A DAO designed to build dApps on Ethereum is now creating a decentralized venture capital fund

DAO, a fork of Moloch DAO, was started in 2019 with the goal to help create value around the Ethereum application layer. It was built around a similar model of aggregating capital from stakeholders with a vested interest in the stated goal of the organization and then deploying the funds where they see fit. While it was able to raise over 1,000 ETH, the sustainability of the model came into question as those funding the initiatives could not participate in the upside.

Recently, the team announced MetaCartel Ventures (MCV), a for-profit DAO designed with a legal entity known as “Grimoire” to make investments and benefit from their success. Participation in the DAO constitutes equity interest in the LLC and all members can engage in sourcing, diligencing and voting on investments. In order to join, an existing member must be submit a proposal on the prospective members behalf which is then voted on. Similar its non-profit DAO predecessors, members can leave at any time and receive their pro-rata share of the funds in the form of liquid tokens such as ETH or DAI, or claims on the same percentage of existing revenue-generating DAO assets.

Why it matters:

• The original DAO had ambitious goals to decentralize venture capital and generated a lot of interest raising $150 million. A poorly designed smart contract led to its demise and along with it the abandonment of the idea altogether. However, many are still eager to see the idea come to fruition and are betting on its abilities to provide superior returns to the legacy hierarchical model of venture capital. Efforts such as MCV and the (new) DAO will give us an opportunity for the decentralized VC model to take shape and test if it can, in fact, be a superior model of coordination.
• We wrote about this in our Crypto Theses for 2020, but DAOs for managing public goods is a less sustainable model then for-profit because eventually those contributing capital will want to take part in the financial upside while still contributing to the growth of the industry. We expect more DAOs to create these legal hybrids in order to offer capital providers this benefit otherwise they likely run out of funds.
  
  

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