Our Investment in Seed Club Ventures, a Venture DAO
Today, we are proud to announce our investment in Seed Club Ventures (SCV), a $25M venture DAO that invests in internet-native organizations, alongside Delphi Digital, Dragonfly Capital, Collab+Currency, SV Angel, Distributed Global, and others.
SCV will be exclusively focused on early stage teams building communities, infrastructure and applications that leverage Web3 primitives to accelerate financial and human capital coordination to achieve their missions. To understand this investment, it’s helpful to understand why now is the right time for the rise of internet-native organizations, and why we believe SCV is well suited to capture that opportunity.
The New Firm
At a minimum, an internet-native organization has the following characteristics:
- Is an online first organization,
- Builders/creators co-create with their community (e.g., user-generated roadmaps), and
- Use smart-contract platforms for coordinating financial and human capital.
People have been forming online communities on Reddit, Facebook and other places for over a decade, so what’s new here? Behind the curtain, these online communities still rely heavily on pre-internet financial infrastructure for custody, payments, and capital allocation. Legacy infrastructure neither operates at internet speed, nor is permissionless, borderless, or programmable. Additionally, legacy tools lack social coordination infrastructure to track individual contributions across social-media platforms to determine the most valuable community members to engage in the co-creation journey.
At the same time, society and culture continues to evolve—quickly—even despite the lack of modern financial and coordination infrastructure:
- People are meeting online first and then hanging out in real life
- Remote work is becoming increasingly more common and accepted
- The Gig Economy is expanding rapidly as flexibility is valued at a premium
- People are working pseudonymously to side step unconscious bias
- Confidence in institutions is cratering
Future generations will increasingly meet, start businesses, learn, build communities and co-create with them, and earn — all online. This requires mass, digital human coordination and financial infrastructure, the likes of which we have never seen before.
Web3 is uniquely positioned to address these demands and solves fundamental limitations of existing financial and social coordination infrastructure. Blockchains enable seamless payments infrastructure and NFTs enable new coordination primitives for governance, rewarding user engagement while tracking contributions across every single social media platform. As a consequence, DeFi and NFTs reduce the cost of operating online businesses with communities to near zero. Why is this important?
One of the most read pieces in crypto circles is The Nature of the Firm, written by Ronald Coase in 1937 (he received a Nobel Memorial Prize in Economic Sciences for it). In a nutshell, it states that “firms” exist because there are a variety of transaction costs (search, bargain, enforcement) involved in contracting away every single element of the business, and, by creating a firm, one can internalize these costs and operate more profitably. On the other hand, there are costs associated with getting bigger in size. The implications are that if you can bring down the transaction costs, 1) you don’t need to assemble a big firm to run a profitable operation, and 2) a more interesting but less talked about way to look at it is that with collapsing transaction costs and the same number of people, you can coordinate significantly better and scale much faster as an organization.
Combining the aforementioned cultural mega trends with collapsing coordination costs enabled by Web3 infrastructure, we arrive at a beautiful point in time where anyone with an internet connection can start a business, build a community, and co-create with their community. This gives rise to a new generation of “firms” built as internet-native organizations.
The Opportunity Space
Today, there are hundreds of internet-native organizations that boast hundreds of thousands of collaborators all over the world. These organizations are focused across a wide range of experiences. As the ecosystem matures, we believe these communities will create scalable consumer experiences and flexible work opportunities for contributors. Because everything from ideation to capital allocation is happening online, internet-native organizations have the potential to scale rapidly and become the next generation of big brands. Here are a few examples from the frontier:
- a community focused on building a decentralized network of cities and neighborhoods that share the same core values and beliefs.
- building a decentralized museum by leveraging its community for accessing, curating and displaying art at museums worldwide, with the goal of eventually becoming the operating system of the art industry.
- a community of storytellers, artists and fans coming together and co-creating new families of IP.
- a community funding early-stage longevity research and commercializing longevity therapeutics.
- a community of musicians, engineers, artists, operators and designers experimenting at the edges of co-creation and music to invent new business models that can fairly compensate artists for their work.
- a group of basketball fans focused on buying a stake in an NBA basketball team, and are inching closer every day.
- a global community of golf enthusiasts on a mission to own a golf course and reimagine the modern golf and leisure club membership experience.
These organizations need internet-native tools for coordinating human and financial capital. Here are just a few categories of challenges that internet-native orgs are trying to solve:
- Idea generation and execution
- Once you have thousands of people excited by the mission, you also need ways to execute the best and most emergent ideas budding at the edges of the network. JokeDAO is one such experiment.
- Programmatic contribution tracking and reputation management
- Treasury management
- Most organizations have treasuries consisting of digital assets that need to perform basic functions such as custody, payroll, cash management, accounting and more. This is a critical function for any organization. Teams such as Squads, Safe, CoinShift, Superfluid, Coinbooks and many others are working here.
- Community coordination
- Community members need a user-friendly place to interact and build meaningful relationships. Today, a lot of communication happens on platforms such as Discord (daunting if you ask anyone), Geneva, and other similar platforms. Teams such as FWB and HNT Labs are experimenting with more community owned spaces.
- Web3 growth and marketing
Seed Club is a decentralized autonomous organization (DAO) with three branches: an accelerator that incubates these organizations and associated infrastructure, a community that drives the future direction of Seed Club with their votes, and now, a venture DAO, Seed Club Ventures.
At the current moment, SCV is best positioned to support founders building internet-native organizations because it is an internet-native organization itself.
SCV will be a power-user of the tools in which they invest and, as such, understand the challenges internet-native organizations face from first principles. Seed Club is already at the epicenter of DAOs, and the venture DAO community boasts over 60 highly qualified members that includes operators from leading crypto funds to founders to angels. This space is evolving rapidly as builders experiment across rich design spaces of governance, contribution tracking, compensation and more, and SCV has an unfair advantage as they operate in the eye of the storm.
We’re excited to back Seed Club Ventures and participate with the community at the edges of massive-scale social innovation. If this design space interests you and you are building something interesting, we would love to hear from you. You can reach out to me on Twitter here.
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