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NF3X Labs, an upcoming marketplace for nonfungible token swaps and financing, announced Friday that it raised $1.65 million in seed funding to launch its peer-to-peer market for trading crypto collectibles.
The seed round was co-led by Infinity Ventures Crypto and Spartan Group, with participation from DWF Labs and Saison Capital. Other investors supporting the round included crypto venture capital firm LeadBlock founding partner David Chreng, crypto exchange Bitmex co-founder Arthur Hayes and Neil Gomes, EMEA head of fintech at Softbank.
NFT3 was founded by Poorvi Sachar and members of the Bored Ape Yacht Club NFT art collection Skittlewood and 0xStarmowa, both of whom chose to use pseudonyms.
Nonfungible tokens are a type of blockchain-enabled crypto asset that represent the ownership of virtual items such as files, digital artwork, music, videos, digital collectibles and video game items. Using the underlying blockchain, these records of ownership can be minted, bought, sold and traded enabling markets for collectors.
Current marketplaces, such as OpenSea and Rarible, enable traders to buy and sell NFTs for cryptocurrency, but trading is not a commonplace option. There’s also little way to provide a way for collectors to purchase an NFT now and pay later. As a result, the founders decided to build a marketplace that could provide collectors the option to collect and trade their NFTs like trading cards and become part of a market that treated them like collectibles again.
“Collecting and trading of NFTs should be a communal, effortless and an enjoyable activity similar to trading cards,” said Sachar. “We are looking to change the way peer-to-peer exchanges work by building a secure platform where members of the different communities are able to barter, communicate and seek financing in their collecting journey. ”
By enabling users to exchange and trade NFTs, NF3 hopes to allow them to return to their collectible roots and “trade up” in rarity the same way that collectors of trading cards might during a swap meet. With additional financing options, the exchange would also enable them to engage in even more opportunities to interact with their collectibles and other owners.
The financing for NF3 comes at a time when NFT markets are down significantly since last year’s boom, which reached $17 billion in sales. However, those revenues crashed in 2022, according to a report from Reuters, falling during the third quarter of this year to a mere $3.4 billion in sales, down from $8.4 billion the previous quarter.
Venture capital interest in NFT marketplaces has also dwindled following the declining markets, Crunchbase reported in November. In the first quarter of 2022, $2.1 billion was invested in NFT companies, but this quickly diminished, more than cut in half by the second quarter with less than 850 million invested. Crunchbase estimated that if the trend continued, the fourth quarter would fall 80% from the first-quarter peak.
In spite of cold times for NFTs, NF3’s investors are still warm on the subject and see the new marketplace as something that will bring audiences new options.
“As traders become more sophisticated, they’re demanding trading venues that allow them to do more, and the growth of the NFT market has sparked a rise in financing options for creators and collectors,” said Kelvin Koh, co-founder of Spartan Group. “The suite of products that NF3 is providing for its users go above and beyond spot buying and selling.”
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