Hello world, and welcome to the third issue of our new format: Thursday Thoughts.
Each week, founders and investors will share their thoughts on fundraising trends and strategy.
Set has built battle-tested asset management tools and infrastructure that lets managers manage on-chain crypto portfolios. Teams like DeFi Pulse, CoinShares, and Index Coop manage more than $150M in AUM through Set’s infrastructure.
Set recently announced their $14M Series A round, co-led by 1kx and Hashed. Felix Feng sat down with us and shared his views on the fundraise.
You just raised a $14M Series A. You previously raised a seed round in 2018. What were the biggest differences in this experience versus the previous one?
There's a big difference between a seed and a Series A. A seed round is all about ideas and you often don't have any pre-existing relationships. You don't have any traction - everything is unproven. Investors are betting on the team and market. At the Series A stage, you need a notion of product/market fit - you need to have traction. We had built relationships and a brand over the past few years. So when we decided to raise, we leaned on existing investors. This made getting the first term sheets easier. The market also helped - it made it much easier to just deal with terms and investors. It's much easier to raise in a bull market. So in this case it was a matter of picking a term sheet and then filling out the rest of the round. In this case, we got the lead really early, most of the work was on filling out the rest of the round.
You’ve now been working on Set for over three years - how has that experience helped you better assess investors?
Working with a bunch of different investors gives you a perspective on how investors can help - a lot of this is based on what investors believe in. Based on what types of LPs they have, for example, impacts that they'll engage in. For the first round, we had traditional LPs - given that tokens were so new, most of them were not able to engage with things like token economics or community building. Over time, we realized that investors who could engage directly with DeFi products were going to be the most valuable. We also saw that investors that could help with things like community and use the products directly - those were the best ones.
You read a lot about how frenzied the current fundraising environment is - do you think that’s right?
In general, if there's a lot more capital than there are entrepreneurs, prices will go up. In our experience, when we fundraised, there was a lot more capital than there had been previously.
Thanks again Felix for your insights.
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See you on Tuesday for Dove Mountain Weekly #7,
The Dove Mountain Team