Fishy business: Rooser raises $23M for its seafood trading platform

The fishing market globally was worth $253 billion in 2021, and despite the controversy that swirls around the industry, that figure continues to grow. Today a startup that has built a platform to make the business of fishing more efficient — and thus the process overall more traceable and less prone to waste — is announcing a round of funding to ride on that wave. Rooser, which provides a marketplace for sourcing fish aimed both at those fishing and those buying for wholesale, trade or retail, has raised $23 million — funding that it will be using both to expand into more markets, and to continue building more functionality into its platform.

Today the company’s focus is on stock management, providing tools to help suppliers manage this, as well as to handle and track sales and assess the wider marketplace for their products. Soon, the plan will be to incorporate more quality control tools, supply chain finance, personalization for buyers and sellers to connect more likely trades; and further down the line, the startup will also bring more business intelligence and analytics into the mix for its customers.

Index Ventures is leading this round, with participation also from GV (formerly Google Ventures) and Point Nine Capital, as well as Figma CEO and co-founder Dylan Field, and David Nothacker, co-founder and CEO of freight and cargo startup Sennder,

The crux of the problem that Rooser is aiming to fix is that fishing is a huge and growing industry, but it’s been built on the back of major inefficiencies — inefficiencies that have time and again proven to be disastrous for more than just businesses, but for wider economic and ecological ecosystems.

Joel Watt — the CEO who co-founded the company with chief commercial officer Nicolas Desormeaux, COO Erez Mathan, and CTO Thomas Quiroga — saw this situation firsthand when he was running his own fishing business.

Originally an accountant by training, Watt hails from the north of Scotland (with an accent my American ear sometimes found hard to penetrate to match), and after years working for a big firm, he returned to his roots and hometown to start a fishing business — not a tech-based marketplace and budding big-data analytics play, but an actual, wet-floors, cold-rooms, and yellow boots fishing operation following in his family’s footsteps, with both his father and grandfather having also worked in fishing.

In nearly 10 years of operations, he scaled that business to 50 people and £10 million in turnover, “and it was then that we started to see just how inefficient it was,” he said. Fishing business’s greatest problem, he said, is uncertainty.

“You have the boats and fisheries, those turning the products into things you can eat, wholesalers and distributors, and then restaurants and fishmongers. All of those need one-to-one communication, but there are in reality many actors and many price points,” he said. The market is massive — 140,000 related business entities just in Europe — but typically those working without leaning on any platform to access wider customer bases and manage those relationships can only handle 20 contracts at a time, no matter how much fish they have to sell.

On the subject of fish to sell, that too is an issue. There are 250 types of fish typically sold in the fishing trade, but when you add in the range of sizes and other variables, it comes out to what Watt said was 35,000 SKUs, and there is little consistency in pricing across that landscape. “No one knows how much anything costs.”

Add to that the many layers of people in the chain, and stages that they each manage, and the delays that brings into what is a highly perishable product, and you have a messy situation. For every two fish or other seafood items pulled out from the water, only one gets eaten.

So Watt did what any accountant who pivots into building and running a fishing business might do: he started to look into software that could help manage the business aspects of his operation. Rooser is a word from the Doric dialect used in Watt’s region of Scotland, and it means “watering can.”

“A team member in my fishing business made a comment about how we seemed to always be fighting a fire somewhere,” Watt said. The idea is that Rooser the software is now helping to fight those fires. Indeed, that software, called Sea.Store, was effective and others started asking to use it, too.

Buyers on the platform can source seafood from 13 different countries, although Iceland, Watt said, is the biggest sourcing country at the moment. As for buyers, France currently accounts for 95% of all sales.

France indeed is a very big market for seafood, but it’s not the only one. Boosting it as the main buyer was intentional on Rooser’s part, he said.

We wanted to get fit in one market and then develop a supply side,” he said. “Now we can easily move into other countries as we spread across Europe.”

Georgia Stevenson, the Index partner who led the investment, said that part of the interest for Index here was how successful Rooser has been so far in addressing this particular vertical’s needs and building a marketplace to match that.

“It’s enabling less wastage, but it’s also just empowering seafood traders to do their jobs better,” she said. And while there have been plenty of critics lambasting the fishing industry for overreaching in their activities, depleting stocks; and equally the industry itself seems to just get increasingly bureaucratic, Stevenson said she believed that Rooser addressed both of these issues. “We have been investing in categories and infrastructure to be more sustainable and we see Rooser as consistent with that.”

Digits books $65M on a $565M valuation to bring a more dynamic, automated approach to legacy accounting tools

Digits, the startup that is building a new take on accounting software through an approach that it describes as building a “Living Model” of a company’s financial activity, has brought in some money of its own to double down on growing its business. The company has raised $65 million, a Series C that CEO and co-founder Wayne Chang confirmed to me values the startup at $565 million.

Digits has until now still been in an invite-only phase after first launching out of stealth mode and amassing an impressive waiting list of 16,000 (and $97.5 million in funding). But today, to coincide with the funding news, it is launching what it’s describing as its first product: a reporting tool called Digits Reports. Reports lets users — typically those users would be accountants or other finance professionals — hover over accounting lines to get deeper analytics and visualizations to put a transaction into better context. (“Hover to discover!” is the tagline that Chang nearly sang to me when describing how it worked.)

Digits will also be opening the doors a little wider to adding more users. Right now, it’s been intentionally working with “just a few hundred”, Chang said, to help teach its algorithms and learn about the different use cases that might arise among customers.

SoftBank’s Vision Fund is leading the funding, with UK investor Harry Stebbings’ 20VC Growth, GV and Benchmark also participating. GV and Benchmark respectively led previous rounds, which now total $97.5 million.

Digits has taken a very cooperative approach to how it has amassed backers: it counts 72 individual angels on its cap table. Part of Digits’ attraction (and traction) has been the track record of its founders: Chang and Jeff Seibert also founded Crashlytics, the crash reporting service that was first acquired by Twitter, which then sold it Google, which integrated it into Android. It is now used across billions of devices and millions of apps.

You might wonder what the line is between building a tools very much focused on developers and building an accounting platform, but as Cheng describes it, the connection was obvious to him and Seibert.

“There are direct parallels,” Seibert told me. “At Crashlytics, we were focused on the product and developer side of the house, where  it is all about analytics on how apps are performing. By processing massive amounts of data could give insights to those teams that they didn’t have before. But we were shocked by how little visibility the companies had of their [overall] business.” Digits, he said, “is using a very similar approach, but applied to the other half of the company.”

That ethos is evident in the products that the company is building.

Digits itself is not a data ingestion tool: Chang notes that it essentially sits on top of Intuit’s Quickbooks (note: that choice was deliberate because Quickbooks accounts for about 80% of the small business accounting software market in the U.S. today, although over time Digits will work with other sources as demand dictates it). It then uses that data, plus API-based integrations with whatever else a company uses to manage incoming and outgoing money in its business, to essentially create a massive database of information.

Digits then begins to organise and read that data to create more intelligence around it. In the case of the new Reports product, it provides automatic answers to the kinds of “how” or “why” questions that an accountant or other finance pro might have around a basic financial report, the kinds of answers that previously would have only been possible through human queries and being able to read and understand the stories behind paper trails and siloed sources of data.

Digits Reports will sit alongside, and is based around, a Search feature that Digits launched last year to help users find transactions that tapped into a similar idea: answers are not found just through keywords but in results that intuit (heh) what the finance pro is really trying to figure out.

Previously you had to search filing cabinets, and even shoe boxes,” Chang said, and he insisted he was not being overly dramatic. “This whole industry is very antiquated.”

Right now, the company’s products are focused on essentially querying historical information: looking at financial transactions and other events that have already happened to make sense of them. But the obvious progression of that is to apply Digits’ Living Model to real-time analytics — and more pertinently for finance people — future reporting. (Another startup building the next generation of finance tools for smaller businesses, DataRails, aptly calls future reporting and modeling the “holy grail” for these finance professionals.)

Change confirmed that this is definitely on the cards for the company but declined to say more.

However, when sharing his screen with me to demonstrate the “hover to discover” tool, I noticed that another product on Chang’s desktop that he quickly moved away from saying it was still being worked on.

It was called “Burn”, and my educated guess is that it might relate to giving a user — most likely from the smaller businesses that Digits is aiming its service at — see how a company’s cashflow is behaving over a period, in order to determine what its runway and burn rate are over that time. This in turn can help a company figure out where it might need to spend less (or perhaps more) if it needs those numbers to be going a different way, or conversely if it has the capacity to invest money to boost activity.

What is also very interesting about the Living Model is that on a more generalized level it could be applied to more than just accounting queries since it gives a complete picture of how a company is operating financially. Chang told me that since launching in 2019 Digits has already fended off three acquisition offers.

He wouldn’t specify who was doing the approaching, but confirmed that it wasn’t just other, bigger accounting platforms that are interested.

“We know we are building pretty compelling technology that no one else has,” he said, “and the Living Model is applicable to other things. For example, if you are a bank and want to apply different lending models, our platform can automatically tell you about the financial state of a company. We are just scratching the surface of what we can do.”

For now, it’s finding enough traction from the accounting angle, where users are rapidly migrating to more digital tools are are looking for more automation and insights in their experiences. That has helped Digits also make the case for signing them up to its product.

“Business owners have thought about this type of stuff very little, only when there’s been a question like, ‘why did this go over budget?” is how he characterized the traditional way of thinking that appears to be evolving.

And this is why investors want to jump in.

“It’s rare for one of our portfolio companies to be valuable to the others,” said Eylul Kayin, an investor at SoftBank’s Vision Fund. 
“Digits is useful to all of them.”

IRS FUD: What you need to know about crypto taxes

Maybe you’re one of the millions of Americans who jumped on the Bitcoin bandwagon in 2021. Or perhaps you’ve become an active crypto trader. Or maybe digital currency bonuses have become part of your compensation package at work. You might have even used some of it to buy something or pay someone else for their services.

Perhaps you’ve been thinking, cryptocurrencies aren’t physical currencies; they aren’t even regulated by the U.S. government. That means I don’t have to pay taxes on profits I make from trading crypto, right?


Even though the U.S. Internal Revenue Service’ rules around crypto are sketchy in many areas, they’ve made it clear that virtual currency is treated as an investable asset for tax filing purposes.

Taxable gains and losses

For calculating taxable gains and losses, crypto transactions are treated exactly the same as those involving stocks, bonds or mutual funds.

  • If you sell crypto for more than you paid for it, the profit will be taxed as a short-term capital gain if you held the currency for less than a year. Generally, people try to avoid short-term capital gains because they’re taxed as ordinary income.
  • If you make a profit selling crypto you’ve owned for more than a year, it will be taxed as a more preferable long-term capital gain. The tax rate will either be zero, 15% or 20%, depending on your income.
  • If you sell crypto for less than what you paid for it, you can take a capital loss, which can reduce your taxable income or offset capital gains from the sale of other assets.

If you’re going to trade crypto frequently, your options for using capital losses to offset capital gains may be limited.

Seems relatively simple, right? But what if you’ve traded Bitcoin, Ethereum, or other cryptocurrencies throughout the year, profiting from some transactions and losing money on others?

Will your crypto exchange help you accurately calculate how much you’ll owe Uncle Sam?

The answer is: It depends.

Fuzzy tax support

Since crypto exchanges aren’t regulated by the U.S. Securities and Exchange Commission, they’re not legally required to offer the same level of tax reporting that discount brokerages and custodians must provide to stock, bond and mutual fund investors.

While some U.S.-based crypto exchanges offer basic summaries of taxable proceeds from crypto-related trading activities, many do not.

And, to the best of our knowledge, none currently generate IRS Forms 1099-B and 8949, which brokerage companies and custodians deliver to consumers to help them report income and capital gains and losses from the sales of investable assets.

BHub secures $20M to become LatAm companies’ back-office administrator

BHub announced Tuesday that it took in a new round of capital just three months after receiving $4.4 million in pre-seed investment to offer full back-office SaaS for small and medium businesses in Latin America.

Monashees and Valor Capital Group are doubling down on their investment in the company by leading an inside round of $20 million in Series A funds that included QED Investors, Picus Capital and Clocktower Technology Ventures.


BHub’s mobile dashboard. Image Credits: BHub

Founded in June, the Brazil-based company provides what it calls “back-office-as-a-service,” which includes bookkeeping, CFO services, legal and HR services so entrepreneurs can focus on their core business, Jorge Vargas Neto, founder and CEO of BHub, told TechCrunch.

BHub is Neto’s third company and his third in the financial sector. He was previously CEO of Zen Finance, which was sold to Rappi in 2020, and Biva, which sold to PagSeguro in 2017, he said. While integrating with Rappi, Zen Finance was told by its accounting firm that it had to pay capital gains taxation, which ended up requiring the company to redo all of its bookkeeping in 10 days.

“It was hellish, but I’m grateful for that experience because I became passionate about how I could help people avoid the same hurdles in Brazil and Latin America,” Neto added. “We tested the market by inviting entrepreneurs to talk about their hurdles of administering business. Some 500 people RSVP’d, and we ended up doing 300 interviews that enabled us to see the pain points and to come up with our vision for a solution.”

For a monthly subscription starting at $349, company owners can integrate BHub with their financial systems and view everything through one financial dashboard that includes a chat function for requesting reports, solving queries and any other activities.

Neto explained that in Brazil, hundreds of thousands of businesses closed in 2020, driven partly by the global pandemic and partly by little financial literacy. Brazilian legislation requires every business owner to have a third-party accountant. The market is reserved for them, and they are protected by the law, “so they don’t have to be that good,” he added. Where the typical accounting firm doesn’t use much technology, this is BHub’s “magic spot,” to provide a service based on a technology approach and with startups in mind, he said.

The Series A came fast for the company due to a combination of factors: achieving early product market fit, steady growth over a period of three months and high referral rates by customers.

The company counts 134 companies as customers and looks to hire 100 people across engineering, technical, accounting, legal, human resources, marketing and customer service.

“Considering the growth we’ve had and what we project we will do, we need to enhance the team of 51 people and grow to 2,000, 2,500 customers by next year,” Neto added. “We do think if we keep up the pace we will get there.”

With a Section 1045 rollover, founders can salvage QSBS before 5 years

The tax code contains provisions that encourage investments in the technology startup ecosystem and small businesses by rewarding founders, VCs and investors for taking high levels of risk in founding or investing in a startup. One of these provisions is the Qualified Small Business Stock (QSBS) or Section 1202 stock, which offers the opportunity to eliminate capital gains tax entirely if specific requirements are met.

It is important to note that this 100% capital gains exclusion, made permanent by the Obama administration, has been included in the draft legislation by the House Ways and Means Committee, and includes a proposed cut from 100% exclusion to a 50% exclusion for gains recognized on the sale of QSBS. For the purpose of this article, I’ll speak specifically to the 100% exclusion.

You can learn more about the QSBS rules and requirements here. One rule we discuss today is that stockholders must meet a five-year holding period to qualify. However, not everyone can time when to sell their company. The fact that many acquisitions happen before five years leaves some founders and investors short of qualifying for these powerful tax savings.

Stockholders can multiply — or “stack” — the benefit of a 1045 rollover by spreading the QSBS exclusion to more than one new investment.

Section 1045 can salvage the opportunity in some cases.

What is Section 1045?

Section 1045 allows a founder or stockholder whose company has been sold before the five-year holding period to defer the capital gains by rolling the sale proceeds into a replacement QSBS.

Benefits and opportunities

A 1045 rollover enables founders and investors to take advantage of multiple tax benefits and opportunities they would otherwise miss.

Extended tax deferral

With a 1045 rollover, the stockholder can defer taxes on the sale of the original QSBS by investing in a replacement QSBS. Under the right circumstances, tax can be deferred until the replacement QSBS is sold.

If the combined holding period is five years and other requirements (discussed below) are met, no federal capital gains taxes are due. But if the requirements are not met, then taxes will be due upon the sale of the replacement QSBS.

Shortened holding period

Typically, the holding period for all taxable exchanges will begin the day after the exchange. However, the holding period for the replacement QSBS includes the holding period of the original QSBS, avoiding a reset of the five-year requirement. This means a 1045 rollover shortens the next QSBS holding period requirement and allows the clock to continue ticking.

1045 Rollover

1045 Rollover. Image Credits: Keystone Global Partners

QSBS exclusion stacking

Perform a quality of earnings analysis to make the most of M&A

As a startup founder, there will be three scenarios in which you’ll need to understand how to properly do a quality of earnings (QofE) if you want to maximize value.

The first scenario will be when you decide to raise a Series A and subsequent VC rounds, followed by when you do a strategic acquisition, and lastly, when you sell your company.

This post is a framework for how to think and organize your QofE and go through the most common items that you’ll want to keep top of mind for every M&A and private equity transaction you may be part of.

Why perform a QofE?

The goal of a QofE is to adjust the reported EBITDA to calculate a restated EBITDA that best reflects the current state of the company on an ongoing basis. It also presents a historical adjusted EBITDA that is comparable throughout the last two or three years.

QofE can have a significant impact on a company valuation for three main reasons:

  1. The adjusted EBITDA will be used by a buyer/investor as the basis for valuation (for companies valued based on an EBITDA multiple).
  2. The adjusted revenue will be used to recalculate the effective growth rate.
  3. The adjusted revenue and EBITDA will form the basis of forecasts.

With that in mind, every entrepreneur must understand how to properly form a view of what is the proper adjusted EBITDA and adjusted revenue of your company. It is common for founders in an M&A process to be unfamiliar with the notion of QofE and leave value on the table.

When performed by a professional transaction service advisory team, the quality of earnings is a result of a thorough review of all the documents generally available in a data room.

This breakdown aims to ensure that you won’t be that founder and that you’ll be armed to negotiate your company valuation on equal ground with your investors. If you are in the seller’s shoes, you will get the advantage of understanding how an experienced investor or buyer thinks. If you’re in the buyer’s shoes, you’ll benefit from understanding and valuing your acquisitions better.

How is a QofE professionally performed?

When performed by a professional transaction service advisory team, the quality of earnings is a result of a thorough review of all the documents generally available in a data room. These include, but are not limited to: Legal documentation, financial statements (P&L, balance sheet, cash flow), audit reports, management presentation and contracts.

When doing a QofE analysis, it’s key to consistently ask yourself: “Can or should this information translate into an adjustment of revenue or EBITDA, net working capital (NWC) or net debt?”

Why did we include NWC and net debt? That is because they often have an indirect impact on adjusted EBITDA. Think of an adjustment to the historical level of inventory. Less inventory likely means fewer storage costs. So if you adjust historical inventory, you’ll want to also impact your adjusted EBITDA.

On top of reviewing all the aforementioned documents, your QofE analysis will heavily rely on interviewing management. No matter how long you look at the financials, if you can’t have management confirm information or explain trends, you won’t be able to draw proper conclusions and understand the numbers.

Principles for efficiently building your QofE

  1. Automatically link everything you read and hear to potential QofE adjustments. This has to become second nature during the engagement.
  2. Always think about all the ways an event or item that qualifies for an adjustment impacts the financial statements overall. For instance, if the event impacted revenue, did it impact costs in some way as well?
  3. Make sure that the cost you are adjusting was not already offset by another accounting entry (i.e., had no impact on EBITDA).
  4. Make sure that the cost you adjust for was classified above EBITDA in the first place.
  5. Make sure that you can quantify each adjustment in the most objective and rational way. This is sometimes not possible and you may have to come up with a range.

Payroll automation startup raises $15.6M Series A led by General Catalyst

Payroll automation is not exactly the sexiest of startup areas but it’s a pretty decent business. The larger startup in the space is Payfit which has raised upwards of $208.4M to do something that lots of companies find quite painful. But Payfit does a lot of other things as well, potentially leaving it exposed. Now a startup aims to come along and hone in on the thorny issue of payroll automation, alone.

Founded by Jonas Bøgh Larsen and Emil Hagbarth Rasmussen, Danish firm Pento has raised $15.6 million in a Series A funding led by General Catalyst. Also participating was Avid Ventures and the UK’s LocalGlobe. Existing investors Point Nine Capital, Moonfire Ventures, Hustle Fund, and Seedcamp also took part, alongside angels (see below). This latest funding takes the total raised by Pento to $18.4 million.

The startup claims 700 companies are using it including tech firms Pleo and Cuvva; large hospitality brands (Honest Burgers); and retail and e-commerce brands (Lacoste, Beauty Pie). Pento replaces spreadsheets etc and gives them cloud-based tools, real-time calculations, transparency, and online and telephone support.

Pento co-founder and CEO, Jonas Bøgh Larsen told me: “The biggest process we’re replacing is payroll outsourcing where companies are outsourcing payroll to an accountant, which the vast majority of companies do in Europe. We automate the entire process from reporting to tax calculations to payments. So, what most other platforms or payable products do is basically just helping you calculate the right taxes and National Insurance, and so on. We also take care of the reporting. We also do payments, and we integrate the product to other HR products.”

Adam Valkin, Managing Director at General Catalyst said: “Despite being so business-critical, payroll is one of the least digitally advanced services across the globe. It’s also one that has garnered a reputation for being too complex, too convoluted and too out of reach for those who aren’t payroll specialists, leading many to consider expensive outsourcing as the only route to go. Pento dispels this myth because it’s built purely with HR and finance teams in mind, by business leaders who truly understand the frustrations involved. It’s easy-to-use, transparent, flexible, secure and affordable. It’s what payroll should be in a modern company and it represents the future of employee compensation.”

Pento’s angel are from Stripe (Thairu and Diede van Lamoen), Monzo (Tom Blomfield), GoCardless (Matt Robinson), Zoom (Eric Yuan), Cuvva (Freddy Macnamara), Intercom (Des Traynor) and others.

The Cult of CryptoPunks

Last month, hours before news of Beeple’s $69 million NFT sale grabbed the front pages of newspapers across the country, a pair of 24 x 24 pixel portraits of aliens wearing little hats sold separately for around $7.5 million each.

The sales, which occurred within 20 hours of each other, didn’t garner the same headlines that the Beeple auction received, but there was a bit of coverage in the tech press, mostly because one of the aliens was sold by Dylan Field, the CEO of design software startup Figma. In a Clubhouse conversation following the sale, Field said he hoped that a century from now the blocky image he had sold would be seen as the “Mona Lisa of digital art.”

Punk #7804, which recently sold for 4,200 Ether (about $7.5M at the time of sale)

The pixelated alien portraits belonged to an NFT platform called CryptoPunks. In the world of NFTs, the platform is as close to ancient history as it gets, meaning it’s almost four years old. There are 10,000 punks, all of which were procedurally generated and claimed for free when the project launched in 2017.

Since then, the economy built around trading these images has sauntered on with a small but passionate community, at least until a few months ago. That’s when it suddenly exploded, dragging into the fray Silicon Valley CEOs, prominent venture capitalists, famous YouTubers, poker stars and major business personalities. The platform has seen nearly $200 million worth of transaction volume in official deals since launch, according to NFT tracking site CryptoSlam, with 98% of that volume flowing through the platform in the past few months.

The sudden rise in punk prices is owed to an explosion of interest in NFTs largely brought about by climbing cryptocurrency prices, the rise in popularity of Dapper Labs’ NBA Top Shot and the resurgence of the physical collectibles markets, all of which have made some investors more comfortable with the idea of betting on digital goods.

Today, the cheapest punk you can buy will run you about $30,000 in Ethereum cryptocurrency, while the rarest may be worth just shy of $10 million.

CryptoPunks have captured plenty of attention, but even with all eyeballs on the project, people still aren’t sure exactly what they’re looking at.

“In NFT world, people are talking about selling Jack Dorsey tweets, Top Shots and Beeple in the same sentence right now,” Sotheby’s CEO Charles Stewart told TechCrunch in an interview. “The lines can get a little blurry. When you look at CryptoPunks, are they art? Are they collectibles? Are they… you know, well… what are they exactly?”

Image Credits: Lucas Matney

A ‘more honest’ stock market

Back in early 2017, John Watkinson and Matt Hall were playing with a pixelated character generator they built, and they were pretty enthusiastic about the fun little pop art portraits they had been cooking up. By June, they had created 10,000 characters with different hairstyles, hats and glasses for a project called CryptoPunks that would be hosted on the nascent Ethereum blockchain. Some punks had a handful of attributes, some had none, some were apes, some were aliens. While the creators had a hand in curating some elements, they let their generator take control of the creativity.

They launched to modest interest from a small community of blockchain enthusiasts who only had to pay a few pennies in Ethereum “gas” transaction fees to own their own punk. It was a novel idea, pre-dating the NFT platform CryptoKitties by months and NBA Top Shot by years, but it arrived at the cusp of crypto’s 2017 wave during the early throes of initial coin offerings, where scams were plentiful and attention was hard to come by. Hall said that about 20-30 punks were claimed in the days following launch.

Then a week later Mashable wrote a story about the fledgling crypto art project, and within hours every punk was gone.

Some users went all-in immediately. One user that went by the username hemba has become something of a cautionary figure in the CryptoPunks community, claiming more than 1,000 punks at launch and selling every one of them before the market took off this year, missing out on tens of millions of dollars in profits at current prices. Another user who goes by mr703 claimed some 703 punks in total at launch, hundreds of which they are still holding onto years later in a collection similarly worth tens of millions.

In a Discord chat with the pseudonymous mr703, we asked whether they felt they had enough or if there were any punks they still intended to buy. “I own all the punks I ever really want,” they typed back. Their public wallet shows they paid more than $37,000 for a punk in the minutes in between our question and their answer. They spent $35,000 on another one several hours later.

Some investors who have already gone all-in backing risky cryptocurrencies see NFTs as a way to diversify their crypto holdings. Others see CryptoPunks as more of a game.

CryptoPunks creators Matt Hall and John Watkinson

“I think that with each year that passes the definition of what is gambling and what is investing move closer and closer together,” says Mike McDonald, a 31-year-old professional poker player who recently bought his first punk.

Why are some punks worth tens of thousands of dollars while others are worth millions? Users in the thriving CryptoPunks Discord community have had to decide that on their own, combining objective analysis of the rarity of certain design attributes with the more subjective impressions of punk “aesthetics.”

Things aren’t always predictable. Earrings are the most common attribute for punks, commanding much lower price floors than those with beanie hats, which are the rarest attribute. But hundreds of punks are wearing 3D glasses, yet they tend to earn a hefty premium over those with green clown hair even though fewer of those punks exist. Some attributes gain market momentum randomly; for instance, the market for punks wearing hoodies has been particularly hot in recent weeks.

“Obviously this is a very speculative market… but it’s almost more honest than the stock market,” user Max Orgeldinger tells TechCrunch. “Kudos to Elon Musk — and I’m a big Tesla fan — but there are no fundamentals that support that stock price. It’s the same when you look at GameStop. With the whole NFT community, it’s almost more honest because nobody’s getting tricked into thinking there’s some very complicated math that no one can figure out. This is just people making up prices and if you want to pay it, that’s the price and if you don’t want to pay it, that’s not the price.”

As prices have surged, owning a piece of the CryptoPunks’ finite supply has become a “digital flex” in its own right, especially when used as an avatar on social media sites, several punk owners told us. That has drawn plenty of wealthy buyers outside the blockchain world, including influencers like YouTuber Logan Paul who uploaded a video last month detailing his $170,000 purchase of several punks.

“When you don’t have a punk, the ecosystem seems like this gentlemen’s club of the 10,000 people that can afford these kinds of avatars,” says McDonald.

There is some concern among the community whether all of this outside attention is a sign of an impending crash in prices, though many investors feel reassured by the historical value of CryptoPunks among NFTs. Nevertheless, some of the investors have a hard time convincing those in their lives that what they’re doing is anything but reckless.

After a recent six-figure punk purchase, user Chris Mintern says his girlfriend was exasperated that he had just dropped more money on a punk than her house was worth. “She says it’s all just a bunch of internet nerds who don’t appreciate the value of money. That to them, it’s just a game and numbers on a screen,” he told TechCrunch.

The community surrounding CryptoPunks has largely bloomed on the chat app Discord in a dedicated group where users that are verified as punk owners tend to drive conversations and can gather attention for up-and-coming NFT projects they’re betting on.

“It’s a bit of a cult,” said user thebeautyandthepunk in an interview.

Like many early users, thebeautyandthepunk has stayed pseudonymous since claiming a couple dozen punks at launch, telling us that no one in her life has any idea she’s sitting on an NFT collection likely worth millions — except her accountant. She did recently decide to make it known that she was one of the few female traders who have been present in the overwhelmingly male CryptoPunks community since the beginning.

“I really try to keep my real life and my crypto life completely separate,” she says. “But people need to know that women have been [in this space] for a while and we’re not going anywhere.”

Today, all 10,000 punks are scattered across some 1,889 wallets, according to crypto tracker Etherscan. Some of those accounts are inactive and feared dead, with the punks inside them lost on the blockchain forever. The largest single wallet of punks today belongs to the platform’s creators, holding some 488 punks. It’s their only ownership in a blockchain-based marketplace where most mechanics are already set in stone.

“We’re just users now, too. Nothing about our website is specific to us having created the project,” Watkinson tells TechCrunch. “Our only equity is through the punks we own. We don’t take a cut of the market or anything.”

Image Credits: Lucas Matney

The NFT high-rollers table

Today, CryptoPunks’ creators are working on NFTs full time. While they can’t make any underlying changes to the CryptoPunks contract, they have aimed to improve the website’s marketplace while hopping into the Discord group to keep an eye on the ever-growing community of users.

“It was never our intention for this to sort of be our careers,” Watkinson says.

In 2019, the duo debuted a follow-up project called Autoglyphs, which brought generative art to the blockchain. It didn’t boast the pop aesthetic of CryptoPunks, but it added a new layer to their exploration of blockchain art. Hall and Watkinson have built up a company around their various projects called Larva Labs, and they are in the process of building up a new NFT project that they hope will have a lower barrier of entry than CryptoPunks and Autoglyphs.

“As the CryptoPunks get more and more expensive, they’re just hard to get into,” Hall says.

At around $200 million in official marketplace sales, CryptoPunks’ total lifetime sales volume is about 40% of what Dapper Labs’ NBA Top Shot has achieved in its past several months. Though CryptoPunks has done so with 0.35% of Top Shot’s total transaction volume, which is fewer than 12,000 trades compared to more than 3.3 million, according to CryptoSlam. Those high transaction numbers spread across millions of NFTs mean much less value per transaction on Top Shot, but a much, much bigger pool of active users.

Last month, Dapper Labs announced they had raised $305 million at a $2.6 billion valuation as they look to expand their private Flow blockchain to other blockchain “games” through more high-profile partnerships. Hall and Watkinson have been watching Dapper Labs’ success, but don’t think Larva Labs will need venture funding to continue exploring what’s next for NFTs.

“Rather than looking at becoming a large company and doing a deal with the NBA or something like that, we’re more just looking forward to kind of just continuing to explore the tech possibilities,” Watkinson said. “What we love about CryptoPunks is the action, and so we’d like to find a way back to sort of that level of action, and our next project is going to try to find ways to sort of keep the deal flow going.”

They have few details to share on the new project, which they said will debut “relatively soon” this year.

Image Credits: Lucas Matney

The origin of the species

CryptoPunks lore is largely steeped in the assertion that they are the oldest NFT project on the Ethereum blockchain. It’s a line that was floated by almost all of the punk owners I spoke with as the main reason they had dumped hundreds of thousands of dollars into the platform. In Paul’s recent YouTube video, he justified prices to his skeptical friends by noting, “[CryptoPunks] is the first and that makes it special.”

But over the past few weeks, holes in that narrative have begun to emerge, as “crypto archaeologists” have begun to unearth abandoned NFT projects that were created in Ethereum’s earliest days, with at least one arriving before CryptoPunks. We recently spoke with Cyrus Adkisson, the creator of a project called Etheria, which he debuted back in 2015, just three months after Ethereum’s mainnet went live. The project allowed users to buy up, sell and build on hexagonal swaths of digital land on a large map. It didn’t develop much of a following at launch and sat abandoned for years on the Ethereum blockchain until Adkisson saw the “fever pitch” developing around NFTs and started searching for the passcode to his old account.

“I remember calling my parents toward the end of February, telling them I may be sitting on a goldmine here,” Adkisson told TechCrunch.

After ultimately gaining access to his Etheria account, he then fired off a few tweets from Etheria’s long-dormant Twitter account, detailing that the bulk of the 914 tiles across two externally tradeable versions were still available and could be claimed for 1 Ether each. Adkisson says by the end of that weekend, his previously empty wallet was filled with $1.4 million worth of Ethereum.

Age alone won’t make Etheria a hit; the major challenge from here is building up a community around the project that brings in more users and pushes the prices of land tiles higher. A tile recently sold for nearly $25,000 worth of Ether, but early adopters are struggling to balance waiting out the market’s development with liquidating enough tiles so that new users can get involved and the project can build hype. 

“With these projects, it’s like, yeah, you have the historical context, but now you need to build a solid foundation with your communities because your real measure is not now, but it’s going to be what your community, size and engagement look like in a year,” says Allen Hena, an NFT enthusiast who helped attract attention to the Etheria community last month with a series of blog posts.

 In the days following the project’s resurrection, the young community has already seen plenty of disagreement and infighting as Adkisson aims to maintain some level of control over the platform on which plenty have already pinned their retirement plans. Owners are mainly frustrated by Adkisson’s attempts to make an older version of Etheria externally tradeable, something that would likely make land tiles on the existing contracts considerably less valuable. Since our interview, Adkisson has left Etheria’s Discord server and admins in the group have vowed to continue on without him as he decides which direction he wants to take Etheria 1.0.

While punk owners we talked with are keeping an eye on these newly reemerged projects, they’re also skeptical that Etheria’s older status will do much to impact CryptoPunks’ value to NFT history.

“On paper it looks cool but it didn’t actually do anything for the community,” says user Daniel Maegaard. “CryptoPunks did all the hard work.”

Punk #6487, which Daniel Maegaard recently sold for 550 Ether (about $1.05M at the time of sale)

Maegaard, a 30-year-old crypto investor based in Brisbane, Australia, is more tied up in the value of CryptoPunks than most. He recently sold a particularly rare female “zero-trait” punk for more than $1 million. He’s also the owner of one of the rarest — some argue the rarest — punks, the only one with seven unique attributes, a qualifier that has earned it the nickname “7-atty” and a sacred place in punk lore. When he bought the punk for about $18,000 in Ethereum last year, it was the most anyone had ever paid. He isn’t keen to let it go anytime soon, saying he recently turned down a private offer for $4.2 million from a group of investors that hoped to tokenize the NFT and sell fractional shares of it to other users. Part of holding onto it is the potential for further gains, but the real reason, he says, is that he’s beginning to feel an emotional bond with his collection of digital files.

“These little pixelated faces, it should be easy to give them up. I’ve sold a few punks and I’ve regretted every sale, I experienced that when I sold my zero-trait punk,” Maegaard says. “Like, yeah, a million dollars is nice, but I really liked her.”