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By the time SuperRare came online on April 4, 2018, the price of Bitcoin more than halved to less than $7,000 per Bitcoin from the year’s ebullient, near-$20,000 per Bitcoin start. The cryptocurrency-based art marketplace found itself, after months of labor, plunged into the depths of an industry-wide “crypto winter.”
Even so, during that troubled year, the website attracted a niche fanbase that bought and sold thousands of dollars of digital artworks per month. That devotion sustained SuperRare’s founders, who continued to work on the site, even if they had to take up freelance web consulting side-gigs to earn a living.
“We stuck it out for quite a while with, like, really low volumes,” says John Crain, SuperRare’s cofounder and chief executive. “We were pretty confident that a market would eventually evolve, but I'm certainly surprised at how quickly things took off and how celebrities started tweeting about” the recent digital art craze.
This year has been a very different story. Cryptocurrency mania re-gripped the world in 2020, and that bullish exuberance has spilled over into the so-called crypto art world—juiced, no doubt, by the digital artist Beeple’s recent stunning $69 million Christie’s auction. Between January and February, average artist sales on SuperRare skyrocketed to $10 million from $2 million. This month the figure is nearing $27 million.
SuperRare’s sudden growth has piqued investors’ interest. SuperRare said it plans to announce Tuesday that it has raised $9 million in venture capital funding. The new cash infusion follows the company raising an initial “seed” round of $1.4 million in Sept.
Flipping the art market
Nick Tomaino, founder and general partner of 1confirmation, a cryptocurrency-focused investment fund that is one of the deal’s leaders, says the investment speaks to the long-term potential for digital art.
Non-fungible tokens, or NFTs, the blockchain-based digital collectible craze that is fueling the crypto art boom, “are obviously hyped like crazy right now,” says Tomaino, who is a digital art collector and an investor in the crypto art marketplace OpenSea. Other rival marketplaces include Rarible and Nifty Gateway.
“The big Beeple sales have gotten the headlines,” continues Tomaino, who formerly worked in business development at Coinbase, America’s biggest cryptocurrency exchange. “But the broad growth of the industry as reflected by the data feels under covered.”
Tomaino expects the upside for digital art—already a $400 million market, by his measure—to eclipse the pain of any possible short-term wintry bust. In 10 years, “digital art has a chance to exceed $3 trillion in total value and flip traditional art,” he says.
In other words, Tomaino believes virtual art will garner a bigger market than its physical predecessor. This rosy forecast of his is based on a belief that blockchain technology will bring transparency, liquidity, and democratized access to a market once characterized by opacity, illiquidity, and exclusivity.
Zooming out of the frame
Other investors share that vision, or at least they see enough of it to back SuperRare.
Co-leading the round is Velvet Sea Ventures, another venture capital fund. Other participants include tech investing celebrities such as Ashton Kutcher, Mark Cuban, Marc Benioff, Naval Ravikan,t and Chamath Palihapitiya.
Samsung Next, the venture capital arm of the Korean electronics giant, is also participating in the round. Intriguingly, the company sells a high-end TV called “the frame” that doubles as a digital art display, a product that could benefit from a thriving digital art market.
When asked about his interest in SuperRare, David Lee, who heads Samsung Next, describes possible synergy with “the frame” as “speculative.” Samsung’s big strength is mobile devices, he says, and “when we see more and more builders and developers in an area such as digital art, we get pumped up about what the future could look like and what how Samsung could support that future.”
This isn’t Samsung’s first NFT-related investment. Samsung is a backer of Dapper Labs, another startup that specializes in digital collectibles. The two companies partnered last year to release a mobile app on Samsung Galaxy phones related to NBA Top Shots, one of the biggest virtual trading card franchises.
“NFTs are a tool. They’re a piece of infrastructure that facilitates our collecting,” says SuperRare CEO Crain, noting that digital trading cards are an "obvious" application. “Along the way, as these kinds of new markets grow and mature, there are certainly going to be booms and busts.”
Despite that cyclicality, Crain believes some behaviors are grounded deeply in human nature and have longevity. “Collecting is an ancient activity people have been doing for hundreds of years,” Crain opines.
On that basis, he says, “digital art collecting is going to be a massive market.”
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This story was originally featured on Fortune.com