Collaborative Raising With VC DAOs

The concept of venture capital has existed for decades, but a new method of raising funds for startups and businesses is gaining traction: venture DAOs. 

With a host of viable options such as MetaCartel Ventures, Orange, MH Ventures and the LAO, we’ll be digging into how VC DAOs work and some of the successful examples out there.

Venture DAOs are communities of investors who collaborate on investment decisions and support the growth of the projects they invest in. Unlike traditional venture firms, venture DAOs allow a broader range of people to participate in the investment process, and they can support investments in a variety of entities beyond just companies. 

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Types of Venture DAOs 

Venture DAOs can support investments in creators, real estate, NFTs, and virtually any other asset. For example, a venture DAO can invest in creators to help them purchase better equipment, grow their teams, or pay for promotions. In return, the DAO earns a percentage of each creator’s earnings. Similarly, a venture DAO can invest in a collection of virtual assets, including digital land and art, and earn rent or capital gains on their sales. 

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How Traditional Venture Firms Work 

Traditional venture capital firms have four main stakeholders: 

• Limited Partners and Venture Capital Firms: Provide funds to venture capital firms, which invest the money at their discretion, typically based on industry focus and published theses. 
• Scouts identify investment opportunities and earn a share of the profits the VC firm generates from those investments. 
• Portfolio companies are the businesses backed by the VC firm, and each typically has a unique relationship with the firm. 

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How Venture DAOs Work 

Venture DAOs differ from traditional venture firms in several ways. First, venture DAOs have shared upside, meaning that all members can benefit from the success of investments, not just the partners of the VC firm. 

Second, venture DAOs unite stakeholders, allowing them to engage in the investment decision-making process rather than being siloed from one another. 

Third, venture DAOs allow members to find potential investments and contribute to due diligence efforts. Finally, venture DAOs can provide portfolio support to a broader collection of community members, formal or informal. 

So what are the leading lights in the space for VC DAOs? 

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300 DAO

300 DAO is a select group of 300 investors, who have undergone scrupulous vetting according to the team and are dedicated to fostering the growth and progress of the Web3 ecosystem. 

This group works in tandem with MH Ventures and partner VC firms to secure exclusive deals that further this objective. The mission of this collective, known as the 300 DAO, is aligned with that of MH Ventures - to invest in emerging technologies and individuals who will shape the future. 

In pursuit of their shared goal, the 300 DAO collaborates with renowned funds such as Coinbase Ventures, Sequoia, Orange Dao, Y Combinator, Polychain, Binance Labs, among others, to invest in pre-seed and seed funding stages.

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Orange‍ 

Orange is a purpose-driven organization that strives to expand the web3 ecosystem by attracting more founders, builders, and users to the space. This is achieved through three primary initiatives. 

Firstly, Orange powers the Orange Fund, which invests in promising ventures that align with its mission. Secondly, the organization provides comprehensive support to its portfolio companies, including assistance with hiring, networking, and mentorship. Lastly, Orange is committed to building public goods, such as its NFT onboarding software, that will benefit the entire web3 community.

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MetaCartel Ventures

The MetaCartel community established this venture to invest in decentralized applications (DApps) in their early stages. The decision-making process of this initiative is governed by its members, referred to as "Mages," who are responsible for identifying, evaluating, suggesting, and voting on investment opportunities. 

Membership in the DAO is restricted and monitored by existing members, who have the authority to grant access to new entrants.

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The LAO

The LAO is a worldwide community of Ethereum enthusiasts and experts that provides support to Ethereum builders. This organization is fully managed and directed by its members, who are responsible for evaluating investment opportunities. 

The LAO accepts applications for funding from any blockchain-based project that meets its criteria. As a result, the organization serves as a valuable resource for emerging ventures seeking to establish themselves in the Ethereum ecosystem.

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Final Word on Venture DAOs

Venture DAOs represent a new way to raise funds and invest in a variety of entities beyond just companies. They offer shared upside and unite stakeholders, allowing for greater collaboration in the investment decision-making process. 

Venture DAOs can provide support throughout the investment cycle, from deal flow to portfolio management. As venture DAOs continue to gain popularity, it's essential for them to understand and comply with securities laws to avoid legal issues.