Inventory of NFT Market Q1 Investment and Financing: Which Tracks Are Most Favored by VCs? Who Is Making High-Frequency Bets?

This article is from Mars Finance, author: Liang Yushan.

Similar to last summer when VCs frequently bet on DeFi, the recently popular NFTs have also become a hot investment track in the primary market.

According to incomplete statistics, VCs invested nearly $400 million in NFT-related projects in the first quarter of this year, with March seeing the highest investment frequency, completing a financing deal every two days on average, a month-on-month increase of 220%.

Which types of NFT projects are most favored by VCs? Which projects/teams received the most VC funding? Which VC has the most investments in the NFT space? Mars Finance reviews the investment situation of NFT projects in the first quarter, helping you quickly understand market trends. (A data table of NFT investments in the first quarter is attached at the end of the article.)

1. The most favored NFT investment track by VCs: Trading Platforms

From the beginning of the year to now, VCs have invested in 22 NFT projects, with trading platforms accounting for one-third, becoming a favored sub-investment track for institutions.

According to statistical data, 7 NFT trading projects received VC investments in the first quarter, with a total financing amount of $35 million. Given that 3 of these have not disclosed their financing amounts, the actual scale is likely larger than what we currently know.

Among these 7 projects, Opensea received the most VC funding, totaling $23 million, which is 10 times higher than Rarible and BCAEX.

It is also worth noting that among the 7 projects supported by VCs, Bounce Finance does not naturally belong to the NFT track; it plans to use the raised funds to establish an NFT marketplace and e-commerce platform, which indirectly indicates that capital is optimistic about the NFT market.

●SuperRare

SuperRare was established early, entering the NFT market in April 2018, supporting users to create, sell, and collect rare digital artworks, characterized by strict selection of artists.

Financing amount: $9 million

Round: Series A

Investors: Velvet Sea, 1confirmation, Mark Cuban, Chamath Palihapitiya, and Marc Benioff

●BCAEX

BCAEX is under the crypto art NFT platform BCA (BlockCreateArt), focusing on NFT trading, launched in October last year, with 225 signed artists announced by the official.

Financing amount: $2 million

Round: Angel round

Investors: Distributed Capital, Zonff Partners, Waterdrop Capital, and several angel investors

●Opensea

Opensea is a well-established trading platform in the NFT market, founded at the end of 2017 and officially launched in early 2018. The platform's total transaction volume exceeded $100 million in March this year, setting a historical record.

Financing amount: $23 million

Round: Series A

Investors: a16z, Cultural Leadership Fund, Ron Conway, Mark Cuban, Tim Ferriss, Belinda Johnson, Naval Ravikant, and Ben Silberman

●Mintable

Mintable is a community-driven NFT platform that supports users in creating and trading NFT products, established at the end of 2018. If users trade on this platform, in addition to receiving the purchased NFT, they will also automatically obtain a voting NFT.

Financing amount: Not disclosed

Round: Seed round

Investors: Dallas Mavericks owner Mark Cuban, CRC Capital, Time Ventures, Sound Ventures, Defiance Capital, DeFi Alliance, and Lunex Ventures

●NFTMart

NFTMart aims to create a decentralized NFT trading platform and establish its own vertical public chain. According to the official introduction, the platform consists of two parts: one is nftmart.network (an open decentralized NFT public chain mainly used for publishing NFT assets and processing on-chain transaction data), and the other is the nftmart.io platform entrance, providing users with a place to trade NFTs.

Financing amount: Not disclosed

Round: Seed round

Investors: PAKA, LD Capital, CMS, AU21 Capital, DFG, and Crasolum

●Rarible

Rarible was launched in 2019, supporting users to create and trade NFT products. The platform introduced its native token RARI through "market liquidity mining" in July last year.

Financing amount: $1.75 million

Round: Seed round

Investors: 1kx, ParaFi Capital, Coinbase Ventures, CoinFund, MetaCartel Ventures, and Bollinger Investment Group

●Bounce Finance

Bounce Finance is a batch auction tool based on Ethereum, launched in July last year. Its founder, Chandler Song, also co-founded Ankr. In March this year, Bounce completed a new round of financing led by Coinbase, planning to use the funds to establish an NFT marketplace and e-commerce platform, which the founder referred to as "Shopify for NFTs."

Financing amount: Not disclosed

Round: Not disclosed

Investors: Coinbase, Pantera, Hashed, Fundamental Labs, DHVC, Blockchain Capital, and SNZ Capital

2. The team/project with the most VC bets: Dapper Labs

From CryptoKitties to NBA Top Shot, and the public chain Flow, Dapper Labs has evolved from a pure product development team into a pioneer of NFT market infrastructure while continuously creating blockbuster products.

By consistently proving itself, Dapper Labs has gradually become a star team in the NFT market. Under the market rule of "investing is investing in people," Dapper Labs capturing $305 million in market performance is no longer surprising.

According to public information, Dapper Labs raised $305 million in a new round of financing from top venture capital firms such as a16z, Union Square Ventures, and over 30 professional athletes including Michael Jordan. Its financing scale is second only to Bitmain ($1 billion) and BlockFi ($350 million), currently ranking third in crypto history.

●Dapper Labs

Financing amount: $305 million

Investors: Coatue, a16z, The Chernin Group, Union Square Ventures, Venrock, Michael Jordan, Vivek Ranadive (owner of the Sacramento Kings), and over 30 professional athletes including Kevin Durant

●Opensea

Opensea is a well-established trading platform in the NFT market, founded at the end of 2017 and officially launched in early 2018. The platform's total transaction volume exceeded $100 million in March this year, setting a historical record.

Financing amount: $23 million

Round: Series A

Investors: a16z, Cultural Leadership Fund, Ron Conway, Mark Cuban, Tim Ferriss, Belinda Johnson, Naval Ravikant, and Ben Silberman

●Enjin

Enjin is a blockchain game development platform founded in 2009, supporting users to deploy fungible and non-fungible tokens using a Web Panel. Its native token ENJ is about to be listed on Coinbase Pro. In February this year, the platform announced a partnership with the AR platform MetaverseMe to create virtual character NFTs on Ethereum. By March, Enjin completed a private placement round of financing, planning to use the raised funds to establish the Polkadot-based NFT public chain Efinity.

Financing amount: $18.9 million

Round: Private placement round

Investors: Crypto.com Capital, DFG Group, Hashed, Hypersphere, BlockTower, Blockchain.com Ventures, Fenbushi, Iconium, HashKey, Arrington XRP Capital, and DeFi Alliance

3. Institutions with high NFT investment frequency: NGC, DFG, Delphi Digital

In the first quarter, NGC, DFG, and Delphi Digital each invested in three NFT projects, showing a relatively high frequency, but did not significantly differ from other VCs like IOSG and Hashkey.

From the projects invested by NGC, DFG, and Delphi Digital, DFG's investment strategy is the clearest, with its invested projects covering the upstream, midstream, and downstream of the market (upstream: trading platforms; midstream: collectibles; downstream: public chains), essentially forming a chain-like layout; NGC and Delphi Digital tend to invest in emerging projects, such as auction protocols and NFT brand experience companies.

●NGC

NGC Ventures was established in December 2017 and is one of the largest institutional investors in blockchain and distributed ledger technology, as well as a key contributor to leading blockchain projects such as Zilliqa, Ontology, NKN, Oasis, Mainframe, Certik, Bluzelle, and Iotex.

In the first quarter of this year, NGC invested in NFT projects:

My Neighbor Alice (NFT Game)

My Neighbor Alice is a blockchain multiplayer construction NFT game where players can build their own virtual land, interact with neighbors, perform daily activities, and earn rewards.

FM Gallery (NFT Art Issuing Platform)

FM Gallery is an NFT art issuing platform that plans to introduce the concept of DAO to build a fan self-governing community.

TopBidder (NFT Auction Protocol)

TopBidder is an NFT auction protocol based on radical market theory, mainly auctioning crypto artworks and collectibles.

●DFG

DFG (Digital Finance Group) was established in 2015, focusing on investments in crypto digital assets and blockchain technology, with early investments including projects like Bloq, Brave, Ledger X, and Circle.

In the first quarter, DFG invested in NFT projects:

Polkamon (Digital Collectibles Project)

Polkamon is a beautifully animated digital collectibles project created using blockchain technology, with each Polkamon supported by a truly unique NFT that can be purchased using PMON tokens.

Efinity (NFT Public Chain)

Efinity is the NFT public chain planned to be launched by the blockchain game development platform Enjin, which was launched in 2009 and supports users in deploying fungible and non-fungible tokens using a Web Panel.

NFTMart (NFT Trading Platform)

NFTMart aims to create a decentralized NFT trading platform and establish its own vertical public chain. According to the official introduction, the platform consists of two parts: one is nftmart.network (an open decentralized NFT public chain mainly used for publishing NFT assets and processing on-chain transaction data), and the other is the nftmart.io platform entrance, providing users with a place to trade NFTs.

●Delphi Digital

Delphi Digital is an independent cryptocurrency research institution that established a venture capital department, Delphi Ventures, in July last year, focusing on providing long-term financial and intellectual support for the most promising projects in the crypto space.

In the first quarter, Delphi Digital invested in NFT projects:

Illuvium (NFT Game)

Illuvium is an open-world RPG game that includes collectible and auto-battling elements. In the third quarter of this year, the project will launch on the Ethereum Layer 2 solution Immutable X.

Recur (NFT Brand Experience Company)

Recur is an NFT brand experience company aimed at designing and developing on-chain brand experiences, making it easier for users to purchase, collect, and resell NFTs.

Yield Guild Games (NFT Decentralized Autonomous Organization)

YGG mainly helps investors pool assets and stake NFTs for profit, ultimately sharing the returns with supporters. Currently, YGG focuses primarily on the NFT gaming sector.

4. Conclusion

Looking at the investment dynamics in Q1, we can see that VCs began to frequently bet on NFT projects in March, with the scale of funds injected far exceeding that of January and February.

However, it should also be pointed out that the high influx of funds into the NFT market in March is largely due to Dapper Labs securing $305 million, which is almost 4.7 times the total financing amount of other NFT projects during the same period.

From the type of investment, trading platform projects are the most favored by VCs, which is not difficult to understand. NFTs are essentially assets, and as the market size gradually expands in the future, trading platforms at the top of the pyramid will inevitably be the first to reap market dividends, while early-positioned VCs can share in the profits.

Beyond trading platforms, VCs like Dragonfly Capital are also paying attention to NFT social projects. On one hand, although NFTs belong to a niche circle, the artists or buyers involved have a strong consensus about the market. If a platform can connect and consolidate this group of people, it can largely form an early competitive barrier; on the other hand, unlike homogeneous token trading, the NFT trading market involves more human concepts and ideologies, and the emergence of social projects provides a venue for "output."

Overall, the NFT market is still in a very early stage, with most projects in the seed round of financing, and only Opensea and SuperRare have completed Series A financing. Additionally, the infrastructure of the NFT market is still immature, and the market structure has yet to take shape. In this context, those VCs who are early to position themselves and have keen insight are likely to capture NFT projects that may become "unicorns."

Attached is a summary table of NFT project investments in the first quarter: