Exclusive: Futureverse acquires NFT startup Candy Digital
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Illustration: Brendan Lynch/Axios
Futureverse has acquired Candy Digital, an NFT startup with partners like Major League Baseball, Netflix and DC Comics, executives exclusively tell Axios.
Why it matters: The four-year-old startup, which emerged in the NFT boom times, has found a home as part of a larger metaverse company.
Context: Fanatics CEO Michael Rubin, Galaxy Digital founder Mike Novogratz and entrepreneur Gary Vaynerchuk launched Candy with the MLB as its first partner in 2021.
- The startup later partnered with Netflix for "Stranger Things," NASCAR and WWE. It also began working with DC Comics through its merger with Palm NFT Studio.
Follow the money: Candy raised a $100 million Series A at a $1.5 billion valuation, co-led by Insight Partners and Softbank, in 2021.
- But in 2023, Fanatics sold its 60% stake with Rubin saying in an internal email, "Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business."
- Candy raised a Series A1, led by Galaxy and ConsenSys Mesh, in 2023 for an undisclosed sum.
Zoom in: Futureverse CEO Aaron McDonald says the companies are aligned in "wanting to use technology to give fans new experiences."
- Futureverse formed in 2022 as the merger of eight metaverse companies. It raised a $54 million Series A at a $700 million pre-money valuation in 2023. Revenue comes from content, subscriptions and APIs for tools and services it provides to brands.
- Candy has about 25 employees, growing Futureverse's team to about 200. Matt Novogratz, co-founder and senior vice president of Candy and brother to the founder of Galaxy, will serve as chief commercial officer at Futureverse. CEO Scott Lawin will be an adviser.
- The deal was primarily equity based with some former staff granted the choice to convert options to cash, McDonald says.
Between the lines: Novogratz says the digital collectibles industry has seen "ups and downs" and expectations have changed. But he is confident in its future.
- "I look at my kid who's obsessed with Roblox. If you told him that he didn't actually own any of these things, he would be perplexed. He would not know what to do. So it's certainly not going away. It's evolving," he says.
Thought bubble via Axios Crypto's Brady Dale: The NFT 2021 boom was a prototype, proving that digital ownership had a certain appeal. The sector is a lot smaller right now, but it's never quite died (just like Bitcoin through all its ups and downs).
- NFTs will be back in a big way one of these days, but the technology is likely to evolve from just buying digital images by then.
- Think of Futureverse as a platform for building digital environments that fans can enter and explore. So a company can skin it with their own branding and imagery, but the underlying mechanics are already built.
- This kind of thing has been big business in video games, for example, where "game engines" built for one game get licensed by lots of other games that look, feel and play quite different, but share core software.
What's next: Candy's library will be integrated into The Root Network, Futureverse's blockchain.
- McDonald says the plan is for Futureverse's tech to help Candy create collections, as in more variations from a base IP, and share them across platforms.
