Donut, a mobile app to save and earn high yield with DeFi, today announced the closing of $2 million in a new funding round. Redalpine added to their commitment, bringing Donut’s total funding to date to $3.8 million.
Other investors include Inventures, Compound founder Robert Leshner, Entrepreneur First and a group of enthusiastic users, including the owners of the Washington Nationals baseball team.
Since releasing its high-yield interest generating product in September 2020, the company’s early user base and assets under management have seen 40% monthly growth. Donut will use this latest investment to drive rapid user growth and product development ahead of planned additional funding in early 2022.
In an era of historically low interest rates, Donut is bringing back an incentive to saving that has been missing for decades. The company believes the future is in decentralized finance (DeFi), a set of banking tools built on the Ethereum blockchain. The sector has seen rapid expansion since last summer, often referred to as “DeFi summer,” when it grew from one billion to $60 billion in assets driven by an explosion of lending and borrowing protocols.
Yet, navigating this new world is overwhelming for most. Donut is a mobile-first DeFi app that feels like a best-in-class fintech such as Wealthfront—an elegant, simplified and easy experience that does not require technical know-how.
"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.”
For DeFi heavies such as Compound, whose lending protocol unlocks value for billions of dollars in assets each day, Donut plays the crucial role of introducing the mainstream investing community to a clear value proposition: high yield. 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.”
“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,” said Simon Leicht, Partner, Inventures. “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.”
“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,” said Harald Nieder, General Partner, Redalpine. “The Donut team is at the forefront of bridging this gap, building that additional layer and establishing that new financial paradigm.”