Illustration: Annelise Capossela/Axios
DevRev, a Palo Alto-based startup that has built a developer CRM for product-led growth, has raised $20 million — and did so by tokenizing its fundraising process.
Why it matters: By putting investments on the blockchain, DevRev believes it can open its fundraising process to customers and other advocates for its platform.
Context: DevRev was founded by former Nutanix CEO Dheeraj Pandey, along with Nutanix tech lead Manoj Agarwal, both of whom left that company early last year to build the startup.
- Pandey says the decision to raise additional capital in this way came partly from his experience at Nutanix, where the company raised nearly $2 billion during his tenure.
- “We realized that we have a lot of end users who are developers and engineers on our platform that want to be investors, too,” he told Axios.
- Last July, the company raised $50 million in seed funding from Khosla Ventures, Lightspeed Venture Partners and Mayfield, among others.
How it works: The DevRev SAFE token is being offered under a Reg D filing with the SEC and represents a digital version of a typical SAFE security.
- Each token is worth $50,000, is hosted on the ethereum blockchain and will be transferred to an investor’s wallet once their investment is closed.
- To purchase one, Pandey says investors will need to establish an identity with their wallet, show their intent that they want to purchase a token, and then DevRev will do a back office process to prove that the purchaser is an accredited investor.
- “Then we come back, and we ask them to wire money to us, and then we basically give them the tokens in return,” he explains.
Yes, but: It’s important to note that DevRev is not putting tokens out on the open market or allowing them to be traded or sold on a public exchange.
- And when DevRev raises a priced round, the tokens will be converted into equity and burned.
What we’re watching: While it’s still early, DevRev is not ruling out the possibility of making tokenized fundraising a part of its product suite, potentially helping its customers to raise money from their customers.
- “If we did a good job of this, then over time, we can productize this for others,” Pandey says.
Editor’s note. This story has been updated to show that DevRev has already raised the $20 million.