When an NFT series commemorating the handover of Hong Kong from the UK to China generated $260,000 in sales, Artifact Labs, the startup that launched the collection, saw the long-term potential of symbolizing historical artifacts and making them immutable and accessible for the public.
Artifact evolved from the South China Morning Post, the flagship English newspaper of Hong Kong, which was bought by Alibaba for $262 million in 2015. rarity level determined by the significance of the events on a given day.
The NFT publisher has embarked on an independent journey since stepping out of its parent company last year. Artifact announced today that it has raised its first $3.25 million external funding led by Hong Kong-based hedge fund manager Blue Pool Capital, which includes prolific web3 investment firm Animoca Ventures.
From a strategic point of view, “Animoca is obviously heavily invested in web3 and believes that NFTs and digital asset ownership is the future, so we’re filling a really nice portion of that around collectibles,” the company’s CEO, Philip Pon, told MinRegion in an interview.
SCMP will remain a “major” shareholder after the funding round, Pon said.
Artifact works with a handful of third-party partners to power its NFT transactions. The 1997 collection was minted – the process of creating a token on the blockchain – on Flow using Blocto wallets, but it is also capable of minting NFTs on other chains, including Ethereum, Polygon, and BSC.
In addition, the company has received grants from Dapper Labs, the creator of the popular NFT series NBA Top Shot, and Filecoin, a decentralized storage solution.
The startup is also increasing its internal tech stack. It recently bought source code from Refinable, an NFT infrastructure provider, for an undisclosed sum. According to an announcement, the acquisition would allow Artifact to develop a decentralized NFT marketplace. The company will also spend the seed funding on adding technical staff.
Despite going down the path of the market, Artifact does not see itself as a challenger to OpenSea as its focus is more on traditional institutions. “We are building a marketplace for it museums and cultural institutions. While we admire OpenSea, we are probably a bit more niche,” says Pon.
In the nascent crypto industry, where the fundamental pieces are still taking shape, developers and projects are actively improving the field. In terms of on-chain preservation work, Artifact outlined a new metadata standard in a proposal to Ethereum.
“Artifact Labs is taking a leading role in this domain, through the innovative integration of blockchain technology and their newly proposed EIP-6596, which we believe will be an important standard for museums and custodians of culture in the future,” said James Ho, head of Animoca Ventures.
Hong Kong like home
Artefact is geographically positioned to tap into a potentially large pool of collectors. Thanks to its favorable tax system, Hong Kong has long been Asia’s art trading hub. In 2020, the city overtook London as the second largest art auction market after New York.
It comes as no surprise that Artifact plans to partner with other types of cultural institutions beyond the genesis of tokenizing newspapers. So far, it has partnered with RMS Titanic Inc., granting the company the rights to salvage the wrecked ocean liner; Hong Kong’s popular homegrown brand GOD; and the Hong Kong Philharmonic Orchestra, which is co-designing a metaverse-style virtual concert with Artifact.
The company is also in confidential discussions with several major museums in Hong Kong and other parts of Asia to help create on-chain versions of their collections. Long-running multinationals also belong to the target group.
To date, Artifact has about 17,000 members in its Discord community. It makes money by charging project fees to its institutional and IP partners and will explore a revenue-sharing model with its clients in future NFT sales, according to Pon.
The timing seems right for Artifact and other web3 companies in Hong Kong. The city recently announced plans to legalize crypto trading through licensed exchanges, giving everyday consumers the necessary infrastructure to buy and sell digital assets.
The company has a team of about 16 employees, mainly located in Hong Kong. The geographic expansion plan will follow the cultural centers of the world, with major museum centers such as New York, London and Paris as the likely next stops, the CEO said.