Venture DAOs and VCs: a match made in heaven

As crypto fever sweeps over global venture capital, some VC firms are taking a deeper plunge.

In March, US-based Bessemer Venture Partners announced that it was launching BessemerDAO, a Web3 community that offers additional portfolio services “in a decentralized manner.”

Image credit: Timmy Loen

Bessemer isn’t the first to reimagine venture funding in the Web 3.0 era. Stacker Ventures, another US-based VC firm, also ditched the old playbook when it remade itself into a decentralized autonomous organization (DAO) in early 2021.

Both BessemerDAO and Stacker Ventures are a nod to the growing influence of venture DAOs like MetaCartel and Global Coin Research, where investment decisions and assets are managed by all members of the organization instead of just by a small team of professionals.

No Southeast Asian VC has followed suit yet, but some that Tech in Asia spoke to are already members of various venture DAOs and communities focused on non-fungible tokens or NFTs.

Are venture DAOs the next stage for venture capital? These new entities can surpass traditional VCs in some respects, but instead of locking horns, they might make inseparable bedfellows instead.

Bigger, better, faster, stronger?

To be clear, venture DAOs have several advantages over traditional VC firms.

Raising funds from venture DAOs, for example, often comes with lower requirements.

“Startups often need only post a white paper or pitch on Discord to raise funds,” says Katherine Ng of TZ APAC. With smart contracts doing most of the heavy lifting, this often cuts the fundraising process from a few months to a week.

“There’s no need for multiple stages too, since everything works via smart contracts,” says Ng, who is the marketing and operations head at the Singapore-based Tezos blockchain adoption entity.

Most VCs take “well over” 12 months to raise funds internally and need an average of three to six months to close a deal, according to executive Adrian Chng. He is the founder and chairman of Fintonia Group, an entrepreneurial financial services firm based in Singapore.

In contrast, FlamingoDAO, which was formed in October 2020, had already secured US$10 million in pooled funds and acquired nearly 600 to 700 NFTs by April 2021. While that’s not an apples-to-apples comparison, it does indicates how fast venture DAOs can move.

Risks abound

Stronger together