Dune Analytics founder recounts: From nearly giving up to a valuation of 1 billion

Original Author: Fredrik Haga, Co-founder of Dune Analytics
Translated by: Kyle, The Path of the Metaverse

We recently announced that we raised $69.42 million in Series B funding at a unicorn valuation. In 2018, when Mats Olsen and I started Dune in Oslo, Norway, we began as first-time entrepreneurs from the fringes of the crypto industry. Fast forward just three years, we have become a unicorn company with only 16 employees. This article tells our funding story.

Pre-seed Round

Time: March 2019

Size: $250,000

Funding Duration: 7 months

Team Size: 2 founders

This was by far the hardest round of funding we faced. At that time, we had just launched Dune, and our social connections in the crypto space were minimal. We knew from the start that if we stayed in Norway, we might not find any potential customers or investors who understood what we were doing.

Initially, we focused on clarifying Ethereum data and securing our first customer before spending time fundraising. Just two weeks after Dune launched, we flew to the ETH Berlin conference to promote our product dashboard idea—the "Crypto Mix Dashboard." Merely three months later, we signed Dharma as our first customer. On December 1 of that year, we submitted clarified Ethereum data to them, and they paid us $600 a month. This was a huge victory, as very few people had paying customers in the emerging crypto space at that time.

The photo above shows Mats and me celebrating our first customer with IPA beer and chess.

With hope for paying customers and months without a salary, I began focusing on fundraising in late autumn that year, assuming we could secure a seed round by the end of the year. Things did not go smoothly. The fundraising process was brutal. At that time, traditional venture funds had little interest in cryptocurrencies, and there were probably fewer than ten real crypto funds. By Christmas that year, we had had about 50 conversations with investors, but we hadn't even reached the point of discussing funding terms.

The main resistance was that the addressable market for crypto tools was very small, and there was no business to be done with crypto data since it was all open. By Christmas 2018, it was clear that we might not secure funding anytime soon. Facing bankruptcy, no salary, and receiving ten rejections or no replies every day made this a tough period.

During the Christmas break, we engaged in long and hard reflection on the resistance we faced. Part of the reason we founded Dune was that Ethereum and cryptocurrencies represented a new, more meaningful financial infrastructure that was well-suited for builders. We firmly believed this and essentially ignored all investor concerns about market size.

However, regarding the openness of data, we did see criticism about the access to B2B dashboard tools, which might not be very powerful given the underlying data is open. At this point, we had two paying customers, which was our only attraction. We decided to take a risk and made the difficult decision to pivot to a free and open community product.

We realized that the powerful effect here would be to embrace and accelerate the openness of data rather than selling closed dashboard products similar to Web 2 data products.

Despite our new direction, fundraising was far from guaranteed. For the next two months, we still received no responses from investors, faced rejections, and had over 50 conversations that led nowhere. Fortunately, just as we were on the brink of failure and preparing to look for other jobs, Teck from Binance was impressed by our actual revenue and accepted us into their accelerator program.

(Above) Just weeks before we might have to give up Dune due to lack of funds, we were at ETH Denver 2019.

After being accepted into the accelerator, I remember calling Mats and then lying on the floor in joy because we had finally secured Dune's continued existence. After seven months without a salary, the next $4,000 paycheck was the best I had ever received.

I think there’s an interesting lesson to be learned: you need to learn to ignore as well as accept VC rejections. Keep your faith and don’t be discouraged by the rejections of 100 investors, but also take others' rejections seriously and rigorously evaluate your beliefs. We essentially ignored all market size concerns and held onto our core belief that crypto is a more meaningful financial infrastructure that would have a large number of builders to serve. On the other hand, we also took rejections to heart and adjusted our plans accordingly, embracing the openness of crypto data rather than fighting against it by selling closed dashboards.

Seed Round

Time: August 2020

Size: $2,000,000

Funding Duration: 15 months

Team Size: 2 people

At the end of the Binance accelerator in spring 2019, they held a demo day in San Francisco where everyone was trying to raise seed rounds. If I remember correctly, out of this batch of 10 companies, only 1 or 2 successfully raised seed funding. We were not among them.

We returned to our home in Oslo, kept our burn rate to a minimum, and did not hire anyone. Mats and I maintained an annual salary of $50,000. We built the product, backfilled missing data, talked to users, posted dashboards on Twitter, attended hackathons, shared a room in a bad hotel (I snore loudly—sorry, Mats!), provided service support, answered user calls to help them learn SQL, and: tried to raise a seed round.

Over the next year, we made four serious attempts to raise a seed round, but none were successful. We had $30,000 in ARR and a growing user base, including many top projects in the field. Nevertheless, most investors still did not believe in the crypto opportunity, especially in the data aspect. We went to San Francisco in February 2020, and ended up unable to raise even $1 million in seed funding. In hindsight, it seems absurd that less than two years ago, someone could have acquired about 10% of Dune for $1 million, but no investor in Silicon Valley was interested.

Mats and I pitching Dune in Palo Alto in February 2020, trying to raise $1 million, ultimately to no avail.

Dune was born and grew during the crypto bear market. Finally, in the summer of 2020, the bear market was coming to an end. The "DeFi Summer" arrived, and Dune became a key destination for tracking all the obscure yield farming schemes, staking rewards, and the crazy "YAM" craze. We achieved $60,000 in ARR, and our key metrics grew by about 5% weekly.

Fifteen months after the Binance accelerator demo day, we made our fifth attempt at a seed round, and we finally succeeded. In fact, putting together this round of funding was still not easy; we had to do some serious work. No one wanted to lead this round, so we ended up valuing ourselves. This was certainly a stressful few weeks. We were also unsure if it would go smoothly this time, but in the end, we managed to complete the funding. We were finally ready to elevate Dune to a new level with a significant amount of money: raising $2 million.

Series A

Time: May 2021

Size: $8,000,000

Team Size: 6 people

Funding Duration: 1 week

By the end of 2020, our application v1 (a fork of the open-source analytics tool Redash) was overwhelmed as we expanded to thousands of users. Redash was a great MVP for us, but the query execution queue had thousands of entries, the application was slow and clunky, and we lacked proper public user profiles, etc. Something needed to be done. After more than two years of a two-person team with no salary and low pay, we finally had the funds to hire more teammates. In the first quarter of 2021, a four-person Dune team consisting of the two founders and our first employees Wilhelm and Vegard (plus one advisor) took on an ambitious project: rebuilding the Dune application from scratch.

We didn’t know how long it would take, but it was undoubtedly a massive effort. It needed to support thousands of queries, user flows, and visualizations. After hard work, we launched Dune v2 on March 18—we delivered faster and better than we expected. A small, focused team can quickly complete tasks from 0 to 100.

By late April that year, we felt great; cryptocurrencies continued to grow, and we hired a few more team members, bringing our total team size to 6. For months, we also began to see something we weren’t used to: investors' interest in us. They had been checking out Dune charts on crypto Twitter and wanted to talk to us. While we felt like the seed round had just ended, we realized there was a real opportunity here.

In late April, we said to hell with it and decided to go for a Series A round. Mats and I made the decision on a Friday. I turned around and asked the VCs I knew if they were interested in chatting the following week. I spent the entire weekend putting together a PPT and started practicing my pitch before the call. I remember telling my girlfriend, "I'm not sure if I have time to go on a weekend ski trip in a month because I might be busy fundraising."

However, things took an unexpected turn, and we suddenly became hot property. The following Tuesday, we received two investment term sheets: one with a valuation we thought was good, and another with double that valuation—crazy! From that moment on, things escalated rapidly. Investors who had previously said they could only find time to talk to us in a month were now ready to start conversations within 30 minutes. FOMO kicked in, and Mats and I spent the next Wednesday and Thursday pitching to investors for 12 to 14 hours each day. By the end of that week, we had a handful of investment term sheets, with more likely on the way.

(Above) The two of us walking in the park while deciding on the investment term sheets.

At 10 PM on Friday night, just a week after we decided to fundraise, we signed a term sheet for an $8 million investment with our dream partner, USV. That was the most stressful and exhausting week of my life; the sudden "enthusiasm" from VCs completely overwhelmed us, but it was certainly better than the rejections and non-responses from two years ago. What a turnaround.

Series B

Time: November 2021

Size: $69,420,000

Team Size: 16

Funding Duration: 0 days

Six months after the Series A funding. Cryptocurrencies continued to heat up and become mainstream, NFTs exploded, and you could track OpenSea volumes and many other things on Dune. Our key metrics continued to grow at a rate of 30% per month. From August to September 2021, it grew at an incredible rate of 175% per month—all of this was organic, with zero marketing spend. We also expanded the team to 16 people.

Now, in stark contrast to two years ago, all tech investors wanted their crypto exposure through Dune, and they were certainly seeing Dune charts everywhere. After the Series A funding, we had become indifferent to the investors wanting to chat with us, and I was rejecting some investors' requests daily. Ultimately, everything we did was to build the product, community, and team, and that’s what we continued to focus on.

However, at some point in October 2021, despite our strong refusals to VCs, Coatue managed to reach out to us, and I had a 30-minute conversation with them. They were impressed with Dune, showed a deep understanding of what we were doing, and wanted to know if we were fundraising. I told them we were not fundraising.

In the following weeks, we had no further contact, and then they reached out again, saying they had conducted thorough due diligence on us. This was certainly interesting; we had a brief call where they showed me 40 slides filled with numerous customer interviews and insights into our market opportunity. Everything looked great, and they said to let them know if we were fundraising. Again, I said, "Cool, but we are not fundraising."

A few weeks later, I received another call from them, wanting to chat for 10 minutes. At this point, my experience was enough to understand what this meant: a proactive investment term sheet. I took the call, and sure enough: they wanted to invest $50 million at a $500 million valuation—this was a very reasonable markup compared to our Series A funding six months prior. They also showed me some very impressive data they had tracked, which gave them strong confidence in what we were doing from the inside out.

During this call, I also realized that their headquarters were on the West Coast of the US, not in New York as I had assumed. They took the call at 5 AM to accommodate my proposed European time slot. Knowing their location, I said I would be happy to take a call later in the evening, but they just replied, "We will work in your time zone, don’t worry."

However, we still weren’t very keen on fundraising, so I told them they needed to give us an offer we couldn’t refuse, and I told them, "How about a $1 billion valuation? We’ll see." They said they needed to discuss it internally, but it didn’t sound completely impossible.

Next, you know the story: two days later, they came back with a new investment term sheet at a $1 billion valuation. An offer we couldn’t refuse. Just like that, we completed a round of unicorn funding. The feeling at that moment couldn’t have been better. Ultimately, this entire round of funding amounted to $69,420,000.

(Above) We made the decision to pursue Series B funding over coffee.

Securing funding to build Dune has been a challenging journey, filled with serious struggles and some amazing joyful moments. Interestingly, the size of the funding and the time it takes to raise it are generally negatively correlated. If you are building a startup, remember that things can change rapidly; you may need to grind for a long time with little to no progress, but when you succeed, things can develop at an astonishing pace. Just three years ago, we started from zero—now we have become a unicorn.