Tech investors pump millions into NFT start-ups as digital collectibles boom


An illustration of NFT-based art.
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Venture capitalists are writing big checks for start-ups in the booming NFT space.

NFTs, or non-fungible tokens, have exploded in popularity this year in tandem with a rise in the values of cryptocurrencies like bitcoin and ether. They’re a type of digital asset designed to track ownership of a unique virtual item — such as a piece of art or sports trading cards — using blockchain technology.

Last year, the total value of NFT transactions quadrupled to $250 million, according to data from, while in the past month alone overall NFT sales volumes exceeded $220 million.

The trend hasn’t gone unnoticed by investors, who have poured $90 million into NFT and digital collectibles companies so far in 2021, according to data shared with CNBC by Pitchbook. That’s almost triple the $35 million that NFT start-ups raised last year.

The largest deal was for Sorare, a blockchain-based fantasy football game, which raised about $50 million in February from VC heavyweights like Benchmark and Accel, as well as soccer star Rio Ferdinand.

“It’s one of the most exciting developments we’ve seen in crypto for years,” Andrei Brasoveanu, a general partner at Accel, told CNBC. “It’s one of those developments that has mass market appeal and could potentially impact a world outside the crypto niche.”

The second biggest investment this year was in OpenSea, an NFT marketplace, which bagged $23 million in a round led by Andreessen Horowitz last week.

The space may be set to attract millions more in venture capital funding, with reports that blockchain firm Dapper Labs is seeking a $250 million cash injection at a valuation of $2 billion. The company has gotten a big boost from demand for its NBA Top Shot digital collectibles platform created in partnership with the U.S. basketball league.

Roham Gharegozlou, CEO and founder of Dapper Labs, called the report “baseless rumor” when approached by CNBC for comment. Hedge fund firm Coatue, which was reported to be leading the round, declined to comment.

It’s easy to see why some start-up investors have been tempted by the NFT space. The market is growing rapidly, with some digital collectibles being sold for millions of dollars. That’s happened alongside a rally in cryptocurrencies like bitcoin and ether, the latter of which is often used to trade NFTs.

Last week, Twitter CEO Jack Dorsey sold the first-ever tweet for over $2.9 billion on the “Valuables” platform run by blockchain company Cent. Meanwhile, auction house Christie’s ran an auction for a virtual work from the artist Beeple which eventually sold for $69 million.

Still, the NFT space has been met with skepticism from some creators and investors. Critics view it as another crypto fad that will eventually fade into irrelevance, and there are also worries about potential market manipulation, similar to that found in the traditional art world. Environmentalists, meanwhile, are alarmed at the energy required to fuel the NFT market.

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