NextGem, a social app built for trading card enthusiasts, came out of stealth on Tuesday by announcing it's raised $1.8 million in pre-seed funding.
The app uses AI technology to capture professional-grade images with smartphone cameras to showcase previously inaccessible card collections. To date, 3,500 trading card collectors, representing $2 billion in assets, have signed up for the service.
NextGem is the first company to be spun out of the venture studio at Great North Ventures, the St. Cloud-based venture capital firm founded by Ryan and Rob Weber. Other investments came from San Francisco-based SK Ventures; Minneapolis-based Groove Capital; Minneapolis-based Gopher Angels; former Minnesota Twin Corey Koskie; and Ryan McKillen, the first software developer at Uber, among others.
Co-founder James DonFrancesco said the value of the trading card market is trending towards high art, and NextGem wants to be the museum of rare cards.
NextGem is similar to sites such as StockX and Depop, which allow users to buy and sell unique and collectible clothes and sneakers. But in the trading card market, there are often only a few special edition cards released at one time. Prior to NextGem, buyers had to work off of auction histories on eBay to seek out rare cards they wanted to add to their collection.
DonFrancesco said eBay caters to the low and middle end of the market, but high profile collectors see their purchases as investments they might hold on to for four or five years.
NextGem's mission is to reimagine the way people collect and discover trading cards through its social platform. Collectors can publish their entire inventory, opening up the market to sought after cards that are difficult to track down.
In addition to being a social platform targeting a market projected to reach $67 billion by 2027, NextGem's AI camera scanner, 'Gemma', is able to inspect and automatically post-process images. In the future, the tool will also be able to assist with authentication and establishing value.
DonFrancesco said the app is currently in an invite only closed beta, but will expand later in the year.
Another company forged in the Great North Ventures studio is expected to come out of stealth later this year. The fund anticipates it will build at least one or two new companies in the studio annually.
Great North Ventures said its first fund has invested $15.5 million into 27 companies. Its second fund, which is already 40% larger than its first fund, is expected to close in March.
