SPACs, NFTs and Clubhouse: Blips on the Q1 radar

We are already racing to close the first 2021 quarter. Take a moment to pause and review trends making most news or surprising us with their novelty, you cannot miss the SPAC activity, NFT market upswing and growing interest in Clubhouse.

SPACs love disruption being themselves a disruption in current times. Like many industries being swept by digitalization forces, insurance is raring to be disrupted and is getting help from  a thriving private funding market. The SPAC route is an alternative to traditional IPOs that is becoming increasingly popular, partly from speed to market benefits. If Non-fungible tokens (NFTs) do not ring a bell, it’s just a matter of time before it will. From digital sports cards to artworks, NFTs have caused quite a stir, doubling total USD volume in February alone. Three years back, the NFT market was touching $42 million. By end 2020, it grew 705% to $338 million. A newbie in social media, Clubhouse is audio-chat based networking. Users join conversations between interesting people on myriad topics, not very dissimilar to tuning into podcasts but added you’ll find an air of exclusivity. Clubhouse was launched in March 2020. With 1500 users in May 2020, it was worth $100m. It burst into the mainstream after Elon Musk hosted Robinhood CEO Vlad Tenev on it.

Currently, the 300 odd SPACs listed on US markets are scouting for acquisitions. Though a bit late, Europe is not far behind in SPAC activity. It seems opportune that insurtechs make use of latest avenues to publicly list. Later-stage companies Hippo and Oscar had the option of mega-round funding before they went public. However, there are umpteen benefits to going public, such as brand recognition, raising funds for early investors and access to bigger funding. Given the number of SPACs proliferating, there is significant competition among SPACs leading to rise in enthusiasm among potential sellers, so it’s an ideal time for insurtechs ready to latch on to this opportunity.

Simply put, NFT is a blockchain entry like bitcoin. While bitcoin is fungible (indistinguishable and value-equivalent), NFTs are non-fungible. NFT tokens represent one-of-its-kind entities and are unique, which aids in establishing the one-and-only “original” digital asset. Buyers acquire undisputable ownership record of an asset along with access to the asset. Currently, assets tend to be works of digital art or trading cards, with instances of physical object ownership based digital records. Till February, ~150,000 token sales for $310 million occurred this year — a massive jump from 2020 sales. NFTs haven’t yet demonstrated ability to retain value over time. Volume is comparatively low. Buying one seems easy. Selling though, is dependent upon finding willing buyers with similar aesthetic proclivities. Nexus Mutual (NM) is a member-owned insurance mutual which provides coverage in crypto land against smart contract vulnerabilities. Contracts are available on Rarible as NFTs, with an emerging secondary market for reselling coverages.

Social media apps routinely arrive on stores, disappearing in due course, with few managing to hold user attention sufficiently. Clubhouse has broken through, though its early days, thanks to burgeoning support from Silicon Valley’s biggest names and global communities. The Elon Musk event breached conversation-room limits and was streamed to YouTube, propelling Clubhouse to chart leadership and ignited a mad rush for invitations. As of early February, the platform had 2 million+ users, skyrocketing it to a billion dollar valuation. Rooms are dotted with experts, luminaries, VCs, journalists and the like.

You get to chat with insurtech founders with recent large fund raises, moderators with expert ensembles highlighting events in their world parts. Barring the weak moderation framework it needs to strengthen, it seems poised to emerge as a veritable live platform for social interaction and knowledge exchange, conceived perhaps appropriately in an age of lockdowns but with enough ammo to stay afloat.

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