Flip, a startup building a marketplace aggregator in the burgeoning NFT space, has raised a $6.5 million seed round.
While the company is based in Austin, Texas, its co-founder and CEO is Sam Hotchkiss, a serial entrepreneur whose name might be familiar to those in Maine’s startup community. His last company was Cumberland-based Reconnect, which develops software and hardware to improve outcomes for individuals in the criminal justice system. (I first encountered Hotchkiss in 2014 when he sold his Bath-based startup to Automattic, owner of the WordPress platform.) Hotchkiss has moved to Austin, but retains a summer home in Maine.
Distributed Global and Chapter One co-led the round, with participation from CMS Holdings and a number of angel investors, including several NFT artists and Larry Cermak, VP of research at The Block. The news about Flip’s raise was first reported in The Block.
Hotchkiss in October stepped aside from day-to-day operations at Reconnect and handed the reins to Pete Andrews, who has extensive experience selling into the government market.
“We came to the realization with Reconnect that it needed someone who knew how to sell into government and had that experience,” Hotchkiss tells Maine Startups Insider. “I’m very much a zero-to-one builder. We built the product to the point we needed to bring someone in who could really lead the market invasion there, if you will.”
Hotchkiss began working on Flip as a side project during the summer of 2021, fueled by his personal interest in crypto and NFTs, or non-fungible tokens. NFTs are unique cryptographic assets stored on a digital ledger called a blockchain. NFTs have exploded in popularity since last year (most are on Ethereum’s blockchain). The underlying blockchain technology provides a trustless system where ownership and provenance of items (e.g., digital art, music, videos, etc.) can be tracked and proven using these non-fungible tokens — “non-fungible” means one-of-a-kind, as opposed to something like a Bitcoin or U.S. dollar, which are fungible and interchangeable with any other Bitcoin or dollar.
“This gets me as a technologist excited in a way that I haven’t been for a very long time,” he says.
At first, Flip was going to be an analytics platform to help users track the DeFi space (decentralized finance), but that soon became crowded with competitors. Meanwhile, NFTs were blowing up.
The largest NFT marketplace at the moment is OpenSea, which is on track to post more than $3.5 billion in trading volume this month alone, but other smaller marketplaces exist and major players are planning to get involved. Coinbase, a major player in the crypto space, has announced plans to launch its own NFT marketplace, and even Facebook and Instagram are reportedly planning to launch their own NFT marketplaces.
Because of the likelihood the NFT market will become increasingly fragmented, Hotchkiss and his co-founder, Brian Krogsgard, pivoted from DeFi to build a tool that would make it easier for buyers to browse NFTs for sale across a number of platforms.
“There needs to be an aggregator and we can be in a position to win that,” Hotchkiss says.
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