OpenSea considers acquisition as NFT market consolidation continues

Non-fungible token (NFT) marketplace OpenSea remains “open” to the prospect of an acquisition as the broader NFT industry sees increased consolidation, according to CEO Devin Finzer.

“We think that if the right partnership comes along, then that’s something we should certainly consider,” Finzer shares.

Finzer stated in a recent interview that OpenSea has received offers and interest regarding an acquisition. Once a dominant player in the NFT sector, OpenSea has been overtaken by Blur, a rival marketplace. Despite having fewer overall users, Blur sees over five times more volume. OpenSea previously had a 90% dominance in the NFT sector.

According to data from Dune Analytics, its monthly trading volume has plunged by 96% and is down to just $171 million, with an annualized revenue of $38.9 million. Finzer claims that Blur’s growth tactics involved cutting corners, particularly in terms of legal and regulatory compliance. Blur’s rapid growth is often attributed to its aggressive token airdrops and the marketing campaigns that push these.

Market observers see parallels in crypto’s latest bull market resurgence, creating prime conditions for industry consolidation. Dealmakers seek bargains and synergies as prices recover from the crypto crash from the past two years. OpenSea itself stayed active via acquisitions in 2022, purchasing NFT data provider Gem, crypto wallet Dharma Labs, and NFT launch platform Mintdrop. Finzer cites gaining top talent as a key driver for such deals.

OpenSea counts high-profile venture capital firms Andreessen Horowitz, Paradigm, and Coatue Management among its top investors. They participated in massive fundraising rounds in 2021, when OpenSea achieved a peak $13 billion valuation amid the NFT hype cycle. However, as the NFT market crashed, valuations also crashed. Coatue reportedly slashed the value of its OpenSea stake by 90% late last year.

Andreessen Horowitz helped OpenSea raise $423 million in funding for three series in 2021. The prolific firm, led by Marc Andreessen and Ben Horowitz, has backed over 20 crypto startups at a valuation above $1 billion. 

In November 2023, OpenSea laid off approximately 20 employees, or 50% of its staff, amid plunging NFT sales. 

“The restructuring that we did was really oriented around adjusting the team composition to be a much leaner, smaller team that can operate more nimbly in the market, as opposed to downsizing due to financial pressure,” Finzer said.

Whether driven by financial duress or not, downsizing suggests the firm reset its operations to contend with new competitive and market realities. With OpenSea struggling to maintain market share versus rivals like Blur, its high-profile backers have seen the value of their stakes plummet. Significant dilution should OpenSea raise further rounds, which also presents downside risk.