Fanatics Selling 60% Stake in Candy NFT Startup – Ledger Insights
Fanatics is selling its stake in NFT startup Candy Digital to an investor group led by Galaxy Digital, which co-founded Candy with Fanatics and Gary Vaynerchuk in early 2021. The news was first reported by CNBC, citing an email from Fanatics – the company.
In October 2021, Candy raised $100 million in a deal valuing it at $1.5 billion, led by Insight Partners and Softbank Vision Fund 2, with participation from Peyton Manning and Connect Ventures, the joint venture between sports agency CAA and New Enterprise Ventures . Notably, Softbank also participated in a $700 million funding round for Fanatics in December 2022 that valued the company at $31 billion.
“Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business,” Fanatics CEO Michael Rubin wrote in the email cited by CNBC. “Apart from physical collectibles (trading cards) that drive 99% of the business, we believe digital products will have more value and utility when connected to physical collectibles to create the best experience for collectors.”
While there is no doubt that NFT prices were inflated by speculation, it is also hard to deny the transition from entertainment to a digital experience. Especially for younger generations. Brands continue to embrace the concept, although many choose the term “digital collectible” to avoid association with fraud.
Fanatics’ commitment to physical collectibles is not surprising given their significant investment in acquiring rights. Shortly after the launch of Candy Digital, Fanatics acquired collecting rights for the MLB, NBA and NFL Players Association. Topps had owned the MLB rights for 70 years and was forced to exit a SPAC listing. Fanatics later bought it for $500 million.
Candy Digital owns MLB digital collectible rights as well as a number of other rights, such as with NASCAR teams through the Race Team Alliance. Until recently, Candy was unable to use NASCAR branding, but the latest collection launched in December featured the iconic branding front and center.
In November it was reported that Candy had cut a third of its staff. Fellow sports NFT company Dapper Labs (NBA Top Shot, NFL All Day) also cut staff by 22%, and the Galaxy saw a similar share of layoffs.
Meanwhile, Galaxy has made two acquisitions in the past two months: the GK8 crypto platform and Helios Bitcoin Mining from Argo Blockchain.
