Digital cats and minesweeper may have more in common than you think.
Dapper Labs, the startup behind blockchain-based virtual collectables CryptoKitties, raised some $15 million in funding Thursday in a round led by venture capital firm Venrock. Samsung Next and GV, the venture arm of Alphabet, also participated—bringing its total funding up to $27.9 million since launching Nov. 2017.
With the additional funding in hand, the Canadian company that allows users to breed and trade digital cats, plans to attract more users to the game and by extension, blockchain technology. To do so, the firm is building out a U.S. office in Los Angeles while establishing partnerships with household brands and figures.
And while the game has grown famous for the trading and breeding of digital cats (one cat sold for as much as $140,000), Dapper plans to include more functions. Enterprising fans for example have built ways to race and battle using the cartoon felines.
“Games are the way you understand how to use new tools,” said Dapper Labs CEO Roham Gharegozlou, who pointed to early games that helped users familiarize themselves with Microsoft computers. “Solitaire taught drag-and-click. Minesweeper taught right click on a mouse. The original version of Hearts taught networking.”
And now, Gharegozlou is hoping that cats, battles, and breeding could put a billion people on the blockchain. It’s targeting consumers by consciously staying away from the crypto-jargon blockchain enthusiasts often use to extol the technologies virtues—think “self sovereignty” or “distributed ledger.”
For Venrock, it’s not just about the cats. The investment is a bet on the human desire to collect rare and valuable items—with blockchain technology being a natural evolution of the collecting industry.
“Collecting is an incredibly large hobby from baseball cards, to art, to wine, to trinkets, to stamps. It’s widespread, and it’s something the species does,” said David Pakman, a partner at Venrock. “This is the thesis that they can effectively be a platform company for the launch of many, many different kinds of digital collectables.”
Pakman adds that blockchain technology could be a major way update the world of scare digital assets and intellectual property. While works such as music and online artwork are easily copied and thus depreciate in value, blockchain can potentially solve that problem by constantly tracking who is holding a CryptoKitty and how many are in the world. Meaning should a rogue CryptoKitty appear on the internet, it would be easy to label it a knockoff or an illegitimate get.
The investment also comes though activity on the CryptoKitties platform appears to have waned somewhat since it briefly went viral last year. In December, the platform processed 1.3 million transactions, based on data from Bloxy. This month, roughly 163,340 transactions in October despite a push into Greater China and Singapore earlier this year.
But for Pakman and Dapper, its not all bad news. The sudden popularity of CryptoKitties was a source of frustration among some cryptocurrency enthusiasts, as the sheer volume of transactions at the time slowed down the blockchain network upon which it was built: Ethereum. Now, CryptoKitties has time to take a breath and try and solve those problems.
Bottom line: “I think this is a very big idea,” says Pakman about CryptoKitties. “I don’t know if this company is going to succeed at it. It’s very hard odds—the first movers aren’t always the ones to reap all the benefits. But I think this team has a chance of that.”
