Ex-Polychain Capital General Partner Launches $125M Crypto Venture Fund
Nicholas Otieno Mar 24, 2022 07:35
The fund, dao5, will invest in early-stage protocols and blockchain firms.
Tekin Salimi, a former general partner of crypto venture giant Polychain Capital, announced on Wednesday that he has launched a $125 million fund called dao5 to help provide blockchain startups with early-stage funding.
The fund will invest in seed and pre-seed stage firms and projects across various verticals in the crypto industry, including the so-called “Layer 1” blockchain infrastructure, which supports networks like Ethereum and Solana, privacy tech, decentralized finance, DAOs themselves, NFTs and gaming. The average investment will range between $500,000 and $2 million.
Salimi disclosed that he later intends to convert the fund into a founder-owned decentralized autonomous organization (DAO). He expects that by 2025, the investment fund will eventually be transformed into a DAO to provide a new way to reward company owners for their contributions.
Salimi stated that by 2025, dao5 will become a fully founder-owned DAO, as he believes that it will take three years to fully invest the $125 million fund, about $40 million invested annually.
The fund will be dissolved once the entire $125 million is invested – dao5 will return the limited partnership capital to investors and convert the fund into a DAO, an online community that uses Web3 tools, cryptocurrency, and smart contracts to organize, incentivize participation, and share control among group members.
Salimi, who will manage the fund, revealed that investors are eager to participate and that the fund has already raised the $125 million funding in place.
According to the report, Ivan Soto-Wright, founder of Moonpay, Ben Fisch - a professor of computer science at Yale University, Do Kwon - founder of the Luna protocol, Emin Gün Sirer - founder of the Avalanche protocol, will all serve on dao5’s advisory board.
Unlike traditional venture capital funds, where company owners simply get direct funding from venture capitalists, dao5 will provide grants to recipients in the form of governance tokens that will make up the fund’s future DAO, Salimi said.
"It starts with this centralized venture investing model. But the end state of it is basically a collective of crypto founders that control a new treasury of assets." Salimi elaborated further.
DAOs Giving New Taste to Crypto Venture Capital
In 2021, investment in blockchain and crypto startups rose significantly and changed how venture capital funding is obtained in Web3 projects.
The emergence of Decentralized Autonomous Organizations (DAOs) is giving competition to traditional ventral capital firms. As a result, traditional VCs have to rethink how they help firms raise funds.
Following the surging interest in decentralized finance (DeFi) and non-fungible tokens (NFTs), the popularity of DAOs has significantly increased. In November last year as reported by Blockchain.News, ConstitutionDAO made a remarkable attempt to buy the U.S. Constitution.
Of late, DAOs are organizing to invest funds into crypto startup companies. The trend could potentially disrupt the traditional venture capital funding model that has financed a series of new technologies for generations.
Crypto investment-focused DAOs have become the new arena for meeting company founders, sourcing deals, and cutting checks. All these functions were normally done by traditional venture capitalists.
Crypto communities are emerging as DAOs – pooling their funds in DAO treasuries and enabling members to vote and decide how projects should be managed.
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