Crypto investment-focused DAOs have become the new arena for sourcing deals, meeting company founders and cutting checks – all functions that were typically done by well-heeled venture capitalists who prided themselves on their industry-insider status.
DAOs are blockchain-based organizations that are decentralized and unregulated in the traditional sense, often governed by a native crypto token.
In the past year, DAOs have sprung up with weed-like vigor, surpassing 1.6 million in membership in December, up 130-fold from just 13,000 members last January, according to DAO data provider DeepDAO.
Enter “investment DAOs,” which are collectives of crypto-enthused individuals capable of investing their personal capital or directing portions of the DAO’s treasury into early-stage crypto startups.
Membership in an investment-focused DAO involves an upfront buy-in in the form of the DAO’s governance token in exchange for access to private spaces – invite-only Discord chats, Telegram groups or in-person events – where deals can be sourced and checks written.
“Crypto has allowed micro VCs to really thrive, because the return on investment on blockchain projects can be in the thousands of percent,” said Michael Steinberg, founder of venture capital firm Reciprocal Ventures.
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