Late in the summer of 2021, I wrote an original proposal for an idea called “NEW DAO”, a web3 native ecosystem fund that would be owned, run, and controlled by NEW INC members. The impetus behind the fund was that many NEW INC projects are not natural fits for traditional venture investment-- and that there could be interesting collective and codirected approaches to allocate capital towards member projects. This proposal also coincided with discussion within NEW INC about a desire to create an investment fund. Eventually, this “NEW DAO” proposal grew into an active group of individuals working to help build and shape the idea further.
Much of this original proposal is now obsolete, but I wanted to share it. You can read the original proposal here:
Here is another copy of the proposal below. 👇
A NEW INC member-led ecosystem venture and grant fund.
Squads value self-determination, not through individualism, but through collective maintenance and care for one another. Squads value creative expression, but celebrate the group rather than individual authorship. For the squad, the autonomous is always collective.
NEW INC has considered creating a venture fund to support member projects. Yet, the creation of a NEW INC fund is a challenge due to legal constraints of New Museum's 501c3 status as well as the overhead of administration, management, and diligence.
Many NEW INC projects could benefit from funding, but are overlooked by investors seeking venture scale and outsized financial returns. In addition, less than 3% of venture funding goes to women-led organizations, as well as only 3% of venture deal flow to Black-founded organizations.
This proposal is for an ecosystem fund, potentially formed as a crypto-native DAO (decentralized autonomous organization), that is collectively owned and managed by NEW INC members & community. Members pool resources, source outside investment, as well as collectively diligence, propose, and vote on investments.
We plan to pool resources together, and democratically choose how to distribute them. The core thesis will be determined by membership, allowing for a thesis that flexibly allows for investing in projects with many forms of returns: financial, social, cultural, or public goods.
The fund will seek to:
The NEW INC community is uniquely equipped and positioned for building a successful and collectively managed fund.
Talented Member & Alumni Community: We are a diverse collection of artists, designers, technologists, community organizers, and business builders.
Trust & Reputation: NEW INC and New Museum are established and respected brands and institutions.
Supportive Network: A collectively managed fund could benefit from the support of NEW INC's impressive network of mentors.
Financial capital: There is already a strong desire to financially support NEW INC projects from the incubator's network of foundations, benefactors, impact and cultural investors.
NEW INC is the world's first museum-led incubator, and could also help support the world's first member-led incubator fund. This initiative could support NEW INC's commitment to new art and new ideas — as well as cross collaboration between NEW INC member projects.
A unique, collectively managed fund structure could allow for a venture fund that defines success outside of purely financialized returns — focusing on cultural and social returns as well.
A collective fund could support projects in many ways, not limited to:
NEW DAO would be totally separate entity that is independent from NEW INC, initially consisting of a membership base of individuals within the NEW INC ecosystem. The fund would be collectively owned, managed, and operated independent of NEW INC, New Museum.
Membership will initially be limited to those within the NEW INC ecosystem, but could eventually expand dependent on the democratic will of NEW DAO's members.
DAOs enforce trust and allow for the coordination of both humans and capital. When stripped down, a DAO is simply a set of smart contracts which allow people to pool capital, vote on how to allocate that capital, and leave with their pro-rata share of that capital if they so wish.
Traditionally, venture funds require a hierarchy of individuals where money and decision making power are concentrated, leaving deal flow and subjective investment decisions to few people.
Essentially, structuring a fund as a DAO helps codify collective decision making power and collective governance — and creating easy ways for members to join and leave the organization.
The proposed fund's goal is to facilitate a DAO with a focus on open participation where its members are enabled to have radical level of flexibility in their continued involvement, all while having a right to participate in the management of the DAO (investment decisions, asset management, membership admissions).
A community owned and operated economy
Radical transparency & p2p accounting
Ability to invest in (and hold) crypto-native assets like social tokens & NFTs
Web3.0 is the future of community
A distributed autonomous organisation (DAO) is a cryptonative and remote-first way for people to coordinate funding, labor, time and social capital. The governance of DAOs are distributed, with all funds and assets managed on-chain via smart contracts. There’s no board of directors, nor is there central control of the organisation. They coordinate components of the soft human-facing layer of crypto: money, social capital, reputation and attention. They give power to individuals upon crowd consensus, and are inherently a political tool. — MetaCartel Ventures WhitePaper
A Protocol Economy is the boss-level phase for creator-focused protocols. But it's also the phase that's radically different from existing platforms. As creators and communities become key contributors to protocol economies, I believe crypto will go from looking like a toy to being recognized as the generation defining movement that it has the potential to be.
A venture fund that is collectively-run and codetermined by members could be a novel way for equity and wealth building within the NEW INC ecosystem. Here's how we can run an ecosystem venture and grant fund, together.
Although this proposed fund's fundraising and asset management may happen on-chain, many of its decisions can be coordinated through social consensus, using "off-chain" communication channels such as group chats, video meetings, and in-person meetings. These interactions help the members develop and evaluate ideas, initiatives and values together long before they are submitted as formal proposals to a vote of the members. Every member of the fund will be expected to take an active community role in remaining fully informed about the fund's developments and progress.
As such, all members are recognised as managing members of the LLC and will have full economic, informational and governance rights in the LLC. Within the DAO, there are three main recognised categories of membership, which a DAO member may fall in and out of depending on the member's level of activity at a given time:
Each member class can have rules that define:
NEW INC Members + Alumni + Staff + Mentors could be a member class that should be considered to be actively participating in the fund's shared management efforts, including activities such as sourcing investment opportunities, conducting deal due diligence and managing the fund's assets. This group would maintain a level of expected managerial responsibilities, these members would not need to be "accredited investors" under applicable securities laws.
ex. minimum financial contribution: 1,000 DAI
ex. voting shares per person: 2
Outside Backers & Benefactors are members that may choose not to exercise such rights and powers to the same extent as NEW INC Members + Alumni do, despite legally having all the same managerial rights and powers under the LLC operating agreement. Although Outside Backers & Benefactors may still be expelled from the DAO at any time, there is no expectation that they will be expelled for inactivity and lack of participation. For legal reasons, this membership group must be deemed as ("accredited investors").
ex. minimum financial contribution: 15,000 DAI
ex. voting shares per person: 1
When joining, each member of the dao will receive both "voting shares" & "loot". Voting shares represents the voting power of each individual, while the financial upside and share of the guild bank is determined pro rata by the amount of "loot". The "loot" number can be proportional to the amount of money contributed to the guild bank.
"Loot" can also be awarded to members for non financial labor inputs (through proposals) as well.
This allows individuals to not have outsized decision making power, but also to allow those with higher contributions to have higher upside.
Example Member Shares & "Loot"
Any member can create a proposal.
When voting on a proposal, voting power is determined by each individuals # of voting shares. This way, outside limited partners and accredited investors could still have a seat at the table, but NEW INC members could still have a larger share of the decision making process.
Any member can "rage quit" at any time. This is a function of the Moloch DAO v2 smart contract.
This can be when a member either disagrees with the action or direction of the collective, or if a member simply wants to exit with their share of the guild bank. Leaving (rage quitting) the organization is easy and permissionless. When this happens, the member that is leaving automatically receives their proportional share of the guild bank determined by their pro rata share of "loot".
Using the Moloch DAO v2 framework, the following proposals could be made by any voting member:
Add new member: Existing members can introduce a proposal to bring in a new member.
Investment Proposals: Members can propose a new investment
Proposed payments to service providers: Approval for retainers/ costs etc.
Rage Quit: Members can leave the unilaterally (in a permission-less way) leave the organization
Guild Kick: Members can be expelled from the organization
There are other proposals that may require a higher threshold than a simple majority, like any proposal to amend the LLC operating agreement, sell more than 50% of the fund's investment assets to a third party, merge the fund as an LLC with or into another business entity, acquire a majority of the assets or securities of another business entity / organization or commence or participate in any legal proceeding.
By allowing members of each class to have equal voting rights (irrespective of financial input), the fund can be consistent with cooperative principles.
Specifically, the fund could be ideologically consistent with the idea of a "DisCO", or a distributed cooperative organization.
Open-value cooperatives apply the logic of feminist economists like Marilyn Waring, to account for the care work vital to human prosperity and survival. They also acknowledge the value
of intersectional approaches, currently ignored through the misleading narratives of
our harmful economic systems.
From the The Commons Transition Primer:
"The principles of Commons-Based Peer Production, applied through Distributed Manufacturing and Open Cooperativism, offer a glimpse of an economy that could be and is worth working towards. While we cannot confidently predict what a wider, generative P2P economy would look like, we suggest that it will be characterized by:
There are clear, well documented, and open source precedents for legal and organizational references for this proposal. One of the best examples is Meta Cartel Ventures, which has extensive documentation. This includes:
Our DAO is made up of a code and law pairing; with our business LLC entity being tightly coupled with its smart contracts and token technology deployed on the Ethereum main-net. The technology half will consist of an instance of the Moloch v2 smart contract standard and the legal half consisting a member-managed Delaware limited liability company governed primarily by the Grimoire (the “Limited Liability Company Agreement”) and the statutes of the Delaware Limited Liability Company Act. - Meta Cartel Ventures
The Moloch DAO v2 is a way for people to collectively pool resources, democratically determine how to allocate them, and allows a flexible way for members to leave at any time. Information on this framework can be found through some of the following resources:
a Public Benefit Corporation or LLC operating agreement can constitute a pact among fund's members. Meanwhile, the Delaware Limited Liability Company Act prescribes meta-rules about how that pact should be written and interpreted.
Through the LLC, the fund will be able to enter into legal contracts and engage in investment opportunities without the risk of individual personal liability beyond the capital in the DAO. It will also allow registered legal entities to participate in the fund's membership as well as the issuance of securities to the DAO.
Admission of members under the LLC operating agreement can tie into the on-chain mechanics of the MolochDAO implementation. Once a membership proposal for an individual is approved on-chain, the individual will become a DAO member and receive the proposed number of voting shares. Each DAO voting share represents a percentage membership interest in the LLC. Potential members will also be asked to complete certain legal formalities either in advance of the proposal or after it is approved, including electronically signing the LLC operating agreement or a Joinder Agreement.
The DAOhaus platform provides an interface for creating an investment DAO using the Moloch v2 framework. This makes it relatively easy, on the tech side, for NEW INC members to summon their own DAO.
The core ethos of DAOhaus is to create a truly self-sustainable protocol with integrity at heart. Community should always be prioritized over capital.
New members are voted in with a proposal for existing members.
New members deposit a contribution into the fund's Guild Bank, a collective pool of crypto assets.
Each voting member can create a proposal.
After each proposal, there is a 7 day voting period.
There is a 3 day grace period after any vote. This time allows anyone who strongly disagrees with a collective decision and would like to leave to be able to rage quit with their pro rata share of the guild bank.
Instead of the rigid departments or hierarchies you might find in a traditional venture fund, we can operate on a flexible model of circles, groups of people which take responsibility for different aspects of NEW DAO. People can belong to more than one, and there should be no entry requirements.
Non-financial contributions can be measured, recognized, and rewarded by the fund. One way that these can be recognized is through a collective time banking system.
Then, proposals could be created to compensate the time of those working on the fund. This could be done by either a proposal to provide a grant to an individual, or a proposal to increase the amount of "loot tokens" per member, thereby increasing the members financial stake in the fund.
Ampled has created a template for a simple time banking system that could work for the group.
Example Time Bank