TinyTap Secures $8.5M to Leverage NFTs for EdTech
Web3 ideas are flowing to the education technology sector, known as EdTech. TinyTap, a subsidiary of Animoca Brands and a leading EdTech platform for user-generated educational games, announced an $8.5 million raise earlier this week to help grow its combined Web2 and Web3 platform. The investment, which comes from major players such as Sequoia China, Liberty City Ventures, Kingsway Capital, Shima Capital, Polygon (MATIC-USD), GameFi Ventures and others, will help TinyTap’s business expansion plans centered around NFTs.
Non-Fungible Tokens, commonly known as NFTs, are one of the most important technological innovations spurred by blockchain. As the name suggests, they are different from regular coins or tokens because each NFT is unique and not fungible, making them suitable for representing one-off items and collectibles. The concept became popular in late 2021 and early 2022, primarily for the “monkey picture” NFTs that were all the rage for speculators at the time.
However, NFTs as a technology can be used for pretty much anything. Each NFT is linked to an underlying element, such as a monkey JPEG or a financial position in the Uniswap DEX (decentralized exchange). At their core, they are a way to reliably know that someone is in possession of the thing represented by the NFT. This connection can be quite weak, for example in the case of the images. If the NFT points to a link on a server representing the image, the owner of that server can easily delete the image and “pull” the NFT holder.
Stronger connections can be enforced in a world of smart contracts. Each liquidity provider to the Uniswap V3 protocol contributes their funds to earn a portion of the exchange fees generated by the platform. The claim to their money is represented by NFTs, but because the smart contracts that honor the claim are immutable, having NFTs is as good as having money in your bank account.
The TinyTap Publisher NFTs
TinyTap uses smart contracts to generate so-called Publisher NFTs. The platform is similar to Coursera (NYSE:COUR) in that it offers a selection of courses, offered as educational games, that can be published by any teacher. However, these marketplaces are usually very competitive and in practice it is difficult to make your course stand out in the sea of potentially less informative but better known teachers.
This is where Publisher NFTs come in. They represent rights to co-publish a particular TinyTap course, which is designed to be an educational game as intended by the teacher. Each teacher creates these games in their subject and publishes them to TinyTap. When the Publisher NFTs are sold, the creators get a share of the revenue, while the NFT buyers take on the role of co-publishers. The co-publishers are expected to promote and market the associated courses and receive a portion of the total sales in return.
This offers a welcome degree of specialization to the EdTech industry. Talented teachers in a particular subject will rarely be good at marketing (unless they teach a marketing course). The Publisher NFT model allows teachers to share a piece of the pie to attract reputable marketers and spread their quality work to a larger audience.
TinyTap launched a Web3 initiative in 2022 with two successful auctions of Publisher NFTs, which the company says sold for a total of 243 ETH, or $352,000 at the time of the auction. Since the NFTs were auctioned in Q4 2022, the Company claims that the average revenue of NFT buyers was approximately 8.2% (or 19.7% annualized) of the purchase price of the Publisher NFTs.
A case study of this initiative is Misa Matsuzaki, who owns two Publisher NFTs while earning $7,823 in the five months from November 2022 to March 2023. She expressed her enthusiasm for TinyTap, saying that “TinyTap helps teachers to actualize great ideas for educational content,” adding, “I’d like to see more use cases like TinyTap Publisher NFTs, which are so much more interesting than just having NFTs in our wallet!”
Founded in 2012, TinyTap is an educational game library of over 250,000 courses and activities, created both by individual teachers and educational publishers such as Sesame Street and Oxford University Press. TinyTap delivers educational content to families, primarily in the OECD area, with a focus on children under 6th grade. According to the company, it serves 9.2 million registered family members with content created by over 100,000 creators.
TinyTap’s model already included revenue sharing systems, which are now enhanced with NFTs. To leverage it further, Animoca Brands acquired the company in 2022. Animoca Brands is one of the largest GameFi publishers whose portfolio includes The Sandbox, Phantom Galaxies and other major games, as well as numerous NFT integrations with brands such as Disney (NYSE:DIS), Snoop Dogg, WWE (NYSE: WWE), and others.
The recent fundraising will certainly help the TinyTap team steer new potential use cases of NFTs as a technology, diversifying from the now defunct field of “artistic” NFTs.
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