Bitcoin social tipping startup ChangeTip has announced $3.5m in seed funding, drawing support from a variety of bitcoin-focused investment funds and entrepreneurs.
The seed round was led by Pantera Capital, according to the San Francisco-based startup. Other participants in the round included500 Startups, Boldstart Ventures, CryptoCurrency Partners and Idealab.
ChangeTip intends to use the funds to build out its infrastructure as well as redouble efforts to continue expanding its user base. Several weeks ago, the popular microtipping service revealed that it had brought in more than 30,000 users since its December 2013 launch, and in recent months has pushed to have its services available on a growing number of online social channels, including Twitter, Reddit and YouTube.
In a statement, founder and CEO Nick Sullivan said that online platforms, powered by bitcoin, have made it easier for concepts of social money to develop, explaining:
“The social media phenomenon of ‘tipping’, or expressing one’s appreciation over the Internet with small monetary or other digital gifts, is building momentum. With ChangeTip, a million users can tip $0.01 and the content creator can collect his $10,000 – an impossibility in a legacy payments world.”
Tipping has been underlined as an early use case for digital currency thanks to the Bitcoin protocol’s facilitation of micropayments, an action most legacy payment systems today do not allow in a cost-effective fashion.
Consumer onramp
Investors involved in the deal say that ChangeTip is in a unique position to help bring more users into bitcoin.
According to Pantera Capital CEO Dan Morehead, social solutions like ChangeTip’s could provide an easy onramp for those who are interested in digital currencies but may be put off by some of the technical challenges of sending transactions.
Morehead said:
“Tipping is likely to be bitcoin’s first killer app – seamlessly integrated into social media, enabling people to send money in a free, fun, instantaneous way without borders or minimums. This could have a huge impact on bitcoin adoption.”
Morehead added that, in the future, ChangeTip could serve as a mechanism for people to receive their introduction to the industry – as well as their first bitcoins.
500 Startups partner Sean Percival cited CEO Sullivan’s enthusiasm and support for digital currency, as well as the long-term promise of the ChangeTip service itself, as reasons why his group decided to get involved. He told CoinDesk that the funding round is only the first step in the startup’s plans to deploy bitcoin-powered payment solutions.
“Safe to say they are just getting started with today’s product offering. We’re very excited to be part of the journey and look forward to what’s next from the team,” he said.
CoinDesk has contacted the investors involved for comment and will continue to monitor this story.