Hello world, and welcome to the sixth issue of Thursday Thoughts.
Each week, founders and investors share their thoughts on fundraising trends and strategy.
RabbitHole is a portal into the world of crypto that enables users to earn rewards by using decentralized applications.
They recently announced their $3.6M Seed round, led by Electric Capital, with participation from ParaFi Capital, Framework Ventures, and Slow Ventures.
RabbitHole’s co-founder Brian Flynn sat down with us and answered a few questions about the fundraise.
You recently announced a $3.6M funding round for RabbitHole - congrats! Can you tell us a bit more about how the round came together?
Our fundraising strategy was always to do a small pre-seed, find some product-market fit, and raise six months later. We ended up raising a bit earlier than we wanted because of where the market is currently at. We’re really excited to have Electric as our lead because they have some of the most experienced product minds in the space.
You closed a pre-seed round before that - why did you choose not to publicly announce it? What tips would you give to founders about fundraising PR strategies?
It really depends on what you’re trying to accomplish and what type of product you have. If you have a really strong product and have demand, then you don’t need to publicly announce it. If you’re looking to signal that you have money so you can attract hires, then I would recommend announcing.
You recently introduced a really cool feature called "Skills" (focused on-chain credentialing). How have your investors influenced product strategy?
Our investors can give us a third eye into the market that we currently don’t have. For example, our investors noticed that a lot of projects were doing targeted token distributions through retroactive airdrops. We wanted to build something that could cover this use case so we can support more projects on the RabbitHole platform. Having investors who see a lot behind the scenes can be helpful in building strategic mental models.
You’ve built up a great reputation as a thinker in the DAO/social tokens/NFTs spaces - how useful are a founder's visibility and brand to get the best investors on board?
I think Twitter is the most underrated tool in the crypto space. If you invest in your personal brand, you don’t need PR, job boards, or paid advertising. Your following becomes a recruiting funnel, user funnel, and even investor funnel. You can be your own growth engine, and create a new narrative from your own following. Investors can get a sense of how you think before they take a meeting with you by just looking at your timeline.
What did you wish you knew before you started this fundraising round? Any other advice for founders fundraising now that the market is shakier?
Take your time when fundraising. A lot of founders want to create tight windows to force investors into making decisions. Ultimately, your investors are part of your team. You want to invest the time to make sure that the investors are the right fit. One good way of doing this is asking other founders for reference checks if they share the same investors. Ultimately, you want a mix of both investors who are going to closely work with you and also investors who have visibility in the market. The last piece of advice I would give is to be wary of party rounds. While they may look flashy on a fundraising announcement having dozens of names involved, you want investors who can get their hands dirty. Having a few investors who will invest the time into helping you succeed is extremely important.
Thanks again Brian for your insights.
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See you on Tuesday for Dove Dispatch #10,
The Dove Team