Why PathLabs ? —Incubator & Innovation engine to build the next big thing
The biggest question we ask ourselves every day is:
What is the highest leverage thing we can do to increase the DAO’s treasury?
We started off with private and seed round investments, knowing that this is where we can generate the highest expected value (EV) of returns in a bull market. However, two major obstacles emerged when macro sentiments turned bearish. Firstly, when projects went public with tokens, there was no public bidding power, resulting in many promising projects dipping below seed rounds.
Secondly, there were projects that did not align value accrual to investors, but rather to their own founding team (e.g., revenue from sales of NFTs benefitting gaming studios without returns being channeled to seed investors). This made us question if there is a better way to deploy capital.
Furthermore, we see a plethora of opportunities around us today, waiting to be tapped and applied within the gaming community space — from unique applications of web3 into consumer apps, to AI, to fintech. We live in a convergence of zeitgeist, and it would be a folly not to capitalize on these waves.
What if we can build a creative space to nurture frontier-defining concepts and ultimately accrue value to PATH?
PATH has always been on the search for projects that can be categorically defining. It’s about time for us to leverage the skillset of DAO contributors, community, and treasury to publish highly innovative projects of our own.
When we do so, we unlock a new growth lever for our DAO because of:
- Full value alignment :
By incubating the projects, PATH would own a significant stake in them. This would ensure that the value accrual of projects would lead back to PATH. Also, when these projects grow in valuation, so will PATH’s stake in them, and thus PATH’s treasury value.
- Synergy between backed projects :
A key criterion in selecting projects to incubate would be whether they generate positive value for our ecosystem and for each other. For example, one project could be targeting gaming communities from a financial standpoint, while another could focus on tooling. Synergy here lies in the go-to-market strategy, as a good relationship with one community benefits both projects.
- Sharing of skilled resources :
Each incubated project is not built in isolation. Learnings and lessons from one project will be shared with others, increasing the likelihood of success over time. Additionally, at an early stage, sharing software devs and web3 dev resources will significantly reduce the overhead costs at the genesis of these ventures.
- Agility of capital and risk management :
In many seed project investments, if a venture fails, the capital deployed is fully lost. By incubating ventures, if the venture fails, remaining capital can be easily refunded to the DAO and reallocated to other projects. Moreover, by being a close part of their growth journey, we can see red flags early and reduce capital and resource risk where needed.
Our incubation model aims to be capital-light until traction is proven, with the main support coming through shared talents.
The capital support for each incubation will be provided in tranches, starting from $10k and increasing progressively up to $200k for projects with proven traction. Each project can tap into PATH’s core contributor pool of software devs, web3 devs, and product owners. Over time, each project is expected to set up its founding team and raise individual capital to stand on its own feet.
We are excited to build the next big thing together.
Opportunities are aplenty, and talent is generally the bottleneck. If you are a passionate member of the DAO and have a groundbreaking project you want to build in the PATH ecosystem, please reach out. We will dive into the first cohort of our incubations in the next Medium articles to present their bullish case and why we are excited about the future.
