Jordi Hays and Sarah Chase felt frustrated. They watched as speculators snapped up NFTs of apes or NBA stars with ease — and wondered why it wasn't just as easy for investors to back a startup.
Hays had a friend who had wanted to invest $500 in his previous company, only to have his lawyer say it would be more expensive just to run the paperwork for an investment that small. (He went ahead and accepted the $500, and the investor drove $50,000 of directly attributable revenue in return, so it more than paid for itself.)
So Hays and Chase decided to build Party Round as an easier way for founders to raise money. Named after the term used to describe when there's dozens of investors in a round, Party Round's goal is to allow founders to easily invite friends to invest via a SAFE, handle the documents and send money. Think Venmo, but for startup investing (and with a bit more legal paperwork).
"We honestly thought it was a little bit absurd that you could put $100,000 into an NFT from some stranger that you didn't know, but if your friend was sitting across the table from you and they were actively fundraising, you had to get lawyers and DocuSign and use wire transfers and all these archaic processes," Hays told Protocol.
Currently in private beta, the app had the ultimate dogfooding when Party Round used its own app to raise its pre-seed round from Gradient Ventures and roughly 50 angel investors — a party round of its own. The startup is now announcing that it's raised an additional $7 million in a seed funding round led by Andreessen Horowitz and its Cultural Leadership Fund. Other investors include Seven Seven Six, Abstract Ventures and Shrug Capital.
"The state of party rounds today is that all the best companies are raising party rounds," Hays said. "They're still finding a lead investor, but it actually is so advantageous to raise from a large group of people that it's super rare to find a company today that's not raising from a diverse group of people."
Already thousands of founders have signed up for the company's waiting list. During a beta with founders of JuneShine, Popshop, Eco and Commsor, Party Round said its app was being used to process an average of $200,000 a day. It's currently free for founders, and the team is exploring revenue-generating options, a spokesperson said. But it's no fluke that Party Round has been able to attract those numbers in the last seven months.
Party Round first started gaining attention thanks to a series of "drops" on Twitter, purposefully creating a brand that feels closer to streetwear than it does a fintech product, Hays said. The first drop was "Startup Ipsum," which generates ridiculous sounding startup headlines and texts.
The one that went the most viral was a collection of NFTs of "helpful" venture capitalists. VCs had to claim their own within a five-hour window under the threat that their virtual selves would be auctioned off.
"We want Party Round to look and feel totally native to the internet," Hays said. "And that means communicating with formats that are native, so memes and things like that."
Soon after, the company started fundraising and closed its $7 million round. (Because Party Round's beta version only works for SAFEs, it didn't use its own app for its latest priced round.) Beyond attracting investors and raising its profile with founders, Hays said it's been a boost for recruiting with over half of the 12-person team joining the fully-remote startup after coming across one of the drops on Twitter.
Even with its large following, Party Round so far doesn't have any plans on turning its app into a marketplace for founders and investors to find each other. Instead, Party Round wants to focus on the first checks in among friends to make it easier for founders to raise money, whether it's a $500 check from a friend or a $50,000 check from a fund.
"We want to make running a company closer to playing a video game than the way it does now, which is interacting with the DMV on a daily basis," Hays said.