Take, for example, members of Global Coin Research (GCR), who have cumulatively invested in more than 30 deals, deploying over $25 million into projects such as blockchain interoperability protocol Aurora and Web 3 management platform Coinvise. (In order to participate in a deal, the individual DAO member must be an accredited investor, typically defined as individuals who are legally authorized to purchase securities that aren’t registered with regulatory authorities.)
“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. Steinberg dubbed investment DAOs as “fundamental recasts” of angel networks or syndicates – loosely organized networks of investors whom early-stage startups have traditionally turned to for funding.
Founders also can benefit from their interaction with the DAO, which includes receiving product feedback and advice from a crypto-native community. For fledgling crypto startups, user adoption and product-market fit are all too familiar challenges they – and their non-crypto counterparts – still face.
“It’s possible,” says Reciprocal’s Steinberg. However, “crypto venture capital is a full-time job. VC firms are generally very active, highly engaged, and have lots of time and resources to devote to portfolio companies. We’re all for partnering with DAOs, but some founders need playbooks.”
“There’s room for more centralized investors alongside the extremely democratized investment syndicates, similar to how FTX and Coinbase are viewed alongside Uniswap as liquidity venues,” said Evan Feng, head of research at crypto venture firm CoinFund. “There’s room for hybrid approaches as the boundaries between the two camps blur further.”
This content was originally published here.