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Unbundling venture capital via DAOs

Service DAOs, Incubation DAOs, Investment DAOs

  • Enactment and regulation of equity crowdfunding (Jobs Act, 2012)
  • Cryptonative crowdfunding via token sales (2013)

Capital itself is abundant, valuable services are not.

Despite the abundance of capital flowing into the tech and crypto ecosystem, high-value services have remained scarce.

  • The lack of quality data on investors has led to a sales-first-oriented venture environment where investors are overpromising and under-delivering. Unlike service providers that are held to contractual obligations or even founders who are held to vesting schedules, investors are not held to the same standard despite only getting access to highly competitive funding rounds with their proposed value proposition.

The rise of investment DAOs (1st Generation)

The original hypothesis of the first investment DAOs (MetaCartel Ventures and the LAO) was that the aggregate network and expertise of 60–100 DAO members (builders & investors) was able to better assess and provide value add to projects than the typical venture fund that is run by 2–3 partners.

Investment DAO Landscape (Source: 1kx)

The rise of incubation DAOs (2nd Generation)

Incubation DAOs are communities that collectively help launch and spin out new products and projects — while taking a small cut of project ownership in exchange for the initial incubation provided.

Incubation DAO Landscape (Source: 1kx)

Next: Rise of Service DAOs — disrupting the unit economics of venture capital

While the DAOs mentioned so far have mostly only tangentially addressed the ecosystem need for high-value services, we believe that in order to evolve the venture landscape for founders, we need to assess venture capital from a services point of view as opposed to a purely financial function:

  • Projects pay in project ownership dilution
    (selling % of either their token supply or equity)
The unit economics of value add services for ownership dilution
  • A regulatory guidance service DAO that provided an equally as high quality of service in exchange for 1% of the token network
Service DAO Landscape: https://medium.com/1kxnetwork/service-daos-landscape-challenges-and-solutions-b1af1a212ea

Why DAOs?

35% of US employment is to establish trust (legal contracts, law enforcement, auditors), this is reflected in the administrative processes needed to set up and operate an equity company — it takes weeks as opposed to potentially minutes via a smart contract enabled organizational stack.

  • Solving the free-rider problem
    (DAOs need to figure out how to balance community ownership with individual participants to ensure that the most active contributors are rewarded for their work and have a long-term stake in the DAO while minimizing the effect of passive members)
  • Difficulty activating latent community talent
    (Even for DAOs with access to talent, getting the talent within the network to contribute is difficult. How can we create scalable coordination processes to produce high-quality output efficiently?)

A vision of a DAO native venture landscape

We are standing on the brink of a revolution in venture capital and want to accelerate the vision of a DAO native venture landscape.

  • Help various DAOs partner with one another to form joint ventures
  • Create a network of service DAOs to cross-pollinate operational insights
  • Help identify how service DAOs can work with projects of varying maturity from early-stage teams to large scale token managed treasuries

Helping early stage teams bootstrap token networks

  • Designing token models (distribution strategies, incentive programs, governance structures, value accrual loops)
  • Ecosystem building (launching or guiding go-to-market supply and demand DAOs, community coordination, contributor coordination, governance participation)
  • Bootstrapping infrastructure ecosystems (running validators, building open source infrastructure for portfolio projects, running liquidity provisioning and arbitrage bots)
  • @ koltenb (telegram) / @ 0xKolten (twitter)



At 1kx, we help exceptional founders bootstrap token networks. Our community focus is second to none, and we’re hands-on advisors to the creation, design and iteration of token models. We strive to help the best and brightest ideas in crypto & web3 achieve network success.

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