Trying to raise money for any cause can be tricky, from finding sponsors to individual contributors. In the web3 world, there are a variety of ways to raise money, with DAOs being the new trend in order to democratize funding. Startups are often finding it more and more difficult to find fundraising tools that are efficient and quick, and thus DAO’s have set a new precedent in being able to solve all these issues.
Despite this convenience, it still takes time to attract funding. There are a variety of DAO fundraising procedures and tools to do so which we will discuss in the following article.
So how do you get started fundraising as a DAO?
1/ Target individual investors
There are two ways of approaching individual investors. First, targeting the coveted individual investors that are usually big names in the crypto world. Some of the most famous investors that have followed and grown large DAO and crypto projects are the likes of Mark Cuban, Peter Thiel, among others. They have invested in DAOs such as PleasrDAO (read more), BitDAO (read more), and KlimaDAO. Many of these DAOs started with bold ideas, and a passion for change, and were able to attract such famous investors through notoriety in the industry.
The second way of approaching is the opposite to the above one — funding through a large group of smaller-stake investors, the same concept as crowdfunding. Attracting smaller investors who are able to grow your DAO organically and from the bottom. This DAO fundraising procedure is more natural, and starts from attracting investors through a useful, interesting, and return-oriented project. Usually members are on board and deposit tokens into the DAO in exchange for tokens. Such targeting smaller investors could also get to build a community that excites about your project, being the angel or testing users of your product or project.
Launchpads, such as DAO Maker, do just this process, and help crypto projects find individual investors to get their DAO funding. DAO Maker also has a variety of products and services, but it’s their DAO Launchpad system that provides services such as fundraising, along with other services you can explore like Farm and Vesting, and staking DAO coins among others.
2/ Apply DAO grants/ incubation
DAO Grants are now big in the game for the crypto world, with other DAOs helping to propel ones that are just starting. This method of community funding allows for different DAO’s that are either tied to a specific project or have an independent clause. For example, different DAO’s give out grants and funding to projects that support their internal ecosystem, and do so through a simple application process.
While some focus on the ecosystem of the DAO, others focus on giving grants for specific focused projects such as projects on a given chain, like ETH. MolochDAO, deemed the “Original Grant Giving DAO” funds different DAO’s or projects that support and further the ETH ecosystem.
Gitcoin is famous for providing grants in a democratic competition way. Projects inside have various purposes, while some are DAO projects, some are not. There are a lot of good ideas and projects worth taking a look at.
3/ Join competitions/ hackathons
This fundraising tool has now gained more popularity as Web3 or DAO hackathons are starting to gain notoriety in the industry, and have propelled many projects from small and unknown, to gaining a large following and significant funding. Hackathons as such normally have a specific focus in mind, so it’s helpful to search for competitions that are related to the field or area you are interested in or have built a DAO in. Some hackathons require prior preparation and a prior idea, whilst some are more “on-the-spot” and take a case competition-esque format.
Applying for these hackathons can be time intensive, but worth it to apply for as a fundraising tool. When applying for such hackathons, try researching who guest judges are for a chance at perhaps winning not just funding from the competition, but also recognition by such industry giants. For example, ETH conferences take place around the world, with notable individuals like Vitalik Buterin and Changpeng Zhao being invited as guest judges and speakers at the events.
These hackathons are hosted both at crypto conferences and online. The blockchain and crypto community really like the innovation coming out of these competitions. Full list of events are yet to be explored by yourself with keywords like “Web3 hackathons”, “Blockchain hackathons”, “DAO hackathons”. But the more notable ones in the space are ETHOnline, ETHGlobal, Chainlink, Binance, etc..
4/ Approach Venture Capital/ investment DAOs
Lastly, a simple and effective way to fundraise as a DAO comes in the form of Venture Capital. This DAO fundraising procedure starts by finding venture capital firms in your area, whether that’s geographically, field of interest, or field of work. VC firms have their entire purpose set around funding meaningful and sustainable projects, and if you are able to prove to them that your project can do that, you have a fair shot of getting DAO funding from them!
Another method, along the same lines, are Investment DAOs. As mentioned in another article, investment DAO’s focus on channeling funds into different outlets, voted on by members of the community. Some of these outlets may include different financial products, like funds and stocks, but many include startups and projects that show potential. For example, BitDAO, which we have mentioned previously on this blog, is an investment DAO that invests in different DAO ecosystem projects. Based on prompts of their choosing, projects can submit through their GitHub at a chance for funding!
Preparing the fundraising
Now that you’ve found your avenue for DAO fundraising, it’s time to start that application process.
1/ Get the Basics: Decks, Goals, Whitepaper
To start this process, you’re going to first start out by outlining your DAO. Broadly speaking, this means putting your goals, milestones, methodology, team, expenditure planning, etc. in a deck, whitepaper, litepaper, or website. Creating a navigable and easy to understand project description can help future investors to evaluate your messaging and direction more easily, and thus make a swifter funding decision.
2/ One step further
To provide a solid basis for anyone to join and contribute to your DAO, it is often better to act before the fundraising stage. People often keep things hypothetical at the stage of fundraising. Although “seed round” might mean getting capital to kickstart things, find things you can start with limited resources. It’s always good to have a proof-of-concept product or even a mockup to make the DAO project look legit. If the DAO is not a product project, you can also start outreaching for DAO-to-DAO or organizations collaborations. Solid actions will make your success rate much higher!
3/ Don’t miss this part! Treasury Management System
Now that you have got your basics in check, there’s something people often miss in a DAO fundraising process. Each DAO is going to need a treasury management system after obtaining the funding. This is best done through a proper decentralized treasury management system, one that is built for DAOs to manage crypto and digital assets as a team, such as ADAM Vault. ADAM Vault has a comprehensive budget and team system to manage the DAO treasury. It differs from storing assets on a basic wallet like Metamask, inconvenient and unsecure for a DAO team to use. From storing the assets to allocating the treasury, ADAM Vault is able to encompass all DAO team needs. Your all-in-one solution to manage DAO treasury for fundraising.
If you’re interested in using ADAM Vault, or need some help in DAO fundraising, our team is happy to talk! Contact us through hello@adamvault.com .
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