The team behind dogetipbot, the popular tipping tool for the alternative digital currency dogecoin, has raised nearly $500,000 in a seed funding round.
The fundraising was led by Blackbird Ventures, a venture capital group based in Sydney, Australia. Additional investors, including angel investors Scott and Cyan Banister, also took part in the round. In total, $445,000 in new capital was raised for the project.
Dogetipbot enables microtipping, allowing users of its service to pledge dogecoin tips that can then be redeemed for the currency. Users can tap dogetipbot when pledging money on Reddit, Twitter and Twitch. To date, the service says it has processed more than 650,000 transactions.
CoinDesk spoke with Blackbird Ventures managing director Niki Scevak, who said that he and his team are interested in how digital currencies can be leveraged to make microtransactions economically viable.
"What's most fascinating to me about cryptocurrencies is enabling new transactions that never happened before. The credit card fee structure means that it's not economical to accept payments of less than $1. So, we asked the question of what transactions can now happen for a few cents that can use bitcoin or dogecoin, and that's how we got to know [creator] Josh Mohland and the team."
Funding to fuel user upgrades
Mohland said the funding will be used to support the team over the next 12 months as it continues to develop the service. Specifically, Mohland expects that the money will be used to improve the service's user experience in order to attract a wider audience.
"One of the things we're really looking at is the user experience," Mohland said. "A lot of our traction initially was on Reddit, but we're seeing a lot of demand on Twitter. So, what we're working is our user experience, making it seamless."
With a median tip of around 3 cents, dogetipbot is as much about the social experience of tipping as it is a rail for small payments.
According to Scevak, the fact that the system can be used to both express public appreciation for content and exchange value makes it a powerful combination. He noted that the grassroots development of the dogecoin community is a big part of that success as well.
Correction: A previous version of this article indicated the project had raised $446,000 in funding.
Images via Shutterstock; Dogetipbot