Tekin Salimi, a former general partner at Polychain Capital, has formed a new blockchain-focused investment fund that will be converted into a founder-owned decentralized autonomous organization (DAO). The fund will invest in blockchain projects, DeFi, gaming, and NFTs.
The $125 million fund, dubbed “dao5”, will invest in pre-seed and seed-stage blockchain and cryptocurrency startups. In the startup environment, a pre-seed round typically assists firm founders in getting their business off the ground. The seed round is the first recognized round of equity fundraising.
The fund will focus on layer-1 blockchain infrastructure, privacy technology, decentralized finance (DeFi), decentralized autonomous organizations (DAOs), gaming, nonfungible tokens, and crypto-oriented social platforms.
Unlike traditional venture capital funds, which provide company owners with direct funding from venture capitalists, dao5 will provide recipients with a grant of governance tokens, which will form the fund’s future DAO. Governance tokens will also be distributed to dao5 employees and advisers.
Around 2025, the fund is scheduled to make its formal transition to a DAO, and so achieve a sufficient level of decentralization.
Dao5 is seeking to provide project founders with some risk diversification by pursuing a DAO governance structure, as all grant recipients will be exposed to all other projects in the portfolio. According to the company, this will encourage entrepreneurs to collaborate and increase their chances of success.
“The purpose of dao5 is to investigate a novel paradigm for bootstrapping a DAO by focusing first on talent and capital acquisition through venture financing, and then on increasing treasury value by using the pooled talent of the dao5 community,” said founder Tekin Salimi.
For nearly four years, Salimi was a general partner at Polychain Capital, one of the largest crypto venture funds. His employment with the corporation came to an end in February.
Decentralized autonomous organizations proponents see this method of governance as a significant advancement in how organizations and systems should operate. The mandate of a DAO might be applied to any governance scheme that has a principal-agent problem.