Palm NFT Studio announced a $27 million Series B investment round including Microsoft’s M12 venture fund and Warner Bros.
The Palm protocol is an energy-efficient Ethereum sidechain that has thus far been used for art, entertainment, and sports NFT projects.
As the NFT space expands and flourishes, creators are looking for ways to minimize Ethereum’s sizable environmental impact, congestion issues, and transaction costs. Palm has emerged as a bespoke, NFT-centric sidechain and scaling solution to help with those concerns, and now the creative studio tied to it has brought on some major new investors.
Today, Palm NFT Studio announced a $27 million Series B funding round led by Microsoft’s M12 venture fund. Entertainment icon Warner Bros. is another major participant in the round, alongside Griffin Gaming Partners, SK Inc., RRE, Third Kind Venture Capital, Sfermion, and The LAO, an investment-focused decentralized autonomous organization (DAO).
“When we went to raise this money, it was important for us to find strategic partners who were philosophically and ideologically aligned with what we're trying to do here,” Palm NFT Studio CEO Dan Heyman told Decrypt. “I couldn't imagine a better group than we've come up with.”
In addition to leading the round via its venture arm, Microsoft is arguably the most interesting name on the list. The software and tech giant has only dabbled in the NFT space so far, releasing free NFTs around a Minecraft educational initiative earlier this year, along with others around the Windows 11 launch.
Microsoft has been involved in the Ethereum space for several years, including an alliance with ConsenSys—Palm NFT Studio’s parent company, which also funds an editorially independent Decrypt—that dates back to 2015. Heyman said that Microsoft is beginning to look outside of private, permissioned blockchain implementation and into broader use cases.
“Now they're trying to push the envelope forward and understand how that private chain experimentation and innovation can translate into other initiatives,” he said. “We're very excited that they've chosen Palm NFT Studios as their first partner in the public NFT space.”
An NFT acts like a receipt or a deed of ownership to a rare digital item, including images, video files, and interactive video game items. The NFT industry has ballooned over the course of 2021, including some $10.7 billion worth of trading volume in Q3.
Warner Bros. is an existing partner of Palm NFT Studio, teaming up for October’s free NFT drop for its DC FanDome streaming event. Palm ultimately gave out several hundred thousand free NFTs to DC Comics fans that registered for the event, Heyman said.
Such initiatives reflect the kind of large-scale, fan engagement projects that the studio sees in its future. Heyman said that while big-ticket NFT sales are important to the industry, the number of active collectors is a relatively small number.
Instead, he suggested that NFTs will become “fairly ubiquitous” as additional use cases take shape, and as society moves past the “rental model” of streaming media services. He also believes that most NFTs will ultimately be given away for free as a souvenir or engagement tactic, as with the DC FanDome collectibles.
Heyman—who recalled his own childhood love of music CDs—points to the rise of NFT avatars and vinyl records as two seemingly disparate trends that intersect at the concepts of identity, ownership, and people wanting to collect and hold onto things that they love.
“For me, the potential with NFTs is to fundamentally reimagine the relationship between fans and creators,” he said. “NFT's present a remarkable opportunity in the digital context to do that at scale.”