Is it relevant to involve VCs more in the DAO field now?
Arguably, VCs are already involved in the DAO field, as many projects who have stated a future intent to decentralize, as Digix and Tezos did during the times of their sales, received significant VC funding. This being said, we still have a rather narrow playing field, as cryptoassets are, in my experience, considered too difficult to value and are too high risk for most VC to want to touch.
What questions you’d be interested to ask?
This question isn’t super clear to me – what to ask VC, what I would ask if I were a VC, etc – can you elaborate?
Are there better funding mechanisms for the early stage DAOs?
Our BizDev team has identified the following funding mechanisms for DAOs:
- Top down – grants from a business or businesses
- Bottom up – donations from members
- Continuous funding – “teal equity” using a bonding curve mechanism
- Subscription based – members must pay in order to exercise voting rights
- Token sale – the dominant fundraising model in blockchain thus far; either STO or utility tokens.
- Revenue stream – offering a product or service as a firm does
I expect that VC funding would likely be either continuous funding or through a token sale. In the case of continuous funding, DAOs that are providing the demand-side liquidity of the bonding curve may be highly lucrative opportunities, at least, in terms of book value (this could be done through the DAO lending its treasury, perhaps, and immediately re-investing into its own token). In the case of a token sale, I expect that VC would want to focus on tokens with price-friendly tokenomic considerations, that is, tokens with some sort of sink/burn structure a la BNB or MKR or revenue sharing, such as DGD. These mechanics, however, dive into the security token design space. Perhaps this helps explain the rise of the STO narrative.
My own suspicion is that subscriptions will be the most popular DAO fundraising mechanism. If we consider that the members already share the same values – hence their participation in the DAO – then there’s already enough alignment to agree on bottom-up subscription based funding. The real question is, how much, and for what purpose?