Dibbs, an app that allows users to trade fractional interests in sports cards, has raised $2.8 million in seed funding.
Money is pouring into the sports card industry, and it’s not just card sellers who are benefiting.
Dibbs, an app that allows users to trade fractional interests in sports cards in real time, will announce today that it has secured $2.8 million in seed funding, led by Courtside Ventures. Other investors in the round include Founder Collective, JDS Sports and Sports Card Investor, as well as former NBA player Channing Frye, WHOOP founder Will Ahmed and Flatiron Health cofounder Nat Turner, a notable name in the sports card industry.
Dibbs, which was founded in September and is currently in beta, with about 4,500 users having signed up and another 35,000 or so on a waitlist, is aiming to officially launch next month. The money from this new round will help the Los Angeles-based startup expand overseas, in part by pushing deeper into sports like soccer, tennis and golf, and investigate opportunities with physical cards, purely digital cards and hybrids of the two.
It’s fortuitous timing, with the sports-card industry white hot. A one-of-a-kind signed Mike Trout rookie card went for $3.9 million in an online auction in August, and that proved just the beginning of a string of record sales, with a Mickey Mantle card taking the baseball crown a mere five months later in a $5.2 million sale. This month, a Luka Doncic card sold for $4.6 million, and a Tom Brady card went for $1.32 million. And it’s not just the top of the market: The volume of cards sold on eBay increased by more than 4 million in 2020 relative to 2019.
That growth—along with the meteoric rise of NBA Top Shot, a blockchain-based marketplace for collectible video highlights that has generated more than $200 million in sales in the last 30 days—is driving plenty of investors into the industry. A card-trading platform called Alt launched just two weeks ago with $31 million in combined seed and Series A financing, joining a parade of well-funded recent entrants into the sports collectibles space, including Rally Rd., Otis, Whatnot and StarStock.
Established players are benefiting, too. Goldin Auctions announced $40 million in funding from the Chernin Group last month and in the first three months of the year has already broken its annual sales record. Shares in Collectors Universe—the parent of Professional Sports Authenticator, which assigns the grades widely used to judge a card’s condition—dipped below $20 last March; last month, a group led by Turner, the investor, completed a deal to take the company private at $92 a share.
That industrywide surge came as a surprise even to Evan Vandenberg, Dibbs’ CEO and cofounder, who began formulating the idea for the startup well before the pandemic, when he was working in business development at the blockchain company Worldwide Asset eXchange and brought in Topps as a partner for a digital set of Garbage Pail Kids cards.
“We’re the beneficiaries of an incredible period of time where the NFT technology that we were using and the fractionalization of NFT and cards all collided,” Vandenberg tells Forbes, adding, “It’s just become this crazy, crazy, crazy space.”
Vandenberg, 31, expresses some frustration at the blockchain mania. “It seems like every day there’s some new NFT project popping up,” he says with a sigh, describing most as having no real utility. But he believes the technology can help set his app apart—and is overdue in the card space, which has long resisted innovation.
Dibbs creates NFTs, or non-fungible tokens, corresponding to individual cards and fractionalizes them, allowing users to buy or sell small stakes in cards that might otherwise be prohibitively expensive. The cards are kept in a third-party vault until a user accumulates enough of an interest to buy out the other stakeholders and claim ownership.
Higher-value cards are released on the platform through so-called drops so Dibbs can limit how much any one user can buy, with a maximum of 5% per card per user to this point. That makes for a livelier secondary market, encouraging users to trade back and forth among themselves.
“We would rather 10,000 people own one little piece of a card than one person own, or five people own that at 20% each,” Vandenberg says.
Dibbs is doing two drops weekly, typically selling five to 12 cards each time with a total value ranging from $35,000 to more than $100,000. But the bulk of the app’s offerings are lower-value cards that head directly to the live market, worth hundreds of dollars as opposed to tens or hundreds of thousands. That contrasts with marketplaces like Rally Rd. that focus on big-ticket items, and it inspires more frequent trading, pumping needed liquidity into the market—and creating more revenue opportunities for an app that relies on trading fees.
“If you can do that at volume, you’ve got a pretty interesting platform,” says Vasu Kulkarni, a partner at Courtside Ventures, which focuses on sports, fitness and gaming startups at the seed and Series A stages and which contributed $1 million to the Dibbs round.
Dibbs has experimented with buying cards it believes are undervalued and reselling them on its own platform—investing “probably a couple hundred thousand” to supplement the cards that were provided by the startup’s investors or independent sellers, Vandenberg says—and it is considering pursuing other possible revenue streams. That might include selling whole physical cards or partnering with an IP holder to release an exclusive set of cards—or, perhaps, adding support for other NFTs, like Top Shot.
In the meantime, Dibbs, which has 12 full-time employees, will work to grow its market share in a suddenly crowded space.
Is the number of new competitors intimidating?
“Intimidating? Sure,” Vandenberg says. “Inspiring? To some degree, it gets our ass out of bed every morning ready to work, that’s for sure.”
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Author: Brett Knight, Forbes Staff