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🔦 Deal in the spotlight - Sorare

🔦 Deal in the spotlight - Sorare

(by Julius Müller)

Sorare raises a $50M Series A round, led by Benchmark, to transform football fandom.

Key facts about Sorare and the deal:

  • Value Proposition: Sorare uses non-fungible tokens to create digital football card collectibles that can be traded and used in a fantasy football game - the first in a suite of potential applications using those cards
  • Founded: 2018 / HQ: Île-de-France, France (pay us a visit guys, we are practically neighbors)
  • Series A funding round: $50M equity round led by Benchmark with participation by Accel and notable sporting personalities, among them Antoine Griezmann and Rio Ferdinand
  • Prior funding: 07/2020: $10M Seed round led by e-ventures | 05/2019: $500k Pre-Seed round led by Seedcamp and Kima Ventures
  • Notable figures: ~$16.8M in token value traded all-time at the time of writing, with $3.5M in Jan 2021 alone | 120 licensed clubs on the platform

🚀 Why you should really care about this deal

  • Non-fungible tokens (NFT) are here to stay, take three. If decentralized finance was the most hyped topic of 2020 (we published our take on the market earlier in the year) then NFT is an early strong contender for the top spot this year. NFTs seem to make a resurgence whenever we see a wider crypto craze - industry observers saw the same thing happen in 2017 (where some of the more popular applications, Cryptopunks for example, were initially released). We predicted this fourth-ever crypto hype-wave to be the coming-of-age moment of DeFi - the same could be the case for NFTs. The incredible hype surrounding that industry now will lead to higher activity of innovators in the space in the future. The same has been said during past hype cycles though - Sorare could now, however, be the catalyst that enables more applications that actually provide value beyond the crypto space. Their value proposition feels distinctly different from other crypto-centric applications by putting the underlying technology into the background. That is the correct approach - let’s be honest here, Cryptokitties never was the killer-application that the world has been waiting for.
  • The perfect fusion of huge and highly irrational markets. Fantasy sports meets sports collectibles powered by blockchain tokens. It really is the perfect triangle to attract enthusiastic users with high spending power. The average card is currently traded for just over $100 on the platform due to the demand of fantasy sports players, collectors, and speculators alike. Sorare is the first in a string of NFT platforms that truly understood how to fuse multiple domains together and they are in the perfect position to capture more of this market. The sky is the limit really as long as they execute well on their vision and keep players interested. The combined size of the merged industries here is staggering:
  • Fantasy sports was valued at $18.6B in 2019 and is forecast to grow to $48.6B by 2027 driven by strong demand in developing markets.
  • The sports memorabilia market was valued at approximately $10Bby Forbes with surging demand in recent years driven by increased digital distribution.
  • And that really is only the tip of the iceberg - the same customers that might spend money on digital sports collectibles might spend money on rare skins in video games - an industry that easily tops $40B in market size and is growing rapidly.
  • When those industries meet the scorching hot crypto market then the potential for staggering trading volumes and potential revenues is clear. Sorare is reportedly profitable and increased trading activity should lead to a solid revenue increase as well.

🤔 What you need to believe in

  • Sorare can execute on their vision and provide a better experience than established fantasy sports providers. As I’ve said in our DeFi piece: blockchain applications will only break into the mainstream only if the user experience is better than existing solutions. Sorare caters to sports collectible enthusiasts first, crypto speculators a distant second which is the correct order for mainstream appeal. The platform still feels like a beta, but with a team of 12 that might be expected. We hope they double down on the user experience and keep the blockchain in the background - it is an infrastructure technology after all and the inner-workings really shouldn’t be customer-facing.

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