Donut has raised $2 million in a new funding round led by Redalpine, with other investors including Inventures, Compound founder Robert Leshner, Entrepreneur First and a group of enthusiastic users.
This round brings Donut’s total funding to date to $3.8 million as the firm plans to use funds to expand its mobile app to a wider market of users looking to save and earn high yield with DeFi.
The firm has plans to raise additional funding in early 2022.
Donut launched its “high-yield interest generating product” in September 2020. The app’s user base and assets under management have seen 40% monthly growth since then.
The company believes the future is in decentralized finance (DeFi). Last year, the space grew from one billion to $60 billion in assets driven by an explosion of lending and borrowing protocols.
“Today, many people earn less than 0.1% in interest in their bank account. This simply is not acceptable,” says Donut’s founder Neel Popat. “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.”
“DeFi needs an app like Donut where anyone, regardless of their crypto knowledge, can start investing in digital assets,” said Robert Leshner, founder, Compound. “Donut has become the essential next step in this industry and as a partner and investor, I’m thrilled that they are bringing DeFi to the masses.”
DeFi offers high yield opportunities for investors and lenders but also high risk as no regulation has been set yet and the value of tokens can drop to zero in an instant.
The company was recognized by Andreessen Horowitz as one of the few companies “advancing a new model for >2 percent yield on deposits by incorporating crypto securities lending.”
Simon Leicht, Partner, Inventures, commented: “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.”
Harald Nieder, General Partner, Redalpine, said: “DeFi is brimming with new solutions. However, it is still very disconnected from the traditional world of finance. Financial solutions in the future will be an eclectic mix of both traditional and DeFi. It will require trust, curation and ease of access to DeFi for a new financial paradigm. The Donut team is at the forefront of bridging this gap, building that additional layer and establishing that new financial paradigm.”