Former Polychain Capital general partner Tekin Salimi has launched a new blockchain-focused investment fund that will eventually evolve into a founder-owned decentralized autonomous organization (DAO), offering a new way to reward startup leaders for their contributions.
The $125 million fund, known simply as “dao5,” will invest in blockchain and cryptocurrency projects in their pre- and seed stages. In the startup world, a preliminary round usually helps the founders of a company get their business off the ground. The seed round is the first official round of equity financing.
The fund will invest primarily in projects focused on Tier 1 blockchain infrastructure, privacy technologies, decentralized finance (DeFi), DAOs, games, non-fungible tokens, and crypto-centric social platforms.
Unlike traditional venture capital funds, where company owners simply receive direct funding from venture capitalists, dao5 will provide grant recipients in the form of governance tokens that will make up the fund’s future DAO. Dao5 employees and advisors will also receive governance tokens.
The fund is expected to begin a formal transition to a DAO and therefore reach a proper level of decentralization around 2025.
Adhering to the DAO governance structure, dao5 attempts to provide project promoters with a certain degree of risk diversification, as all grant recipients will have access to all other projects in the portfolio. The company says this will encourage founders to collaborate and maximize their chances of success.
Will 2022 be the year of DeFi and DAO? @Huobi_Research predicts a big year for both, but much less optimistic for Bitcoin. https://t.co/wdeECLiS2J — Cointelegraph (@Cointelegraph) January 22, 2022
“The goal of dao5 is to explore a new model for launching a DAO: focusing firstly on attracting talent and capital through venture capital investment, and secondly on increasing the value of the treasury by leveraging the collective talent of the dao5 community,” said founder Tekin Salimi. .
Salimi has been the general partner of Polychain Capital – one of the largest cryptocurrency venture capital funds – for more than four years. His term with the company ended in February.
Related: Legal DAOs: Why is the Marshall Islands betting on a decentralized future?
The number of DAOs has increased over the past two years due to the potential to change the world through democracy. But are they a real alternative to traditional governance models? (via @CointelegraphZN) https://t.co/w0vdIh0c9n — Cointelegraph (@Cointelegraph) March 4, 2022
Proponents of decentralized autonomous organizations see this way of governing as an important innovation in how organizations and systems should work. DAO authority can be applied to all kinds of governance schemes where there is a principal-agent problem. As reported, the Republic of the Marshall Islands has taken a bold step in normalizing decentralized corporate governance by formally recognizing DAOs as legal entities.
