedge funds in the database of Insider Monkey held stakes worth $4.5 billion in Twitter, Inc. (NYSE: TWTR), up from 78 in the preceding quarter worth $2.7 billion.

Just like Dolphin Entertainment, Inc. (NASDAQ: DLPN), Takung Art Co., Ltd. (NYSE: TKAT), and ZK International Group Co., Ltd. (NASDAQ: ZKIN), Twitter, Inc. (NYSE: TWTR) is one of the best NFT stocks investors are flocking to.

RGA Investment Advisors, in its Q1 2021 investor letter, mentioned Twitter, Inc. (NYSE: TWTR). Here is what the fund has to say in its letter:

“‘The bird has wings’—Twitter’s quarter started off somewhat ominously, with Twitter the worst performing stock in the S&P 500 following the January 6th insurrection and questions about the stickiness of the userbase after permanently suspending the account of President Trump.8 By the end of the quarter, Twitter was one of the best performers in the index after exceptionally strong fourth quarter earnings and guidance for the year and an upbeat analyst day that highlighted a rapidly evolving product roadmap placing the timeline at the center of ephemeral (fleets), long form (Revue) and voice (Spaces). The improvements to the experience makes the platform more accessible and provides more opportunity to continue growing the userbase. Importantly, Twitter also embraced what we have been calling “creative empowerment” in previewing SuperFollows and a host of features designed to help content creators and contributors monetize their own audience on Twitter itself. These developments, alongside considerable progress on the advertising platform give us growing conviction that Twitter will deliver on its largely untapped opportunity—in other words, the value creation opportunity on top of the low multiple we were able to build our position at. Elliot spoke at length about these developments on Yet Another Value Podcast with Andrew Walker and The Business Brew with Bill Brewster, which we invite you to check out.”

9. MakersPlace

MakersPlace is a blockchain-based platform for unique digital creations. It was founded in 2016 by Daniel Chu, Daniel Chu, Ryoma Ito, and Yash Nelapati. It is based in San Francisco. So far, the startup has managed to raise $34 million in funding over three rounds, with the latest round earlier this month bringing in $30 million. Some of the lead investors in the startup are Bessemer Venture Partners and Pantera Capital, among others. A former employee at Pinterest, a social media firm, was one of the founders of the startup.

Another possible investment in the NFT sector is Cloudflare, Inc. (NYSE: NET), the California-based firm that owns a business-focused cloud platform. Cloudflare, Inc. (NYSE: NET) has offered NFT support on the platforms it operates for enterprise clients, including a video streaming service.

Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm SRS Alkeon Capital Management is a leading shareholder in Cloudflare, Inc. (NYSE: NET) with 1.6 million shares worth more than $17 million.

Alongside Dolphin Entertainment, Inc. (NASDAQ: DLPN), Takung Art Co., Ltd. (NYSE: TKAT), and ZK International Group Co., Ltd. (NASDAQ: ZKIN), Cloudflare, Inc. (NYSE: NET) is one of the best NFT stocks investors are flocking to.

In its Q4 2020 investor letter, Alger Mid Cap Focus Fund, an asset management firm, highlighted a few stocks and Cloudflare, Inc. (NYSE: NET) was one of them. Here is what the fund said:

“Cloudflare. Inc. provides a broad range of network services to businesses of all sizes across the world. Cloudflare’s intelligent global network spans more than 200 cities in over 100 countries. It offers network security, performance and reliability to a growing portion of global web traffic. Today. over 15% of global internet requests go through Cloudflare. Cloudflare’s serverless network design allows this global network to be a key component layer as new developments for edge cornputing. 5G and Internet of Things increase the importance of secure. reliable edge networks. Cloudflare stock outperformed in the fourth quarter following the announcement of Cloudflare One, a cloud-bas. network-as-a-service platform designed to replace the traditional enterprise network infrastructure. The Cloudflare One solution merges existing Cloudflare access and security solutions along with new enterprise-specific features into a unified Zero Trust network that can be managed through a single “pane of glass.” or display screen. With the rapid shift to remote work caused by the pandemic, this product increases Cloudflare’s potential for winning business from enterprise customers seeking to adapt to this new business environment.

While Cloudflare One adoption is still early. Cloudflare has already started to demonstrate an improved ability to sell to large customers. When discussing its third quarter results. Cloudflare said that it is continuing to sign up larger enterprise customers. including its first client to generate more than $10 million in annual recurring revenue. Cloudflare has just started to better monetize its more than 100.000 paying customer base. which along with continued product innovation, gives the company strong growth potential.”

8. Boson Protocol

Boson Protocol is an automated Web3 primitive that enables a decentralized commerce ecosystem. It was founded in 2019 by Gregor Boroša and Justin Banon. It is based in the United Kingdom. So far, the startup has raised $10 million in funding over five rounds, with the latest round in March bringing in $5 million. Some of the investors on the project are Lotus Capital and Gains Associates. In April, the firm held a public token sale, raising close to $26 million from the endeavor.

Firms like Mattel, Inc. (NASDAQ: MAT), who sell collectibles, have played a huge part in the mainstreaming of NFTs. The company is headquartered in California. Mattel is reportedly considering the sale of three pieces of digital art as NFTs soon, according to news publication The New York Times.

At the end of the first quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $872 million in Mattel, Inc. (NASDAQ: MAT), the same as in the preceding quarter worth $858 million.

In addition to Dolphin Entertainment, Inc. (NASDAQ: DLPN), Takung Art Co., Ltd. (NYSE: TKAT), and ZK International Group Co., Ltd. (NASDAQ: ZKIN), Mattel, Inc. (NASDAQ: MAT) is one of the best NFT stocks investors are flocking to.

Longleaf Partners Fund, in its Q1 2021 investor letter, mentioned Mattel, Inc. (NASDAQ: MAT). Here is what the fund has to say in its letter:

“Mattel (14%, 0.87%), the global toy company, also contributed to the Fund’s positive returns. Fourth quarter sales grew 10%, with Barbie once again leading with an impressive 18% growth, American Girl up 9% due to direct-to-consumer strength, Hot Wheels up 12% and Infant/Toddler growing 7%. Margins also improved to increase EBITDA 53% year-over-year (YoY) during the company’s all-important seasonal peak. CEO Ynon Kreiz’s outlook for 2021-23 includes achievable targets of mid-single-digit revenue growth and continuously improving margins. Mattel’s strategically important IP monetization has also developed well with no fewer than 25 media projects in the works. We expect significant contributions from these high-margin IP revenues over the next several years and do not think the market yet gives the company credit for the scale of this opportunity.”

7. OpenSea

OpenSea is a firm that owns and runs a marketplace for digital collectibles. It is based in New York and was founded by Alex Atallah and Devin Finzer in 2017. The company has so far raised more than $127 million in funding over six rounds. The latest round, held in July, brought in $100 million. Some of the investors in the startup are Andreessen Horowitz and Dylan Field, among others. The company is valued at close to $1.5 billion, according to a report in technology news publication TechCrunch.

NFTs are already attracting interest from mainstream firms like Funko, Inc. (NASDAQ: FNKO), the Washington-based retailer of pop culture consumer products. The company has started exploring investments in NFTs recently to expand revenue sources, earning a positive mention by investment advisory Bank of America in this regard.

Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Woodson Capital Management is a leading shareholder in Funko, Inc. (NASDAQ: FNKO) with 3 million shares worth more than $59 million.

Dolphin Entertainment, Inc. (NASDAQ: DLPN), Takung Art Co., Ltd. (NYSE: TKAT), and ZK International Group Co., Ltd. (NASDAQ: ZKIN) are some of the best NFT stocks investors are flocking to, just like Funko, Inc. (NASDAQ: FNKO).

6. Rarible

Rarible is a firm that owns and operates a marketplace that allows users to buy and auction off NFTs. It is based in Delaware and was founded in 2020 by Alexander Salnikov and Alexei Falin. The firm has raised $16 million in funding so far over three rounds, with the latest round in June bringing in over $14 million. Some of the lead investors in the startup are CoinFund and Venrock, among others. Tech news publication TechCrunch reports that the platform has already crossed $150 million in sales since it was launched less than two years ago.

Investors who want to avail the growth opportunity that NFTs offer should check out Hall of Fame Resort & Entertainment Company (NASDAQ: HOFV), the Ohio-based resort and entertainment firm that recently signed a high-profile NFT collectibles partnership with Dolphin Entertainment in one of the biggest NFT deals of the year so far.

At the end of the first quarter of 2021, 6 hedge funds in the database of Insider Monkey held stakes worth $12.7 million in Hall of Fame Resort & Entertainment Company (NASDAQ: HOFV), down from 7 the preceding quarter worth $528,000.

5. Dapper Labs

Dapper Labs is a company that makes blockchain-based products for specific needs of users and is geared towards sports and entertainment purposes. It supports NFTs as well. The company was founded in 2018 by Dieter Shirley, Mack Flavelle, and Roham Gharegozlou. It has raised more than $357 million in funding so far over six rounds. The latest round, held in March, brought in $305 million. Some of the investors in the project are True Capital Management and Andre Drummond, among others.

The company is based in Canada. In June, after the success of the Flow blockchain, the company announced that it was partnering with Prime Trust to launch a new dollar-backed stablecoin. In April, news platform The Information reported that the company was valued at close to $7.5 billion after raising $305 million in a funding round in March.

4. Decentraland

Decentraland is a Chinese virtual reality platform that is powered by the Ethereum blockchain. It was founded in 2017 by Esteban Ordano. The startup has so far raised $25 million in funding over three rounds, with the latest round held last year. Some of the investors on the project are Digital Currency Group and Animoca Brands, among others. A total of seven investors have so far put their money in the company. The company offers users the ability to live a virtual life using VR headsets and the software marketed by the firm.

In June, crypto news platform Coin Telegraph reported that a piece of land on the virtual reality platform of the company had sold for almost $1 million. The sale, in the form of NFTs, was compared to the price of an actual property in New York to give investors an idea of the explosive growth potential of NFTs.

3. CryptoKitties

CryptoKitties is a blockchain-based platform which allows users to collect and breed virtual reality cats. It was founded in 2017 by Benny Giang, Bryce Bladon, Dieter Shirley, Fabiano Soriani, Guile Gaspar, Mack Flavelle, Mik Naayem, and Roham Gharegozlou. The startup has so far raised $23 million in funding over four rounds, with the latest round held in August last year. Some of the lead investors in the project, which has accepted investments from 25 different investors, are Union Square Ventures and a16z crypto, among others.

The game was designed by San Francisco-based studio AxiomZen. According to technology news publication TechCrunch, in the year the game was released, users spent more than $1 million on virtual cats. Some have compared the game to the Pokemon cards marketed to children. The game supports NFTs.

2. Illuvium

Illuvium is a game developed by an Australian company that gives users the chance to explore and capture NFT creatures in combat. It was founded in 2020 and has raised $5 million in funding so far over one round, held in March this year. The investors in the startup are Framework Ventures and ISG Ventures.

In May, crypto platform Bitcoin.com reported that the digital tokens for Illuvium were now available for trade on the crypto exchange owned and maintained by the company. The firm claims that the game goes one step ahead of CryptoKitties as it improved on that game from a visual perspective. It is placed second on our list of 10 NFT startups investors are flocking to.

1. Alchemy

Alchemy is a platform that helps firms build quality decentralized applications. It was founded in 2017 by Joseph Lau and Nikil Viswanathan. The startup is headquartered in San Francisco. It has so far raised close to $14 million in funding over four rounds. The latest round, held in April, brought in $80 million. The company has a total of 46 investors so far. These include Coatue, Stanford University, and Jerry Yang, among others. The company is valued at over $500 million, according to technology news publication TechCrunch.

On August 9, crypto news platform CoinSpeaker reported that Alchemy had launched virtual crypto cards in partnership with big payments firms like Visa and Mastercard. Alchemy holds the honor of powering the digital token sold by artist Beeple for a record-breaking $69 million in the most expensive NFT sale of all time.

You can also take a peek at 10 Companies that Benefit From Crypto Mining and 10 Best Blue Chip Dividend Stocks Hedge Funds are Buying.

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10 NFT Startups Investors are Flocking To

Published on August 11, 2021 at 2:11 pm by Usman Kabir in Hedge Funds, News