Investment Memos

Investing in Pillow

Making DeFi & Web 3 Economy accessible and hassle-free


Kshitij Jayakrishnan, Mridul Arora, Utkarsh Bajpai, Vaas Bhaskar

14th February 2022

In 1989, Tim Berners-Lee wrote a proposal for a system to manage and share general information about experiments at CERN.  This proposal received what was at best a lukewarm response and was labeled “vague, but exciting..” by his boss. However, this laid the foundation for what became the World Wide Web - or what we now know as the Web 1 era. Web 1 was characterized by a select few creators who created content that was passively consumed by the vast majority of users. This phase lasted until the mid-2000s.

We entered the Web 2 era in the mid to late 2000s, driven by the rise of multiple consumer-facing products & services. Content started being generated more dynamically and users could interact with each other directly with the rise of social networking sites like MySpace & Facebook, image sharing sites like Flickr, video sharing websites like YouTube, and blogging sites like Blogger & Tumblr. Such user-friendly, consumer-facing apps skyrocketed web adoption globally.  Delightful user experiences were the key unlock!

We are now in the era of Web 3.0, a version of the World Wide Web based on the blockchain. Since the rise of Ethereum in 2015, which allows for code on the distributed ledger via smart contracts, use cases on Web 3.0 have only grown immensely. One such significant use case is DeFi (decentralized finance) which allows for people to trust and work with each other without the need of a centralized financial intermediary. The Web 3.0 Economy is growing fast - DeFi, NFT/Gaming Economies, DAOs, Synthetic assets on-chain etc.

If history is anything to go by, the mass adoption of new technologies and innovations is powered by companies who build seamless and easy user experiences. At the cusp of DeFi and the Web 3 economy,  the story is no different.

Despite clunky, high-friction, terrible UX products, total value locked in DeFi has grown from ~$600M in Jan’20 to $240B in Jan’22! However, mass adoption in this space is still nascent, hampered by  cumbersome on-ramp  processes, intimidating non-custodial wallets and opaque transfer processes. As a consequence, only ~12% of the $2T crypto market map is locked in DeFi today.

We’ve long believed that there will come a time when investing in crypto based assets will be as seamless as paying via UPI. The journey from crypto being an esoteric asset class to becoming a prevalent one is going to be powered by companies like Pillow who make investing in this space frictionless for all consumers.

Pillow is building a global, borderless digital asset management platform, enabling single click investments into digital asset classes across DeFi, synthetic assets and investment themes such as NFTs, metaverses, GameFi and more.

Pillow is starting  with  yield generating products to earn interest on stablecoins and crypto, instead of letting them lie idle. It makes the user journey seamless by offering principal protected strategies and making the platform incredibly user friendly

The  platform is geared toward greater accessibility via its incredibly user-friendly interface . For new users looking to invest in DeFi today, they’ve to take custody of their crypto, deal with variable gas fees and manage assets across chains. For experienced crypto natives, investing in DeFi still involves sifting through and identifying/evaluating high quality protocols and absolutely ensuring no mistakes are made. It is frustrating and unnecessary for users to spend vast amounts of time and effort to invest their digital assets.  Enter Pillow, where users can rest easy and automatically allocate investments across multiple digital asset classes

When we met Arindam for the first time in our office, we were swept away by his insights and depth of knowledge in crypto and DeFi. Instead of the scheduled one hour, we ended up spending 6 hours+ of unstructured time, problem solving with each other and talking about all things crypto!

The founders of Pillow are incredibly special - Arindam and Rajath are DeFi maxis, with majority of networth in DeFi while Kartik bought his first bitcoin in 2013 and has been HODling since then! We could build conviction that this is the team we want to partner with to actively advocate and drive adoption of DeFi in the world.

We’re thrilled to partner with Pillow as they enable mass adoption of DeFi and Digital Assets.

Disclaimer: The above is merely an articulation of Elevation Capital’s investment thesis. It is not investment advice and is not to be treated as such.
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