The fund will invest in L1 solutions, privacy technology, DeFi, gaming, NFTs, and crypto social blockchain initiatives.
Tekin Salimi, a former general partner at Polychain Capital, has formed a new blockchain-focused investment fund that will be converted into a founder-owned decentralised autonomous organisation (DAO), providing a novel approach for startup leaders to be compensated for their contributions.
The $125 million fund, dubbed “dao5”, will invest in pre-seed and seed stage blockchain and cryptocurrency startups. In the startup environment, a pre-seed round typically assists firm founders in getting their business off the ground. The seed round is the first recognised round of equity fundraising.
The fund will focus on layer-1 blockchain infrastructure, privacy technologies, decentralised finance (DeFi), decentralised autonomous organisations (DAOs), gaming, nonfungible tokens, and crypto-oriented social platforms.
Unlike typical venture capital funds, which provide firm owners with direct money from venture capitalists, dao5 will provide applicants with a grant of governance tokens, which will form the fund’s future DAO. Governance tokens will also be distributed to dao5 employees and advisers.
Around 2025, the fund is scheduled to make its formal transition to a DAO, and so achieve a sufficient level of decentralisation.
Dao5 is seeking to provide project founders with some risk diversification by pursuing a DAO governance structure, as all grant recipients will be exposed to all other projects in the portfolio. According to the company, this will encourage entrepreneurs to collaborate and increase their chances of success.
“The purpose of dao5 is to test a novel methodology for bootstrapping a DAO,” stated founder Tekin Salimi, “by focusing first on talent and capital acquisition through venture investing, and then on building the treasury value through utilising the pooled skills of the dao5 community.”
For nearly four years, Salimi was a general partner at Polychain Capital, one of the largest crypto venture funds. His employment with the corporation came to an end in February.
Decentralized autonomous organisations proponents see this method of governance as a significant advancement in how organisations and systems should operate. The mandate of a DAO might be applied to any governance scheme that has a principal-agent problem. The Republic of the Marshall Islands, has taken a bold step toward legalising decentralised corporate governance by officially recognising DAOs as legal companies.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.