Venture 3.0 for Web 3.0

Transcript

hi everyone uh i hope you're not too tired unfortunately i lost my voice so you will not hear too much from me but maybe that's good um let's start with a show of hands quick question who here in the audience is not an a16z partner yes two people are not so the thesis of this or the core idea of this panel is ventures 3.0 as a paradigm shift led by daos for the venture space you could look at firms like anderson horowitz a6 and z as venture 2.0 with services model and i think all of us we

believe that dows have really huge implications for for the vc world and we'll talk about it so instead of a normal intro i wanted to ask each of you in this order to tell us about your most magical crypto experience in the last year hi everyone for those of you i haven't met i'm julia my most magical crypto experience this year was probably running my first mirror crowd fund campaign and i remember the feeling of going to bed the night after i published the mirror post and waking up and realizing people had funded a project to help educate people about dao's for like 18 eth

which was just incredibly magical because i didn't know if anyone even cared about the subject let alone for the internet to work its magic and find a group of people who wanted to fund the same project and collaborate on the same project i think it's close should be a bit closer i think hi everyone yeah okay this is mona um my magical moment i think was just kind of we've been a we've been a d5 protocol in the space for nearly five years now i think we were the first d5 protocol in history to decentralize

and become a dao and you know we've kind of shared a lot of frustrations over the tooling around daos you know the time it takes to contribute to the work that a dow needs to do because of the fragmentation in the dow tooling space and my magical moment over the last few months has been stop complaining and start building and maybe start contributing to some of the tooling so that's something that was actually a really uh magical moment for me and something that i'm really excited about contributing towards going forward can you tell us which tools you're

contributing to so yeah our kind of journey we've jumped around you know from different tools and at the moment uh we're using gnosis safe to interact with contracts so at a protocol level uh we're using enzyme to manage our treasury and then we are the tooling that we want to build on top of that is a link to how to make those processes and interactions much more seamless and how to get top-down fully fledged reporting so that somebody which is like often has been me you know

kind of doing this manual tiresome work of uh you know accounting for every single transaction the dao has ever made in a spreadsheet because like we are in the 21st century in web 3 we shouldn't be doing that and basically being to automate all of that stuff and make it really easy seamless experience for people mainly so that dow participation should be easy because if it's not then we've failed and then we're not going to be decentralized and only like a few people who have the time and who have enough at stake to participate are going to participate thank you thank you i do remember melon

protocol was one of the first uh defier or kind of defined out projects that you kind of dissolved your first entity and then you you doubt before dials were cool yeah thanks for reminding for enzyme for those of you who don't know was a rebrand of melon protocol and yeah we we we dissolved the company behind melon which was melonport in 2019 so two and a half years ago and handed over to ada which was originally running on aragon and later migrated to gnosis safe thank you and [Music] hello everyone my name is mansi vora

my most magical moment essentially was launching this dao called komoribi dao where it's an investment out to invest in female funded female founded companies and when we launched it a lot of people were skeptical in terms of oh you're not going to see a lot of deal flow there aren't enough female founders in this space and i'm happy to say that we've broken that myth in the last three months since we launched we had over 50 female founder companies come to us and we've had a really strong deal close so i think that's been super magical to see yeah actually mine is the other side of yours i think one of my most magical

crypto moments was waking up at 1 40 8 a.m to 8.98 into your mirror camping and that was the start of our friendship kind of so moving on to the next topic uh this idea actually came from we were talking with julia last night about like what are some of the differences with like venture downs dows that are investment dials and normal vc firms one of the core issues is value accrual who actually has ownership it's quite interesting that we have vcs and investors in this space to talk about ownership but then the entity that's deploying into this ownership economy is quite

centrally owned that's kind of crazy so what do you think about that i mean obviously i think this is kind of crazy that there are entire vc funds investing in the ownership economy and refuse to share ownership of their carry but i think one of the big differences as we talk about decentralizing vcs is what goes into building a bc fund if you think about all the things that a vc fund has to be exceptional at you have to be able to find the right founders diligence the right founders pick winners and then go on to support those companies and the way traditional vc funds work today is all of the value accrues mostly to the general partners and then

their lps but if you think about those four functions often it's the community that's supporting them in that it's their friend sending them deals it's their friends doing favors to support their portfolio companies but none of those people who are creating all that value share in any of the upside today and so as we start thinking about decentralizing a vc i think you will start to see the value creation the value capture and the value distribution align yeah and i think you know it just it also goes beyond that where traditionally in vcs the returns that they've enjoyed over

the last few decades have been captured just by a core group of privileged people who had access to being a vc who had access to this team flow and now with just this i guess like rise of dows that we've seen uh that barrier to entry has been lowered where you know anyone can enjoy these returns be a member of an investment dial and really in the true sense empower the community to own these returns you have any thoughts yeah i think i'll comment a little bit more on um the more liquid fun space because that's

where we have um more expertise but i think that um basically the the web 3.0 version of a venture fund or a fund just like you know julian manse dramatically reduces the barriers to entry costs to setting up a fund in traditional finance are like crazy i think it's like a hundred thousand dollars that's just the money forget about the headaches i mean that's what like three to six months of headaches and trying to figure out you know the space is so fragmented um you need so many different service providers and at this point you can basically now have a trustless relationship in liquid asset management between the manager and the investors

without any trust required which also means you can start to imagine things like anonymous fund managers as well which is which is really exciting yeah thank you to kind of summarize the thoughts here i think what's happening with the adventure dows is it's not just that the gps are kind of being decentralized it's also the lps so it's like one of those magical moments where we have like double 10x is it does it count as 100x improvement so so you have instead of just two gps you have 20 30 members who are earning a little bit of carry and then the funding is also coming from many small investors which makes it more accessible

oh you can't hear me yeah we have some issues with acoustics here okay okay i need to face face you maybe okay okay we'll change seats apologies i hope tomorrow we fix the acoustic situation so uh kind of related to this point um how do you see the kind of team formation for these venture dials like you're one of them right uh how does how do you compare this to existing established vc firms and and tell us about your experience the good bad ugly everything

yeah um so it goes back to the point i was making where you know uh the current tao members that we have traditionally would not be able to invest in crypto companies um there and then the process uh was super simple if we were to go the vc'd out it would have taken us months to set it up it would have taken us i don't know how many thousands of dollars and we were able to do end-to-end everything within a week from you know figuring out what our mission is to identifying who the dow members are to raising fun and starting and just like launching this down and i think that's just possible

in in this model as opposed to the traditional vc model and i think the bigger advantage with taos and our investment does is the collective intelligence whereas in a vc fund it's you know a couple people making decisions in the dao model you can really leverage the knowledge of the community so far you know in our example we have investors we have founders we have some really amazing builders in the space who are members of this dao who we can truly leverage not just you know to find deals but also from a portfolio support perspective we can tap into this amazing pool of individuals to really help the companies that we are investing in so

it's not just about capital it's also about support and services and this all sounds great but if i understand correctly none of the kind of core team members are hired full time is that the challenge definitely definitely i think that's a challenge across the house doesn't matter when shadow or not is how do you engage your community and how do you engage your contributors and i think there is a role for incentivization here where you know if people contribute can we drop nfts can we you know pay them in tokens and i think that's something that we still are figuring it out is to how do we really encourage everyone to contribute meaningfully and not just be

a part of the multisig and sign transactions once in a while and i think what's interesting about this model is also that lps instead of committing for like 10 years to two people most of the times two dudes they have access to like a huge pool of talent who could come in and out so i think maybe you in two years you start your own firm but someone else in the meantime kind of starts growing into this role that you have now and i think that that's also really interesting one of the factors that i i don't think it's being pitched to lps at least traditional llps that you don't have to trust like getting into a marriage for 10 years with kind of no way of getting out of it

you're locked in for 10 years now instead you have a kind of huge talent who that every year you can kind of promote the most active members whoever is more most up to date with the space any thoughts from you julia because i think you're also thinking about starting a like a dow native fund well i think one of the challenges that we're running into because we started to decentralize our web 2 fund and obviously this works way better in web3 but one of the things that we've run into is we have such a large community that's really really helpful but the operations is challenging so figuring out how do you run this in a decentralized way that's

efficient and super supportive so you can be both making good investment decisions but also making sure that you're being super super helpful with your portfolio companies and so in our case we make thousands of intros to help our portfolio companies a year and the more the network effects spread the harder and harder it is to keep up with and so i think one of the big challenges that will face these investment dows as we scale is how do you operationalize the things that it takes to be meaningfully helpful and deliver on the promise of collectively investing in supporting companies

i i just because i think mansay and julia covered basically most of the challenges but i'll just add to what julia said with investment dao are not the or the challenges that you guys have just described they're not that dissimilar from the challenges we've faced as a protocol dao and i think that that's exactly why we've decided okay we need to actually like start contributing towards fixing this problem because as we grow and as we scale it's just not sustainable to keep you know ignoring operations and actually you need automated tooling that can make

people you know perform better and that can basically like push everyone to the things towards the things they're good at and not um bogging them down in you know you know hours and hours of admin and operation so like the the tools we're working towards hopefully should help alleviate some of these challenges i don't know if you've seen this but someone tweeted that in i don't know 10 years five years community managers community builders are going to be the highest paying jobs and i think exactly because of this that you don't have just like two five ten lps that maybe you send them a quarterly update you probably have 50 100 active

contributors venture contributors and to just deal with so much like relationships you need community managers like people like myself who are transitioning from community building site to venture but doing it in like a web stream native community first approach um so talking about barriers to entry i also wanted to share a few words about what i've been working on with c club ventures but generally i wanted to hear your thoughts about like mona you already talked about like automation and unchained hedge funds reducing the cost how are using the barriers entry being reduced in like webtree native funds i know we could

also yolo a fund just a multi-stick but we're on stage hello scc so i think let's talk about compliant legal ways that funds are being formed in a web's renegade way but still lowering the barriers i feel like you've done the most leg work on this okay in maybe the question okay i'll just face this way yes let me answer it so um one of the most interesting things with uh native funds is that they're being formed kind of as joint ventures or investment clubs and this heavily reduces the risk

because lps are not just passively trusting two three people for ten years they're supposed to be involved so and i think it's quite sensible from regulators at least for now we're kind of in this gray area that the requirements for auditing and reporting and registrations are much lower for example the the path that we're exploring it's one tenth the cost in cayman islands to set up an investment fund versus an investment club so i think that makes a ton of sense uh the other one is this idea of rage quit it's not practical in illiquid assets

but it's more applicable i think to what mona you're doing so that's another one that instead of kind of needing like laws and regulations and like tons of like you know shareholder agreements whenever you don't vibe with the group you have the option to opt out and i think that's really powerful so what i hope to see is that the investment club regulations in u.s canada europe not much but cayman islands they actually embraced this now we're just like being creative and using this kind of loophole to create weaponry native funds but i think in future we will see potentially at least in cayman islands they're really

forward thinking about this specific dow fund uh regulations uh in bvi and cayman there they have this like incubator fund that's for early stage funds so i wouldn't be surprised if they do the same for dallas and that would be amazing but you guys also have experience in us with setting up a non-traditional fund right yeah i think i've seen a range from you know there are doubts if you ask them what's your legal structure they're like we don't need one we are decentralized to the other extreme where you know dows have incorporated like a traditional vc uh what we've done is essentially incorporated as an llc and each top member is in

is a partner in that llc and our investment decision making process we really made sure that it's distributed or decentralized so there is there is a group of us that do the core work which is you know finding deals connecting with founders having pitch pitch meetings doing their due diligence but we take all of that and write up an investment memo pretty like standard and then it goes to the dow forwarding um and the dow makes the decision whether they want to invest in a particular company or not and so this is really interesting but i think the challenge with

hoping that everyone votes on everything is that most people will not do anything for most of the investment decisions so what we're doing with our investment club structure is that certain sub-dials have a mandate members vote on that and then they have autonomy within the constraints of that mandate they're kind of like layer two so we have like ethereum as layer one it's kind of slow but high trust high security and then you have these smaller sub-dials on potentially syndicate that house different platforms that are experts in one thing so i think i hope the future is not like one uh

firm i'm not gonna name names one firm hiring everyone is that it's these are these dowels of dowels that have thousands of sub-dials with their own focus and they make investments in a decentralized way but while having ownership and incentives for their own share of the pie and then still maintaining ownership in kind of the layer one fund i think that would be beautiful we're working on it hopefully everyone can adopt it so a little bit changing topic i think what's interesting is that the implications of dao's for the venture space is not just technical or financial it's also around diversity we were talking last night one

of the most interesting i think you mentioned that could be your magical moment with like anons yeah so do you want to talk about that so basically the question is like what's the and what are the implications of uh ventures 3.0 or like dowels as investment vehicles for diversity and crypto and generally tech and venture yeah i think one of the things that's most interesting about people being anonymous right now is gender isn't a thing and diversity is a different thing i think we'll still end up having groups bifurcate whether it's like crypto punks versus board apes

i think we'll still find that humans unfortunately end up forming clans but what it does do is it gives an equal playing field for groups that have been traditionally discriminated against and so i've invested in some anonymous founders i've never met them i don't know if they're male or female i'm in their discords i'm in their communities i love what they build and it is totally irrelevant to me as an investor who they are in terms of like skin color age gender and i think that is incredibly powerful to level the playing field i love that i think you know when we talk about diversity we immediately talk

about gender but it goes beyond that it's you know race age even just backgrounds having different opinions um and that's super important as we are building like the future of you know internet but how we are thinking about diversity is right now if you look at uh venture funding only 2.3 of venture funding goes to female founder companies that's ridiculous and there is data out there there's research out there that female founder companies do better on many different metrics they exist exit faster than female male founded companies um so there is you know it just makes financial sense but still

not a lot of female-funded companies get funded and i think one of the key reasons is because more than 65 percent of vc funds right now don't have a single female check writer and i think those two stats are related where we see a female vc is 2x more likely to fund a female father companies so with komar abi our mission is to not just change like the founding landscape in crypto we also want to change the funding landscape where we enable more women to angel invest to invest in companies um and i think you know at right now we are doing a good job we have more than like 70 of our dao is female so we are trying to

disrupt like both sides the vc side but also like the founders side i want to also ask mona how like you are contributing to this because because everything's kind of unchained and the barrier to entry is so low you don't need to have an existing network you set up a fund instead of a fantasy fund you can tell us more about yeah i think it's a really interesting angle um you know we from day one we've been building enzyme in such a way that investors in a fund or in any kind of investment product investment dow or venture fund or whatever can have a

trustless relationship with the manager which also means the manager could be anonymous and i think um that's very powerful because in traditional finance you would never get anonymous managers and the reason for that is because if there are so many risks when you invest in in in web 2.0 you know misappropriation of funds you know madoff is a great example um and so you know what we're what we're building on web3 is so exciting because it means that the numbers speak for themselves the performance speaks for themselves it's all provable auditable unchained

um and actually you can have this trustless relationship with another person whilst investing if you use a protocol like enzyme and we've from day one put a lot of thought and effort in how to enforce that kind of relationship through smart contracts thank you so to summarize we talked about ventures 3.0 as a new paradigm led by investment dials for web 3.0 i hope that more firms will adopt this model and i hope to see hundreds of more adventure dows come to life in the next couple of years we're almost out of time

i wish we could have time for questions but you could post your questions on twitter all happily and all of us we're happy to interact on twitter comments instead of here with these like amazing acoustics so uh thanks for listening and hope you have a great evening thanks aaron thank you for having us thank you thank you [Applause]