DeFi Savings Platform Donut Raises $2 Million
Following months of momentum, the past few weeks have been a rollercoaster for cryptocurrencies. Nevertheless, DeFi — short for decentralized finance — and other blockchain-based services have continued to gain the interest of consumers and investors. In fact, one DeFi offering has just revealed its latest funding round.
Donut has announced that it raised $2 million in its latest investment round. Previous investor Redalpine led the round, joined by Inventures, Entrepreneur First, Compound founder Robert Leshner, and other individuals. To date, Donut has now raised a total of $3.8 million following a $1.8 million pre-seed round in 2019. The company says it plans to use the funds to help drive customer acquisition while also further developing its product. Additionally, Donut notes that they intend on closing another round of funding sometime in early 2022.
Like many DeFi platforms, Donut’s banking offerings are built on the Ethereum blockchain. Currently, customers can earn up to a 4% yield from their funds — even at a time when interest rates have remained low for traditional banking products. As a result, according to Donut, the company has seen 40% monthly growth since launching its interest earning account in September of last year. It’s worth noting that the startup’s tremendous growth also came during DeFi’s breakout last year, which saw the DeFi sector explode from $1 billion in value to $60 billion in a matter of months.
Speaking to the startup’s appeal, Donut founder Neel Popat explained, “Today, many people earn less than 0.1% in interest in their bank account. This simply is not acceptable. DeFi lending offers a new way to work your money harder, but significant time investment is required to understand which services to trust. We’re making DeFi accessible to a broader audience, giving them the opportunity to earn 4-10% APY via three simplified options.”
As for what makes Donut an attractive investment for VCs, Inventures partner Simon Leicht said of the company, “Sitting at the intersection of FinTech and DeFi, Donut has done something unprecedented in making a DeFi product that speaks the language of everyday consumers. We firmly believe businesses like Donut will fuel the next stage of growth in the sector by making DeFi accessible in daily financial life. We’re excited to be along for the ride.”
Despite the current troubles of the crypto market, there’s no question that a number of venture capital firms still see the promise that blockchain and the companies that leverage it present. This is evident in Donut’s latest fundraising and will surely prove true with other incoming deals. Another important takeaway from Donut’s early success is the importance of demystifying DeFi as the startup has done. By harnessing the power of blockchain and presenting the benefits to customers in easy-to-understand way, Donut could well be on its way to becoming a DeFi powerhouse.