US-headquartered non-fungible token (NFT) marketplace OpenSea has launched a corporate venture capital vehicle called OpenSea Ventures to invest in developers of Web3 technology, the portion of the web revolving around the blockchain.
Founded in 2017, OpenSea operates an online marketplace where users can buy and sell NFTs and other rare and collectible digital items, either through a fixed price or via an online auction.
OpenSea Ventures will target developers of multichain technology in addition to crypto-native infrastructure such as NFT-related protocols; cryptocurrency and NFT-fuelled games; and NFT aggregators and analytics capable of boosting activity on NFT platforms.
Such platforms inevitable include OpenSea’s, and portfolio companies will gain access to the company’s leadership and partners as well as its software development platform. The unit is headed by OpenSea co-founder Alex Atallah.
The corporate has not revealed whether the vehicle will invest out of a fund or the OpenSea balance sheet, but its formation comes just weeks after its parent raised $300m in a series C round valuing it at $13.3bn.
The series C round indicates OpenSea’s increasing dominance in the NFT space. It recently passed $10bn in transactions on its platform according to NFT data aggregator DappRadar – more than three times as much as nearest rival Axie Infinity – as the medium becomes more accepted as a mainstream, if risky, asset choice.
Although other parts of the tech industry – such as big data or ride hailing – have experienced rapid growth spurts in recent years, none have been as quick as the blockchain and cryptocurrency sector to reinvest cash in its peers or to support emerging businesses.
The launch of OpenSea Ventures was accompanied by an Ecosystem Grants scheme which will back creators, developers and NFT community members working on innovative and interesting projects, following in the footsteps of similar initiatives by cryptocurrency exchange Kraken and blockchain software producer Consensys.
OpenSea’s investors include digital currency exchange Coinbase and blockchain entertainment app developer Animoca Brands – both under a decade old and forming part of a wave of crypto corporate venturers also including Alameda Research, Binance and Dapper Labs which have been among the most active investors in the past 18 months.
There are several reasons for the structure: with some notable exceptions such as VC firm Andreessen Horowitz, mainstream investors were relatively slow to jump onboard, meaning cryptocurrency startups found it easier to turn to counterparts who in practice were more knowledgeable about the sector anyway.
Another factor is that the cryptocurrency and blockchain sector is a relatively new area which in practice functions a lot like a social scene with its own terminology, reference points and memes, centred on a community that interacts through Discord charts and which is relatively non-hierarchical. In a sense, the funding model resembles Patreon or Kickstarter as much as traditional VC.
Lastly, corporate venturing has become more mainstream and demystified, meaning it is no longer as rare for relatively new companies to begin investing. The traditional view of the space as one where clumsy corporate dinosaurs seek access to lean up-and-comers is not as applicable anymore.
The likes of Xiaomi and Salesforce have approached the practice as one where they build an ecosystem around their products, a decision which in turn influenced others in the digital technology and enterprise software sectors.
The likes of OpenSea may be pointing towards the next step: a tech community which supports and invests in itself. This holds the opportunity for greater understanding but also, potentially, hypothetical conflicts of interest and strategic myopia. If everyone is inside the tent, who’s looking out for danger outside?
