Too Many Collections?
Breaking down Yuga Labs decision to continuously expand the number of NFT collection they are creating...
In today’s edition of the Ground Floor we will be breaking down Yuga Labs decision to continuously expand the number of NFT collections they are creating.
Too Many Collections?
In March 2022, Yuga Labs raised $450 million at a $4 billion valuation.
With this war-chest of capital, the creators of BAYC have continued to expand their team to support an ever increasing number of NFT collections.
Creating More Collections
Why is Yuga Labs creating more collections?
When a startup raises venture capital, the people providing this capital expect to receive a return on this investment via the company they are funding being acquired, going public on the stock exchange, or in the case of crypto companies, commonly via a token offering.
To ensure the risk they are taking on is relative to the reward they would receive should a startup succeed, startups valuations are based on a number of factors with a strong focus being placed on the revenue they generating today, and how fast the company is growing.
For Yuga Labs, this means having big ambitions that will allow them to continuously increase revenue to build a business that generates billions of dollars of revenue annually.
Yuga Labs began with 10,000 Bored Apes.
In the 23 months since its first collection was created, Yuga Labs has created an additional 6 new collections, totaling 100,500 new NFTs ⬇️
💸 Making Money
Throughout this expansion, Yuga Labs have found great success selling percentages of its new collection to the public at very premium prices, while providing its existing collectors with the opportunity to claim these new NFTs free of charge.
Yuga Labs generated $2+ million from the sale of BAYC, $88+ million from the sale of MAYC, and $335+ million from the sale of Otherside Deeds.
Too Many NFTs?
A question that is increasingly being asked is how many NFTs is too many for Yuga Labs?
This is a question without a crystal clear answer as Yuga Labs is paving an uncharted path, however, as a company Yuga Labs ability to generate revenue for the foreseeable future is predicated on their continued creation of new NFT collections.
How will this impact existing collections?
While the majority of existing NFT projects that create new collections see their original collection decline in value, Yuga Labs has to date demonstrated that they can continue to create new collections that add value to its eco-system.
Demand > Supply
Yuga Labs ability to create collections that add value to its eco-system is a direct result of the high demand from both within, and outside their community of collectors.
Most recently this demand for the collections Yuga Labs creates allowed the company to generate $16.5 million in revenue from TwelveFold, a collection of 300 bitcoin ordinals.
Is this model sustainable?
Selling high priced assets works very well in bull markets, however, Yuga Labs will have a much harder time selling out large collections at premium prices during down times ~ as has been the case for the last 9+ months.
📡 Looking Forward
Yuga Labs will continue to generate revenue from royalties, however, to replicate the revenue they generated in 2021 & 2022 ~ Yuga Labs will also have to create and sell new NFT collections, without which Yuga Labs revenue won't surpass previous records.
This will become increasingly difficult to do as Yuga takes on the task of providing value to each of the NFT collections within its eco-system, however, with 400+ million in capital, a highly experienced CEO in the gaming industry, alongside hundreds of millions in primary sales and royalties ~ Yuga Labs has the required resources to support multiple collections.
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The Ground Floor
See you next week ~ Mattob.eth / OB1👋
This newsletter is for informational purposes only and does not constitute financial or business advice to any person or entity.