Show an ad over header. AMP

Maker of NBA Top Shots raises $305 million in fresh funding amid NFT craze

To date, much of the craze for NFTs — cryptographically unique tokens tied to creative works — has centered on the art world, where Christie's recently sold one NFT for a whopping $69 million. But NFTs have found a more down-to-earth niche via their use in the world of sports.

What's happening: A collection of investors, professional athletes and sports leagues are betting that the business of fans purchasing and trading NBA Top Shots — NFTs tied to key moments in past NBA games, which have already done hundreds of millions of dollars in business — will keep growing.


Driving the news: Dapper Labs — the maker of NBA Top Shot, which has run a market for these basketball collectibles since 2019 — is announcing $305 million in fresh funding on Tuesday.

  • The round values Dapper at $2.6 billion.
  • Investors include VC firms such as Coatue, Venrock and Andreessen Horowitz, as well as an all-star collection of sports stars and Hollywood personalities, including NBA players Kevin Durant, Andre Iguodala and Kyle Lowry, as well as Ashton Kutcher, Will Smith and Shawn Mendes.

How it works: This subject can get nerdy fast, which can take the fun out of things. Even the acronym "NFTs" is super geeky: It stands for non-fungible token and means basically that each item is unique — unlike, say bitcoin, where every bitcoin is like another.

  • In the case of NBA Top Shot, buyers stake a claim to a limited-edition video highlight.
  • Just as purchasers of art-world NFTs don't own the original work or its copyright, TopShot buyers don't actually own the video highlight — they own one of a limited number of claims on that moment that they can can view or sell.

Between the lines: TopShot and its investors look at NFTs as a new, digital twist on the old trading-card business.

  • The last generation of baseball card collectors are an established market, many of whom now have disposable income, and the market also attracts a generation of people who are used to buying in-app digital goods.
  • TopShot doesn't even use the term NFT and focuses on selling the digital moments in random "packs," a term familiar to card collectors.

The upsides: A digital collectible like NBA TopShot has plenty of benefits compared to a physical card.

  • Unlike baseball cards, Top Shots don't get creases or rounded corners.
  • Sports cards are notoriously difficult to sell, with high end cards often require expensive grading services to guarantee quality and authenticity; NFTs, meanwhile, can be sold instantly and globally, potentially offering greater liquidity.
  • The uses for digital moments are just beginning, but Dapper and others are finding new ways to display, share and interact with moments; augmented reality could offer more options.

The downsides of digital:

  • The whole NFT market is new and could sputter. If the companies producing them fail, there is fear the market could disappear, too. (The content itself could vanish, too, though Dapper Labs said Top Shot moments are designed to outlast the company.)
  • While there might only be one or two LeBron James cards in a given year's card set, there are a whole lot more LeBron dunks. Potentially each of those could be made into a Top Shot, eventually leading to a glut.
  • NFTs lack that baseball card feel. (I know, I'm old and nostalgic.) Plus, the fact that cards can be lost or degrade also helps increase the scarcity and value of cards that are in good shape.

What they're saying:

  • NBA player Josh Hart told Axios that he likes to be an early adopter and believes that the digital collectibles market is, to borrow a phrase from a different sport, "in the first inning."

"In the same way that the NBA has its die hard fans, there are hundreds or thousands of other pieces of IP globally that have a rabid fanbase," Hart said in an e-mail interview. "I believe that Dapper can scale and build ecosystems for all of them."

  • Venrock's David Pakman: "I have been excited about cryptocollectibles for some time, largely because 'collecting' is something that humans have done for several millennia. It's not surprising that these collectibles are being embraced by digital natives who have already amassed virtual goods in video games and chronicled their lives in digital photos."

Go deeper: Axios' Felix Salmon has written extensively on NFTs.

"Nine minutes and 29 seconds": Prosecutors begin closing arguments in Chauvin trial

Steve Schleicher, an attorney for the prosecution in Derek Chauvin's trial, began closing arguments on Monday by describing in detail George Floyd's last moments — crying out for help and surrounded by strangers, as Chauvin pressed his knee into Floyd for nine minutes and 29 seconds.

Why it matters: The jury's verdict in Chauvin's murder trial, seen by advocates as one of the most crucial civil rights cases in decades, will reverberate across the country and have major implications in the fight for racial justice.

Keep reading... Show less

European soccer goes to war over wealthy clubs' plans for exclusive "Super League"

Europe's biggest soccer clubs have established The Super League, a new midweek tournament that would compete with — and threaten the very existence of — the Champions League.

Why it matters: This new league, set to start in 2023, "would bring about the most significant restructuring of elite European soccer since the 1950s, and could herald the largest transfer of wealth to a small set of teams in modern sports history," writes NYT's Tariq Panja.

Keep reading... Show less

81% of S&P 500 companies have reported a positive earnings surprise for Q1

First-quarter earnings so far have been very strong, outpacing even the rosy expectations from Wall Street and that's a trend that's expected to continue for all of 2021. S&P 500 companies are on pace for one of the best quarters of positive earnings surprises on record, according to FactSet.

Why it matters: The results show that not only has the earnings recession ended for U.S. companies, but firms are performing better than expected and the economy may be justifying all the hype.

Keep reading... Show less

NASA's Mars helicopter takes flight as first aircraft piloted on another planet

NASA successfully piloted the Ingenuity Mars helicopter for its first experimental flight on Monday, briefly hopping the aircraft as NASA's Perseverance rover collected data.

Why it matters: Ingenuity's short flight marks the first time a human-built aircraft has flown on a world other than Earth, opening the door to new means of exploring planets far from our own.

Keep reading... Show less

All U.S. adults now eligible for COVID-19 vaccine, meeting Biden's April 19 deadline

All 50 U.S. states, plus Washington, D.C. and Puerto Rico, have now made U.S. adults over the age of 16 eligible for COVID-19 vaccines, meeting President Biden's April 19 deadline.

Why it matters: The landmark speaks to the increased pace of the national vaccination campaign, but will increase pressure on the federal government, states and pharmaceutical companies to provide adequate vaccine supply and logistics.

Keep reading... Show less

Minneapolis braces for a verdict in the Derek Chauvin trial

Minneapolis is waking up to images of an occupied city on Monday, as the city and the world await a verdict in the Derek Chauvin trial.

What it's like: Residents running errands, picking up dinner and heading to the dog park in recent days encountered heavily-armed National Guard troops stationed throughout the city.

Keep reading... Show less

Russian authorities say jailed opposition leader Navalny has been transferred to hospital

Russian opposition leader Alexei Navalny has been hospitalized, one day after his doctor warned that the jailed Putin critic "could die at any moment," Russia's prison service said Monday.

Why it matters: News that Navalny's condition had severely deteriorated on the third week of a hunger strike prompted outrage from his supporters and international demands for Russia to provide him with immediate medical treatment.

Keep reading... Show less

The state worst hit by the pandemic

Data: Hamilton Place Strategies; Chart: Will Chase/Axios

When the coronavirus pandemic hit, the job facing governments was to save lives and save jobs. Very few states did well on both measures, while New York, almost uniquely, did particularly badly on both.

Why it matters: The jury is still out on whether there was a trade-off between the dual imperatives; a new analysis from Hamilton Place Strategies shows no clear correlation between the two.

Keep reading... Show less

Insights

mail-copy

Get Goodhumans in your inbox

Most Read

More Stories