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 founders to be compensated for their contributions.
Significantly, the $125 million fund, dubbed “dao5”, will invest in pre-seed and seed-stage blockchain and cryptocurrency startups. Pre-seed financing is obtainable to help startup entrepreneurs get their operations up and running. The seed round is the company’s first official round of equity fundraising.
Moreover, the fund will focus on layer-1 blockchain infrastructure, privacy technologies, decentralised finance (DeFi), DAOs, gaming, nonfungible tokens, and crypto-focused social platforms.
Unlike traditional venture capital funds, dao5 will provide grantees with a gift of governance tokens that will become the fund’s future DAO. Governance tokens will likely distributed to dao5 employees and advisors.
Around 2025, the fund is projected to begin its formal transformation into a DAO, achieving a sufficient level of decentralisation.
DAO governance structure
Dao5 is attempting to provide project founders with risk diversification. By pursuing a DAO governance structure, as all grant recipients will likely exposed to all other projects in the portfolio. This, according to the corporation, will encourage creators to collaborate in order to increase their chances of success.
“The purpose of dao5 is to explore a novel strategy for bootstrapping a DAO. By focusing first on talent and capital acquisition through venture financing. And then on creating treasury value by using the collective talent of the dao5 community,” founder Tekin Salimi said.
For the past four years, Salimi has been a general partner at Polychain Capital, one of the largest crypto venture funds. However, in February, his contract with the company expired.
Decentralized autonomous organisations proponents see this kind of governance as a significant advancement in the way organisations and systems should operate. The mandate of a DAO might possibly applied to any governance scheme that has the principal-agent problem. The Marshall Islands has taken a big step toward standardising decentralised corporate governance. By officially recognising DAOs as legal companies, as previously reported.