Summary:

OpenSea is the leading decentralized marketplace that allows people to discover, buy, and sell
digital collectibles.

A digital collectible is a scarce representation of a digital good on a blockchain. In the past four
months, there has been a boom in digital collectibles as a result of the ERC721 token standard
and global ETH liquidity. Cryptokitties was the first project to capture mindshare around this
concept and there’s since been an explosion of Cryptokitties variants (see Cryptohorse,
Cryptocities, Cryptocelebrities) and other NFT-based games (see Etherbots, Ethercraft). Most of
these projects have questionable long-term prospects, but underlying this explosion we think
there is something meaningful going on in how people value and utilize scarce digital goods.
OpenSea is building the leading brand to provide discovery and buy/sell functionality and
ultimately help bring digital collectibles to the masses.

1confirmation is leading a seed round of [redacted] at a [redacted].

Key assumptions for our OpenSea investment:

1.) We’re on the precipice of a massive boom in non-fungible tokens (NFTs) and
the category will emerge with significant fragmentation. Cryptokitties was the first
NFT-based project to gain mindshare (and right now 95%+ of the market volume is
Cryptokitties), but we see a world where there are millions of interesting NFT-based
projects and a strong need for an aggregator to provide discovery and easy buy/sell
functionality for users.

2.) The OpenSea team will continue to be nimble and first to market on adding new
NFTs and new features that the crypto community wants and builds a strong
brand around discovery and buy/sell functionality. The team was first to market in
launching a NFT marketplace and has some mindshare and traction in this nascent
market (which is still less than 4 months old). Devin and Alex are scrappy and have a
good feel for the crypto community and will have to maintain that in a highly competitive
market with well-funded competitors.

3.) There’s a defensible long-term business model here. The nature of NFTs is that
there’s relatively low barrier to entry. The team will have to build a strong brand to gain
the mindshare and trust of consumers and developers to gain strong network effects and
ultimately revenues from fees in the long-term.

Team (8/10):
Co-founders Devin Finzer (CEO) and Alex Atallah (CTO) have done a lot with a little and have
proven to be scrappy and nimble in the nascent and fast-moving market. They went into YC with
a different idea (Wificoin), but relatively quickly pivoted to OpenSea as they saw the NFT market
starting to take shape. They’ve been first-to market in product features and adding new NFTs
and are also tinkering with their own NFT-based games (see Ethmoji).

Devin is an engineer and founded a company called Claimdog (acquired by Creditkarma) and
also worked at Creditkarma and Pinterest. Former colleagues spoke highly about his work ethic
and intelligence. Alex is also an engineer and worked at various startups as well as Palantir.
Former classmates and colleagues also spoke very highly about his intelligence and hustle.

Product (8/10):

The product solves a clear need for the crypto community right now: how do you discover and
buy/sell NFTs. In a category that is 4 months old, there is a long way to go improving the
product and a lot of different directions to take the product in the future, but the product solves a
clear need now for a small but growing niche of users (myself included).

Community (8/10):

There’s a small but growing community of people interested in NFTs and OpenSea has started
to build a strong brand around it. There’s a lot that we can do to push that forward.

Token mechanics (NA):

This is an equity investment. While there is an NFT or token angle which the team could explore
for revenue (presales of digital goods), the company will be funded by equity rather than tokens
and the primary business model is likely to be fees rather than token appreciation.

Key Risks:

● Competition: There are two more well-capitalized and experienced teams who are also
playing in the digital collectibles market Cryptokitties (raised $12M from a16z and USV)
and Rarebits (raised $8M from Spark). Cryptokitties is not directly competitive, but could
be in the future and is probably competing for talent in the space now. Rarebits is directly
competitive. Devin and Alex are scrappy and nimble, were first to market on the
exchange side and are beating them by a significant margin to date, but that could
change.

● Defensibility of the exchange: Unlike Coinbase, which has a regulatory moat, there's
not nearly as much defensibility when it comes to NFT-exchange. It’s likely more
competitors will enter and we’ll need to figure out how to build a sustainable long-term
moat.
Recap (Team + Product + Community + Token mechanics): 8

Overall, we believe that OpenSea is building the right product at the right time, and if the team
executes and the category grows like we think it can, the outcome potential is massive.

While there are two other well-capitalized teams that will be competing for talent, mindshare,
and potentially customers, we think that by staying nimble and fast-moving in this nascent
market, OpenSea can create a strong consumer brand and defensible moat and ultimately bet
the winner in the category.

April 2018