It is the latest company to cash in on a rush to fund cryptocurrency start-ups after raising $300 million in new venture capital, according to OpenSea, one of the most talked-about blockchain start-ups in Silicon Valley. Four years after the start-up was founded, it now has a valuation of $13.3 billion due to a new round of funding led by investment firms Paradigm and Coatue Management. Based on company data, OpenSea previously raised more than $100 million from investors including Andreessen Horowitz and actor Ashton Kutcher.
A 2017 start-up, OpenSea offers a place where people can exchange so-called NFTs, or nonfungible tokens, which are unique pieces of digital code that are backed by blockchain.
Unlike traditional tokens, NFTs are typically digital artwork created by artists who list their pieces for auction on the OpenSea site, similar to eBay listings. Most NFTs are connected to Ether, which is one of the most popular cryptocurrencies and blockchain technologies. The popularity of crypto-related start-ups has led to OpenSea becoming the central place for enthusiasts to trade NFTs. A growing number of investors are interested in placing increasingly large bets on the busy cryptocurrency market.
According to PitchBook, a firm that tracks private investments, more than $3 billion was invested in NFT companies in 2021. Last year, investors around the world invested more than $28 billion into cryptocurrency and NFT start-ups, according to PitchBook.
NFTs and blockchain technology, according to cryptocurrency critics, are just fads accompanied by dubious practices. Earlier this week, there was some controversy surrounding OpenSea after one of its customers claimed to have been cheated out of $2.2 million. The stolen assets were later frozen by OpenSea and they are no longer allowed on the site for trading.
Technologists have not been deterred by those concerns. A number of startups in the cryptocurrency and NFT space are luring employees from big tech firms such as Google, Amazon, and Meta, offering them lucrative jobs with new technologies. The former chief financial officer of Lyft has joined OpenSea as its first chief financial officer after leaving the ride-hailing company last year. In addition to Rajaraman, the company recently appointed Shiva Rajaraman its vice president of product.
The company plans to double the size of its trust and safety team with the new funding while adding to its more than 90 employees. A grant program will soon be available to support creators and blockchain builders in the NFT space, and NFT will deepen its investment in product development.