Silicon Valley’s latest “unicorn” is a Bored Ape

As a technology, non-expendable tokens they are barely 10 years old. However, venture capital firms are pouring money into NFT startups, turning startups into billion-dollar companies known in Silicon Valley as “unicorns,” virtually overnight. investment frenzy reminiscent of the boom of the points like the nineties.

Yuga Labs, the parent company of the Bored Ape Yacht Club, an NFT collection with cartoon ape profiles, announced a $ 450 million round of funding this week. That puts the company at $ 4 billion. In January, the NFT OpenSea platform said it raised $ 300 million, valuing the company at an even more staggering $ 13 billion.

Venture capitalists invested $ 4.6 billion in NFT companies last year, compared to just $ 145 million in 2020, according to the Venture Capital Journal, citing PitchBook data.

What makes these digital card startups so appealing? Venture capitalists are approaching the NFT space for two main reasons, said Jason Heltzer, managing partner at Origin Ventures and an adjunct professor of entrepreneurship at the University of Chicago Booth School of Business.

“NFTs themselves can be valuable, but there are many applications where the underlying blockchain technology could be used,” Heltzer told CBS MoneyWatch. “These companies are priced in such a way that their future potential is valued.”

Yuga Labs declined to comment on its latest round of funding, but the company plans to use part of its $ 450 million to expand its creative and engineering equipment, while the company is also developing a metavers platform called Otherside.

“This capital will give Yuga speed to market many things in progress,” technology investor Guy Oseary, who contributed to the funding round, said in a statement on Tuesday.

CEO Devin Finzer said earlier this year that OpenSea will use part of its latest round of funding to make it easier for artists to create NFT on their platform. The company is also launching a grant program aimed at NFT developers.

An NFT provides someone with digital proof of ownership, or access to services, through a unique code linked to an image or video that lives in the blockchain. Because they are unique, NFTs can be transferred or sold, but not copied or split into smaller parts. Some people buy an NFT in the hope that its value will increase, while others buy it strictly to brag.

NFT markets are where customers go to buy digital collectibles in the form of NFT. Once a customer makes a purchase, part of the sale goes to the person who created (or “coined”) the NFT and another part goes to the market. For example, in OpenSea, 2.5% of the selling price of an NFT, which is set by the developer, goes to the platform.

NFTs saw their popularity rise in 2021 as celebrities, musicians and athletes used them to sell their work. Justin David Blau, a New York DJ known as 3LAU, sold an NFT collection last year for more than $ 11 million, while NFL player Rob Gronkowski sold an NFT football card last year for more than $ 1.6 million.

According to analysts at investment bank Jefferies, NFTs are expected to grow into a global industry of $ 35 billion this year and $ 80 billion by 2025. Venture capitalists have more and more people who want to buy an NFT. in the coming years.

“They pay us to take risks and make bets on things that we believe will have value in the future,” Heltzer said. “But I’m excited about this next phase of NFT.”