NFTs are records based on blockchain that represent pieces of unique media, art or any other form of product that we might find in the physical world. With a surge in popularity in crypto currencies and block chain. NFTs and cryptos are catalyzing businesses and boosting creators across the world. Some time July 2021, NFT sales volume had gone beyond 2.5 billion just in the first half of the year and at the time of writing this, transaction volumes had crossed over $800 million in value within OpenSea.
In case of cryptocurrencies, rareness and scarcity of an asset creates value, following the suit, NFTs are now being considered extremely valuable because of their unique characteristics as it cannot be duplicated, and are limited edition. A marketplace dedicated to such high-valued NFTs did not exist before OpenSea. The reason why NFTs are so hyped right now is because they present a new method of investing in valuable art by avoiding the pitfalls of speculative trading cryptocurrencies.
Cryptokitties, Devin Finzer, and OpenSea
The world came across Cryptokitties in November 2017. It was the very first time when a decentralized crypto collectible was developed on Ethereum blockchain targeting the mainstream audience. Many people treated Cryptokitties like toys and a blockchain game at first, but it was the representation of a drastic change in the way people interacted with digital items.
After its release, cryptokitties surely raised some eyebrows but it also became one of the first crypto applications to target the mainstream market and users. It was not meant for some speculative use case but it could be more than just another financial product. With the modern NFT marketplace of OpenSea, it is now easier and much safer to buy/sell NFT items such as unique avatars and collectibles, etc.
Company servers became the locations of digital items while blockchain-native items were located on a public blockchain that was not owned by a single party. People could view the items anywhere, own them, and exchange them openly. This smooth operation was never possible before. Alex Atallah and Devin Finzer were fascinated by this new movement.
Devin Finzer came with a background in software engineering in Pinterest, Google, and Flipboard. He graduated in Mathematics and Computer Science from Brown University and sold his first company to Credit Karma where he was the manager of the growth engineering team. He teamed up with his friend Alex Atallah to found OpenSea.
Co-founder and CTO at OpenSea, Alex Atallah graduated from Stanford University. His proficiency in coding and software development inspired him to scale and architect real-time infrastructure through unusual prototype solutions. Atallah started his career by working at Apple and Palantir as a software engineer building cybersecurity products and later became the CTO of hostess.fm that was obtained by Beatport in 2014. He also worked as a developer at Wificoin and was the co-founder and CTO at Whatsgoodly before OpenSea.
Intrigued by the Cryptokitties movement, the duo participated in early adopter communities on Discord and began talking to users. In December 2017, they launched the OpenSea beta. It was the first open marketplace on the Ethereum blockchain for all non-fungible assets. Soon, the company grew to be the largest general marketplace for digital items owned by users and began supporting multiple blockchains with a wide set of assets at the best prices.
Market Growth, Investors, and Partners
While people thought of cryptokitties were no more than a cute joke in 2017, 3 years later, artwork by a digital creator Beeple is valued at $70 Million and a flying Pop-Tarts rainbow cat is worth $600,000. OpenSea as the marketplace where these high value transactions unfold is growing at a surprising pace. In January 2021, the marketplace sold digital merchandise worth $8 Million and $95 Million in February alone. With the NFT economy booming at an unprecedented rate, traditional investors seem to be actively taking part in the trade which in addition to the interest gathered from collectors has led to attracting interest outside the cryptocurrency industry for OpenSea.
Finzer wanted to make sure that people have a one-stop destination that serves as Amazon or eBay for digital content like the NFTs and that is how OpenSea started . Investors backing the company include Pinterest CEO Ben Silbermann, Airbnb’s former COO Belinda Johnson, Reddit co-founder Alexis Ohanian, Founder of SV Angel Ron Conway, Dallas Mavericks owner Mark Cuban, and podcaster and author of “The 4-Hour Workweek” Tim Ferriss.
In the meantime, OpenSea has stepped foot into the entertainment industry and sports. It has started to work with the singer-songwriter Shawn Mendes to sell his own virtual avatar “genies”. The Tampa Bay Buccaneers football star Rob Gronkowski is another partner of the company. He collaborated with OpenSea on collectible “Gronk” trading cards. High-volume character avatars like these are quite popular on OpenSea as collector’s items.
“We really wanted to bring on a lot of folks who combine the crypto world with the sort of artist and creative world, because that’s where we see NFTs really blossoming, we definitely didn’t expect things to go so broad and so big so fast, NFTs make this space just so much more accessible,” – Devin Finzer
$127 Million and 5 Rounds
OpenSea has undergone funding five times since its foundation. Today, the company is assisting people globally to discover, collect, and sell NFTs, with a total investment of $127 million. As of the publication of this report, the benchmark valuation of the company stood at more than $1.72 Billion. During the first half of 2021, OpenSea platform extended its volume by 45x. NFT enthusiasts are flocking towards this NFT marketplace seeing the institutional support and funding statistics.
Pascal Capital, Standard Crypto, Blockchain Capital also invested in OpenSea Series A funding round as existing investors. The company recently wrapped up its Series B funding round led by American VC Andreessen Horowitz, Accel, Coatue, CAA and other participants on July 20. OpenSea successfully reached Unicorn status owing to traditional investor’s support and funding for its NFT Marketplace platform. Following is a detailed overview of OpenSea funding rounds starting from Pre-seed to Series B.
Pre-seed - $120,000
On January 4, 2018, OpenSea announced its pre-seed round. The company graduated from the Y Combinator W18 batch, after raising a seed round from Blockchain Capital, Founders Fund, Coinbase, and 1confirmation among others. A total of $120,000 was raised in this pre-seed round by the lead investor Y Combinator.
Seed - $2 Million
On May 10, 2018, the first seed funding round of OpenSea of $2 Million was announced, led by Index Ventures. Ten investors participated in this investment – Foundation Capital, Founders Fund, Crypto Currency Partners, Chernin Group, 1confirmation, Coinbase Ventures, Stable Fund, and Blockstack.
Seed - $2.1 Million
The second seed funding round of OpenSea was announced on November 19, 2019, in which the company raised $2.1 Million. Led by one of OpeSea’s lead investors Accel, this round of investment was joined by new strategic investors including Animoca Brands, Stanford StartX, Gumi Cryptos, and David Pazdan from MetaMask. Moreover, previous investors like Blockchain Capital, 1confirmation, Dylan Field from Figma, and Brad Flora from YC added to their prior investments in the startup.
At the same time, OpenSea informed that the monthly volume of the company reached around $1.8 Million in its marketplace that offers a variety of digital items including NFTs from well-known blockchain games. Since the launch of OpenSea, the total transaction amount of the company till its second seed funding round was more than $7 Million.
“At OpenSea, we believe the design space for blockchain-enabled applications is wide and still largely unexplored — an uncharted ocean full of treasure and mystery,” – Devin Finzer
Series A - $23 Million
OpenSea raised its Series A funding of $23 Million on March 18, 2021, led by a16z Crypto, the cryptocurrency-obsessed venture fund of Andreessen Horowitz. A total of 24 investors joined this round, including a broad range of VC firms, creators, and investors like 3LAU, Naval Ravikant, Mark Cuban, Alexis Ohanian, Linda Xie, Dylan Field, Tim Ferris, and Metapurse. This funding helped OpenSea to become the eBay of NFTs, which was one of the initial ideas of the founders.
“That we could create an Amazon or eBay for all of these new non-fungible tokens,” – Devin Finzer
Series B - $100 Million
On July 23, 2021, OpenSea secured a Series B investment of $100 Million at a unicorn valuation of over 1.5 Billion and took the valuation to 1.6 Billion. Along with this investment, the company informed that it is now launching official support for several blockchains, which will make it the first cross-blockchain NFT marketplace. This funding round was again led by Andreessen Horowitz (a16z), with participation from Michael Ovitz (Creative Artists Agency), Coatue and CAA, Kevin Durant (Thirty Five Ventures), Kevin Hartz, and Ashton Kutcher.
"The team at OpenSea realized early on the need for an open, cross-blockchain marketplace where anyone can buy, sell and create digital NFTs which is why they are one of the most important companies in crypto today. We are thrilled to double down on this team, their technology and overall vision, as they continue to provide the best user experience for today's creators, buyers and sellers, in one platform.” – Kathryn Haun, Andreesen Horowitz
“OpenSea provides the link between the consumer layer and the infrastructure layer for the digital goods economy and is a key utility in this new world of digital ownership. OpenSea provides a one-stop shop to discover, buy, and sell any non-fungible digital asset that conforms to a popular standard like ERC721, and it also quickly tells you the ‘who, what, when, where’ about a particular NFT. OpenSea shows you the provenance, trading, and sales history of digital items in a readable, trusted way.” – Katie Haun, Andreesen Horowitz
With this funding, OpenSea is expanding its NFTs to more mainstream audiences. An entirely new economy based on the idea of digital ownership is represented by the company. While other marketplaces concentrated on a single type of NFT, OpeSea has already started listing numerous types, including trading cards, sports collectibles, in-game items, digital art, event tickets, and more than 25 Million other assets for blockchain-powered virtual worlds like Decentraland.
OpenSea sold digital assets worth $160 Million on its NFT marketplace in June 2021 alone. During the first half of 2021, the company experienced a 45% increase in its volume growth.
Sector, Competitors, and Customers
Founded in 2017, OpenSea currently has 21 employees and more than 1196k users. On its marketplace, it offers 29.4M NFTs. There are 769.6K collections on the platform. The current trading volume of the company is $518M. Apart from co-founder & CEO Devin Finzer and co-founder & CTO Alex Atallah, other important members of this startup are the founding engineers Joshua Wu and Taylor Dawson.
OpenSea is active in the blockchain-based tech sector and its services revolve around the NFT technology, cryptocurrency, blockchain, financial services, fintech, and marketplace. In the finance category, the company has a rank of 57. It is ranked at 4,032 in the United States, and its global rank is 3,830. The top competitors of the company are SingularityNET, Syscoin, Dapp.com, bitFlyer, etherscan.io, Coinmarketcap, Coingecko, Binance, Rarible, Mintable, and Nifty Gateway. There are many competitors but what makes OpenSea different from them is that these marketplaces focus on a particular asset only, while OpenSea provides its customers to explore various assets on different platforms.
Millions of customers visit the website of OpenSea to access its marketplace every day. In the last six months, the average visits of customers per month have been 10.16 Million. The bounce rate is pretty impressive at 30.80%. OpenSea has customers in a total of 252 countries. The top countries according to most customers are the United States (24.56%), Thailand (7.01%), Canada (5.28%), the United Kingdom (3.31%), and Russia (2.78%). The users are mostly interested in finance, investing, computer electronics and technology, and developing and programming software.
What Are the Customers Offered?
NTF offers a brand new type of digital item known as a non-fungible token of NFT. These digital items are unique, usable, provably scarce, and tradable across multiple applications. Users can do whatever they wish with these, just like physical items. These can be sold on an open marketplace or be gifted to someone across the world. The growth of the OpenSea platform has been off the charts during the past 6 months.
Devin Finzer and Alex Atallah of OpenSea believe that open protocols like Ethereum, as well as interoperable standards such as ERC721 and ERC1155, can enable exciting new economies. After a long bearish season, OpenSea began to facilitate digital content trades worth hundreds of millions of dollars this year. In June, OpenSea sold around $160 Million worth of digital merch on its marketplace platform that charges a 2.5% fee for each transaction. The customer satisfaction score of the company is very impressive at the moment. The Oddup score, which depicts the overall potential and chances of success of this company in its relevant sector, is currently 74.31.
So, what does OpenSea assist the creators with? These are the services the marketplace offers for its customers:
Opening own marketplace
A creator is able to allow their users to trade their NFTs freely by opening their own marketplace on the platform of OpenSea. The marketplace is customizable on the preferred domain of the creator and fully integrated into their project. They can also set their fees on secondary sales of their items on OpenSea. Whenever the user sells something, the creator can earn a commission. They are also provided with insights and stats about how their collectibles are trending.
Running own crowd sale
On the marketplace of OpenSea, creators can sell the items in their game and their own token to a user base of adopters. Selling packets instead of individual items allows them to provide their users with more. Rewarding users by airdropping items also grows the user base of the developer’s app. Lootboxes can also be created to gamify the app and build engagement.
Powering in-app economy with OpenSea.js
Fetching assets with API
OpenSea offers a REST API so the clients can fetch NFT assets according to a set of query parameters. Websites and wallets can now display assets, activity, and accounts. Users may filter assets by type, collection, or wallet address. It is also useful to get updates about events happening on all assets even outside the marketplace, including listings, sales, transfers, bids, and more. Account addresses can be acquired with username and profile details.
What the Future Holds?
OpenSea offers both a platform and a marketplace where users can connect their crypto wallets easily to list their NTFs for sale or purchase NFTs from across the world and from multiple creators. Recently, the company announced support for the Polygon blockchain, reducing gas fees for buyers, sellers, and creators on its marketplace.
The marketplace currently supports Ethereum, Polygon, and Klaytn NFTs mainly but already had plans for more blockchain protocols. It also announced adding new chains like Tezos and Flow in the coming months. By investing in the scalability and interoperability of OpeSea’s cross-chain marketplace, the company wants to bring users closer to Web3.
“With increasing market adoption around crypto economies, NFTs are quickly becoming the new internet. It's pretty remarkable to be experiencing one of the biggest fundamental changes the internet economy has seen in decades. We're proud to be leading this growing industry that we have been part of for a long time. As we continue to scale, our focus will remain on our customers, and providing the best user experience and entry point into NFTs.” – Devin Finzer