Pudgy Penguin’s $9M seed round could point to a growing NFT industry

Welcome back to Chain Reaction.

Earlier this week, Pudgy Penguins, an NFT collection that also doubles as a web3 IP company, raised $9 million for its seed round.

Why does this matter?

Pudgy Penguins isn’t the first NFT-focused company or collection to raise money. However, its seed round is another indication of the growing digital asset subsector and how projects that may seemingly be interpreted as just a collection of profile pictures (PFPs) can be turned into something more.

For context: Last September, Doodles raised $54 million at a $704 million valuation in a round led by Reddit co-founder Alexis Ohanian’s VC firm Seven Seven Six. And in March 2022, Yuga Labs, the company behind three blue-chip NFT collections, raised $450 million at a $4 billion valuation.

Pudgy Penguins, which reminds me of Club Penguin, was launched in 2021 and acquired by Los Angeles-based entrepreneur and web3 enthusiast Luca Netz in April 2022. Since then, it has expanded from 8,888 NFTs to a suite of real-life products and experiences providing collection owners live events, physical merchandise and licensing opportunities.

The collection’s round was led by 1kx, an early-stage investment firm, and saw participation from Big Brain Holdings, Kronos Research, the founders of LayerZero Labs, Old Fashion Research and CRIT Ventures. The funds will be used to scale its intellectual property, its team and to “enhance offerings” for its community.

As it stands, Pudgy Penguins holds the 21st position by all-time NFT sales volume across all chains. The collection has over $252 million in lifetime sales and in the past 30 days, it had $4.2 million in sales, up 102% during that time frame, according to CryptoSlam data.

Of the 8,888 NFTs, only 566, or 6.4%, are listed for sale, according to its website. The floor price, or lowest selling price, for a Pudgy Penguin is about 4.18 ether, or $7,700, at current prices. The most expensive one is currently listed for 900 ether, or $1.6 million, even though it was sold two years ago for 0.009 eth, or about $16.

Going forward, Pudgy Penguins, and other big NFT collections, could serve as leaders paving the way for larger intellectual property moves in the subsector. These projects aren’t just making money through sales, but through investors, too. And with that, there could be a snowball effect (no pun intended).

This week in web3

Tensor’s on a climb to the top of the Solana NFT marketplace totem pole (TC+)

Just two months ago, NFT trading platform Tensor raised $3 million in a seed round. Fast-forward to today and it is close to regaining its position as the biggest Solana-based NFT marketplace, based on market share. The platform launched a private beta in June 2022 and opened to the public the following month. In March, it had over 30,000 monthly active users, and by April, its MAU was up about 317% to over 125,000, co-founder Ilja Moisejevs said.

Crypto needs a global view to build better regulatory models (TC+)

The crypto industry is increasingly worried that U.S. regulators are clamping down too hard on the space. Predictably, that’s making companies in the space look outwards to regions that have clearer guidelines in place, and it seems there are lessons the industry, and regulators around the world, can learn from looking beyond their borders.

Former FTX CEO Sam Bankman-Fried seeks to dismiss most US charges against him

Former FTX CEO and founder Sam Bankman-Fried has filed a pretrial motion to dismiss 10 out of 13 charges against him, according to court documents. In Monday’s filing, Bankman-Fried’s attorneys from law firm Cohen & Gresser seek to dismiss the conspiracy to commit wire fraud and bank fraud charges. The lawyers also seek to dismiss a few other charges, including bribery and political contribution charges. However, his attorneys did not appeal three charges: conspiracy to commit securities fraud, securities fraud and conspiracy to commit money laundering.

Arbitrum co-founder sees DAO’s resolution to voter drama as a ‘testament to decentralization’ (TC+)

It’s been a little over a month since the Arbitrum Foundation drama, where the foundation transferred funds from Arbitrum DAO without the community’s approval, sparking an uproar. But if you ask Steven Goldfeder, CEO and co-founder of Offchain Labs, that blunder was just one of the early steps on the journey to decentralization.

Mastercard, PayPal and Robinhood dive deeper into crypto as industry shows ‘promise’ (TC+)

As the crypto market works its way through a downturn, more incoming money and users could help it weather the storm. But right now, it’s sometimes challenging for the layperson to get into crypto. Understanding gas fees and wallets isn’t intuitive, and the perceived miasma of complication that currently surrounds the space is no help, either. To help foster user adoption and the resulting capital inflow, web3 needs smoother on- and off-ramps to make it easier to buy into and interact with blockchains. Trusted providers with existing mainstream audiences are betting they can help fill that gap.

Investors cheer as Coinbase beats Q1 expectations (TC+)

Coinbase reported its Q1 2023 financial results, handily beating expectations. In the first three months of the year, the U.S. cryptocurrency exchange generated net revenues of $736 million, a $79 million net loss and adjusted EBITDA of $284 million. Analysts had expected a far slimmer $655 million in revenue and a larger loss from the company in the first quarter. In after-hours trading, shares of Coinbase are up a little more than 7%. Certainly, Coinbase’s results are a welcome dataset for both crypto bulls and investors in the company alike.

The latest pod

This week we have a bonus episode from a fireside chat Jacquelyn did with Nadya Tolokonnikova, the creator of the protest art collective Pussy Riot, at NFT NYC in April.

Tolokonnikova was sentenced to two years of imprisonment in 2012 after being found guilty of “hooliganism motivated by religious hatred,” but was released early under amnesty.

Fast-forward to 2023 and Tolokonnikova has continued to use the Pussy Riot name to fight in favor of women and LGBTQ people’s rights and against Russia’s control under President Vladimir Putin. As of March, Tolokonnikova was added to Russia’s most wanted criminals list.

Tolokonnikova has also spoken before the U.S. Congress, British Parliament, European Parliament and has appeared on TV shows like House of Cards.

We dove into a deep conversation surrounding Tolokonnikova’s mission, how she uses NFTs as a form of activism and how she got into the space.

We also discussed:

  • How others can use NFTs for activism

  • Future visions for NFT utility

  • Advice for projects in the space

ICYMI: On last week’s episode, Jacquelyn interviewed Jake Chervinsky, the chief policy officer at Blockchain Association, a nonprofit organization focused on promoting “pro-innovation” policy for the digital asset world. He is also a board member of the DeFi education fund and advisor for a web3 seed stage fund Variant.

Prior to his work with the Blockchain association, Chervinsky began his attorney career in private practice with a focus on anti-money laundering and anti-corruption compliance and investigations, financial services litigation and government enforcement defense. He spends a lot of time in DC, testifying at hearings to help provide clarity on the crypto industry in hopes to guide it in the right direction.

We talked about all things regulation, from how Chervinsky views the current regulatory landscape to whether or not we’re in a “crackdown” era, as people call it.

We also discussed:

  • Regulators' views changing

  • American crypto companies

  • Are cryptocurrencies commodities or securities

  • Stablecoin legislation

  • Future legal frameworks and guidelines

Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to keep up with the latest episodes, and please leave us a review if you like what you hear!

Follow the money

  1. Crypto media platform Blockworks raised $12 million at a $135 million valuation

  2. Decentralized crypto wallet provider Odsy Network raised $7.5 million

  3. Webb Protocol raised $7 million to expand cross-chain privacy

  4. Multichain NFT ecosystem-focused Artifact Labs raised $3.25 million

  5. Siphon Lab, a DeFi platform on Sui Network, raised $1.2 million in a seed round

This list was compiled with information from Messari as well as TechCrunch’s own reporting.

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Follow me on Twitter @Jacqmelinek for breaking crypto news, memes and more.