Quick take:
- UpsideDAO has raised $5 million to invest in web3 projects.
- The Apollo-backed community fund plans to spend up to $100,000 per project that receives 75% approval from members.
- The fund utilises a blockchain voting mechanism that gives members voting rights commensurate with their token holdings.
UpsideDAO has completed a $5 million fundraising to invest in web3 projects. The crypto-centred investment fund is backed by some of the leading digital asset venture firms including Apollo Capital Management, a Melbourne-based digital asset manager, crypto payments operator Banxa, crypto broker Caleb & Brown, and digital horse racing game Zed Run.
The fund invests through a decentralised autonomous organisation (DAO), which simply means an entity governed by its community via a voting mechanism based on the blockchain.
However, Kyall Walker, general manager and only paid employee of the organisation played down the DAO connotations, saying it’s “just a name at this point.”
“We’re very much like a syndicate, but we just do things on-chain, using a governance mechanism that’s transparent,” added Walker.
DAOs decentralised the ownership model of an entity by giving members an opportunity to purchase a token associated with the organisation. Members are then granted voting power based on the tokens they hold.
According to Walker, the decision to form the “Syndicate” was driven by inspiration from the rapid explosion of NFTs and the desire to invest in crypto tokens. The crypto industry soared to a total market cap of nearly $3 trillion through November 2021, before slumping to the current levels.
The rapid rise in market capitalisation was partly driven by the adoption of NFTs amid the influx of celebrities and mainstream brands. Ecosystem tokens for blockchain games, the metaverse and decentralised finance (DeFi) also played a part.
Venture capital firms also stepped in with significant funding in a bid to take advantage of the crypto bull, in an investment model that Walker described as warped. That is what UpsideDAO aims to remedy.
“Funding is really warped in crypto projects. Too many people are raising so much money but from the types of investors who then send the project falling off a cliff. The whole project then becomes about maintaining the value of the price instead of building a product or business,” he said.
UpsideDAO leverages the mainstream investment concept of Unit Trusts to operate as a legal entity. But in this case, each unit is attached to a blockchain-based token for decentralisation purposes.
Anybody can see the projects the DAO has invested in as well as, how much capital is left in the treasury.
UpsideDAO’s membership is comprised of Chloe White, founder of policy adviser Genesis Block, Michael Bacina, a lawyer at Alderman Digital Law, and Rohen Sood, partner at Reinventure Group. They all invested between $10,000 and $50,000 according to the report by AFR.
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