How to Invest in NFTs, from Meta4 Digital Art Fund’s $ 100 Million


  • Brandon Buchanan and Nabyl Charania manage Meta4 Capital’s NFT fund.
  • They are currently raising $ 100 million from funders, including venture capital firm Andreessen Horowitz.
  • Buchanan and Charania shared their top 5 tips for building a digital art portfolio with Insider.

Brandon Buchanan and Nabyl Charania have been blockchain evangelists since 2014. But it wasn’t until this year that the co-founders of Meta4 Capital began to view NFTs as viable investment assets.

The non-fungible token (NFT) market has surged this year, with monthly sales rising from $ 400 million to $ 2 billion, according to JPMorgan. Renowned brands like CryptoPunks and Bored Ape Yacht Club have enjoyed the attention of prominent investors including NBA star Stephen Curry and socialite Paris Hilton.

“Celebrities don’t do much when it comes to fostering mass adoption,” Charania told Insider in a recent interview. “It still hasn’t really caught on in the air as an understandable and understandable investment asset.”

“Explaining to investors that our thesis included spending hundreds of thousands of dollars on digital horsepower on the blockchain that we would then ‘create’ for extra return was incomprehensible,” he added.

Charania was referring to Meta4’s first NFT fund, which launched in October. He and his business partner Buchanan have secured seed funding from leading venture capital firm Andreessen Horowitz and are aiming for a total investment of $ 100 million.

“The fundraising is going fantastic,” Buchanan said. “These things always take several months, and it is very difficult to involve large institutions, but since we announced at the end of October, a little over a month ago, we have spoken to everyone.”

“People can sense that there is something very dynamic going on with NFTs,” he added.

While the high level of NFT


volatility

level has attracted many speculative day traders, Buchanan said he and Charania wanted to bring institutional investors into the space by offering the more stable returns of a larger fund of alternative assets.

“We want to provide investors with broad exposure to the asset class,” he told Insider. “It’s a market that’s maturing to the point where we feel we can participate, but it’s not mature enough that we can’t make outrageous gains for investors.”

Insider spoke to Meta4 co-founders about retail investment routes in the NFT space. We also asked them if they were concerned about a bubble right now.

Nabyl Charania

Nabyl Charania co-founded Meta4.

Rokk3r


Build a portfolio

Away from the world of $ 100 million funds, there is still a path to the NFT space for savvy crypto retail investors, who can either invest in a marketplace like OpenSea or create and sell their own digital art.

Buchanan acknowledged that building an NFT portfolio is not possible for everyone. He told Insider that the ideal amount to start investing is around 5 ETH, or just over $ 20,000.

“But there are avenues for people who don’t have millions of dollars,” he added.

Buchanan’s first piece of advice is that retail investors should always beware of NFT scams. These have been of concern to regulators in the crypto space due to the increase in fraudulent tokens and insider trading at OpenSea.

“You have to do your own research because it can be difficult to identify fakes,” he told Insider. “There are so many projects coming out, so there will be a lot of scammers, and a lot of people looking to speculate and make a quick buck are inevitably going to get tricked.”

To focus on renowned brands may be a way to avoid NFT scams, according to Charania. He said Meta4 was only targeting well-known brands like Bored Ape Yacht Club, CryptoPunk, CryptToadz and Zed Run, as well as verified generative artists like Dmitri Cherniak and Mitchell F. Chan.

“My personal preference is to support well-known projects or artists, although the entry point may be higher,” Charania said. “I would recommend everyone to do their own research, go over the discords of the projects you like, and try to understand the community and the value proposition of the project you want to support.”

A non-fungible CryptoPunk digital art token is displayed on a LinkNYC display in New York City.

A CryptoPunk digital art NFT displayed on a LinkNYC display in New York City.

Dia Dipasupil / Getty Images


Buchanan also advised investing in new mints. These are digital works of art that were only recently stored on a blockchain. He said investors were more likely to find deals targeting these assets rather than longer circulation NFTs.

“I’m looking at the Art Blocks release schedule and looking for some new mints, you can get some for 0.25 ETH ($ 1,100),” he told Insider. “Sites like this are a gatekeeper, they’re a great place to look if you’re new to the space – you won’t get ripped off and the user experience is very smooth.”

Whale wallet tracking is another way to find dumped NFT gems, according to Buchanan. He named the anonymous collectors’prank call‘ and ‘Vincent Van Paste‘like two to follow.

“One of the beautiful things about blockchain is that everything is in a public ledger, so you can look at the major wallets and see what they are buying,” Buchanan said. “Imagine if you could see Warren Buffett’s trading strategy as it happened – you can actually do it with NFTs.”

Finally, Buchanan and Charania both agreed that retail investors should buy subjectively, investing in NFTs because they value them artistically, rather than for purely speculative reasons.

“There’s such a rich level of art happening,” Buchanan told Insider. “I encourage people not to buy something just to speculate, but to buy art that you really love and are really drawn to.”

“When I look at my cryptocurrency wallet, I see coins that I bought that make me happy,” he added. “Making money is an added bonus.”

Bubble of optimism

Crypto billionaire and Galaxy Digital founder Mike Novogratz warned of an NFT bubble earlier this year, arguing that the sky-high prices are “not normal in any way,” and advising that ” markets don’t go up forever “.

Some analysts are even worried about a bubble across the crypto space, with bitcoins and several metaverse coins that have slipped over the past few days, as concerns about the potential impact of the omicron Covid variant. and India’s crypto ban resulted in a massive sell-off.

Unsurprisingly, Buchanan and Charania ignored the bubble issues. They noted that there is also significant price volatility in traditional investments in art.

“Valuations can be similar in the traditional art world,” Buchanan said. “At Sotheby’s coins sometimes go for multiples above their appraisal value, so I don’t feel the prices are so inflated.”

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Buchanan and Charania ignored Mike Novogratz’s concerns about an NFT bubble.

Bryan Bedder / Getty Images for Hudson River Park


Charania said Insider Meta4’s investment strategy of focusing on new verified mints and reputable brands would protect their portfolio if the market collapsed.

“We are focusing on prominent, or extremely rare, or collectible NFTs where market fluctuations or concerns about a bubble do not play a significant role in determining asset value,” he said. he declares. “It pays to be safe, and we’re structured to survive another ‘crypto-winter’.”