OpenSea trawls in VC investment
after their meteoric rise over a period of 18 months or so, cryptocurrencies are under pressure. the cumulative effects of the US Fed’s upcoming interest rate hikes, regulatory scrutiny across the globe, environmental impact, etc. have served to place a ceiling on the price of Bitcoin, their bellwether. however, against all these odds, NFT-trading platform OpenSea recently raised $300 million in its Series C funding at a whopping $13.3 billion valuation.
what are its investors betting on?
nowadays it's impossible to imagine life without the internet. when it was first created in the 1970s, it was a tool meant for military purposes and communication between scientists. it has, of course, come a long way since. from sharing pictures of our cats for the appreciation of others to making long distance calls to family halfway across the globe, it appears there’s very little that cannot be done online. it’s the backbone of the global economy too, given that the world’s largest companies such as Amazon, Google, and Netflix would virtually not exist without it. it also offers individuals the scope to earn their living from the comfort of their homes, be it through freelancing or, incredibly, of late trading JPEGs online.
those JPEGs are a lot more than just images, thanks to verifiable ownership on the blockchain. they are what are known as NFTs (non-fungible tokens) which are digital collectibles that have fast grown far beyond just appealing artwork. think of them as the latest method of crowdfunding, with verifiable fractional ownership.
OpenSea is a leading NFT-trading platform, by far the largest for those operating on the Ethereum network. it last raised funding of $100 million in July 2021 at a valuation of $1.5 billion, just over a tenth of its latest round. this shows how quickly the market has grown, and it’s backed up by the numbers.
OpenSea saw $2.91 billion in trading volume in the 30 days, trailing January 5. given its 2.5% transaction fees, that works out to an anticipated gross haul of $72.75 million for the platform. extrapolating that data to 12 months, we get ~$35 billion in volume, and gross revenues of $873 million for the platform. that would put its $13.3 billion valuation at roughly 15.5x its present annual revenue, which is quite a conservative multiple by VC standards.
with plenty of focus on web 3.0 across top tech companies and potential growth for cryptocurrency prices in the long run, it might prove to be a handsome investment for Paradigm and Coatue. for the retail investor, it might just be time to start seriously looking into those JPEGs.