Investment

Creating a $10 billion family office with some help from NFTs

Chamath Palihapitiya, renowned as a promoter of SPACs in the US,  has invested in non-fungible tokens which he sees as the “next frontier” for digital assets. 

NFT is the latest in a series of digital innovations backed by Palhapitiya, a former Facebook executive born in Sri Lanka. He is an early investor in bitcoin and Elon Musk’s Tesla. 

The trend will become more important as family offices fall under the sway of Generation Z. Traditional art may need a digital twin. New 4D platforms could disrupt Facebook

This year he wants to pull together his interests, branded Social Capital, to create, and eventually list, a $10 billion family office loyal to the long-term investment principles of Warren Buffett. He retains 20% stakes in his SPACs including Virgin Galactic, Opendoor Technologies and Clover Health Investments.

He has bought digital art and trading cards believing collectors will see NFT images as the best way to buy, store and trade them on their computers 

NFT comprises digital assets whose identity and access is confirmed by smart contracts. Unlike bitcoin, they cannot be replaced by a different token because NFTs are unique to their owners. You can choose to swap an asset via your digital wallet but you will get a different one back. 

Media billionaire Mark Cuban, owner of the Dallas Mavericks basketball team,  is an enthusiastic backer of NFTs.

In a January blog, Cuban said they would be seen as the way to store value by the next generation of investors: “This generation knows a smart contract and the digital good it reflects are a better investment than old school see, touch or feel.” Collecting stamps will never be the same again.

The trend will become more important as family offices fall under the sway of Generation Z. Traditional art may need a digital twin. New 4D platforms could disrupt Facebook. 

The equity market has already moved on from the physical ownership of share certificates to digital records. Gold is increasingly owned through ETFs, as opposed to bullion.  Palhapitiya believes investors seeking safe havens will make a shift from gold to bitcoin.

NFTs are based on blockchain platforms where their ownership is embedded. This means they can be exchanged from one investor to another without using expensive intermediaries. Proof of ownership comes with a security token, which can also attach to traditional assets like real estate. 

All this disruption fascinates Palhapitiya who recently appeared on TV to applaud the push against short-selling at GameStop by crowds of retail investors. 

In a recent interview with Bloomberg, he said SPACs disrupt an IPO mechanism dominated by investment banks. 

As well as electric cars, he is convinced Tesla will disrupt energy utilities through the use of clean energy and battery systems by households.

Publishers of collectables are starting to embrace NFT strategies. Sorare, for example, produces digital trading cards for rival football clubs for fans to collect and swap.

FC Barcelona defender Gerard Piqué invested $4.3 million in Sorare in December through his family office as part of $10 million fundraising.

Nearly all digital art is traded on platforms. But the first NFT art auction at Christie’s has just happened (25th February). It comprised a piece by Mike Winkelmann who is commonly known as ‘Beeple’.

It is called “Everydays: The First 5000 Days”, a montage of five thousand digital images, created one day at a time. It fetched a staggering $69 million. And one of Winklemann’s NFT pieces was sponsored by Louis Vuitton at Paris Fashion Week. 

Winkelmann is a sensation on the digital scene with two million followers on Instagram including pop stars Justin Bieber and Katy Perry.

Japanese pop star Nakada Kana said in a recent interview she had traded digital assets, citing Warren Buffett as an influence.

Social media multi-millionaire and wine buff Gary Vaynerchuk, born in Belarus, has sensed the stardust.  He recently tweeted: “NFTs will be the gateway to access to those you admire.”

French banking group BNP Paribas has just co-published a report on NFT. It believes banks need to consider whether to accept crypto assets collateral for their loans.

The report estimates that the value of NFT merchandise totals $340 million, against $41 million two years ago.

As well as trading cards and art, NFT has established a presence in gaming and the “metaverse” where virtual land is bought and sold by investors keen to live an imaginary life. 

Coindesk reported on 9 February that a block of virtual land has been sold for a record $1.5 million on a gaming platform hosted by Axie Infinity. 

Subscribe

You will need a Premium Plus Subscription to access this database.

Exclusive news, analysis and research on global family enterprise and private investment offices.

Access to the most comprehensive fully interactive database on global family offices, principal investment offices, and family enterprises.

Check Deal Data, Senior Staff, and New Analysis on more than 500 family/principal investment and holding groups

Already have an account? Login

Subscribe

You need at least a Premium Subscription to read this article.

The most comprehensive information service on the global family enterprise world, featuring exclusive news, analysis, research and data on global family enterprises, family offices, and private investment offices.

Premium

£ 299

Annually

  • Exclusive reports, analysis and commentary
  • Exclusive access to family/private investment office deal information
  • Exclusive interviews with principals and senior management of family/investment offices
Subscribe now

Premium Plus

£ 399

Annually

  • Access to All of Premium
  • Access to all of FamilyCapital Analytics, our interactive database with more than 500 detailed profiles of family investment groups

More Info

Subscribe Now

Already have an account? Login

Subscribe

Exclusive news, analysis and research on global family enterprise and private investment offices.

Membership

Free

  • Exclusive reports, analysis and commentary
Sign up

Premium

£ 299

Annually

  • Exclusive reports, analysis and commentary
  • Exclusive access to family/private investment office deal information
  • Exclusive interviews with principals and senior management of family/investment offices
Subscribe now

Premium Plus

£ 399

Annually

  • Access to All of Premium
  • Access to all of FamilyCapital Analytics, our interactive database with more than 500 detailed profiles of family investment groups

More Info

Subscribe Now

Already have an account? Login

Leave a Reply