NBA Top Shot Parent Company Valued at $2.6 Billion After Raising $305 Million

Dapper Labs, parent of NBA Top Shot, announced Tuesday it raised $305 million that sources confirm values the company at $2.6 billion.

Investors in the round include high profile NBA players like Michael Jordan, Kevin Durant, Klay Thompson, Andre Iguodala, Kyle Lowry, Spencer Dinwiddie, Khris Middleton, Domantas Sabonis and JaVale McGee and NFL players including Stefon Diggs, DK Metcalf Malcom Jenkins, Devin and Jason McCourty. Celebrities who got in on round include vehicles of Ashton Kutcher, Will Smith, Shawn Mendes and 2 Chainz.

"We brought together the best people in media and sports for this round," Dapper CEO Roham Gharegozlou told The Action Network. "It was especially important for us to bring more athletes into the fold because products like NBA Top Shot are all about the fan experience that revolves around players."

The bulk of the money comes from VC and PE firms including early backer Andreesen Horowitz, The Chernin Group, part owner of The Action Network, USV, Version One and Venrock.

After striking a licensing and revenue sharing deal with the NBA in the summer of 2019, the idea of NFT's (non-fungible tokens) took off in the sports world this fall, thanks to Dapper, a newly named company whose team also helped build and sell digital cats called CryptoKitties.

Dapper created its own blockchain in Flow to support its products, the first of which was NBA Top Shot, which connects a limited edition, encrypted set of collectible highlights, to a particular user. That user doesn't own the rights to the highlight and has no potential to earn dividends off its views on YouTube or elsewhere, but that person does own that particular version of that highlight and can sell it.

Because all transactions are on the blockchain, Dapper and its licensed partners, including the NBA, can earn a percentage of every sale at any time, unlike when physical assets are sold.

Dapper says NBA Top Shot has more than 800,000 registered accounts, with 338,000 customers with at least one NFT highlight. Three million transactions have been facilitated. According to NFT market tracking site CryptoSlam.io, NBA Top Shot sales, including what has been sold on the marketplace, have generated $466 million in lifetime sales, including more than $200 million of that in the last 30 days.

The company has certainly had its hiccups, which have included countless pack drops that have had to be rescheduled due to traffic, bot interference and, perhaps the greatest issue, the inflexibility of moving money in and out, partly a result of regulations needed when changing from crypto to cash and back, and lack of staff, which the company says has been remedied.

While the focus is on NBA Top Shot for now, investors are very much investing in Dapper's unique blockchain Flow. Current licensors building off Flow include Warner Music, Ubisoft and the UFC as well as countless third party developers.