[NON-CONSTITUTIONAL] Pilot Phase: Arbitrum Ventures Initiative
Please also review the forum post for full proposal details: here
Abstract
The AVI (Arbitrum Venture Initiative) team’s mission is to equip delegates and future AVI contributors with the tools needed to develop the AVI Ecosystem Fund (or nomenclature equivalent). These are: an effective knowledge base, investment frameworks, and a committed team of experts. We’ll align with DAO budgeting and strategic objectives, building on existing work and GCP learnings as a proof of concept.
The result will be capture-resilient to any one party’s interests and aligned with DAO governance best practices.
The execution of the work scoped in this pilot will lead to a specific proposal for the setup & funding of the Ecosystem Fund (or to smaller proposals for allocating capital to specific targets building up to it). Scope:
- Funding Ecosystem Health Report
- Ecosystem Investment Thesis & Strategy
- Strategic Recommendations
Motivation
After observing the investment and venture challenges faced by the DAO, its builders, and investors, we need the Arbitrum Ecosystem Fund as a bold and decisive initiative. The significant opportunity cost requires quick action for AVI to produce actionable thesis, strategy, and recommendations. These will empower delegates and groups to make effective decisions, tackling the risks of an otherwise incongruent, piecemeal approach. A lean and pragmatic pilot will address these outcomes in the short term, incl. in relation to live proposals, while demonstrating the viability of a more holistic long term structure and laying a solid foundation for it.
Rationale
Arbitrum is already a highly desirable platform by engineers and a market leader. In order to continue to thrive, the DAO needs to double down on betting on these builders that are growing the ecosystem and expanding the sequencer volumes. Doing so in alignment with treasury sustainability, budgeting, and strategic goals, including increasing protocol revenues, diversifying revenue streams, and opening new markets.
Since AVI started there has been a lot of interest from a broad spectrum of builders and investors. We have seen a growing number of proposals in this category, however selecting the correct mix of solutions, funding them, and ensuring accountability to the ecosystem has proven challenging. Thus AVI is focused on rapidly producing actionable outputs, while unlocking a variety of tactical steps for the DAO.
Outputs:
- Enable Arbitrum to make the next step towards developing a best-in-class approach to a DAO-led Ecosystem Investment Fund in Web3 including a proposal for its further structure and deployment.
- Rigorous understanding of Arbitrum environment, including:
- Funding gaps
- Opportunities outlined by investors
- Free market capital that can be mobilized
- Live proposals for venture initiatives (e.g. BoB, SC, etc)
- Develop an Ecosystem Investment Thesis, Strategy, and Recommendations aligned with Arbitrum's long term goals to create a unified vision within the DAO on best practices for fostering a thriving venture ecosystem
- Develop an Ops plan for applying the Ecosystem Investment Thesis, Strategy, and Recommendations
- Community engagement for DAO accountability and transparency:
- Evaluating approaches for community engagement in the work of the unit
- Running engagement sessions with educational outcomes on key concepts
- Ensured coordination with the work of other relevant groups
Specifications
Deliverables
Market Consultation Report (State of Venture in the Arbitrum Ecosystem)
- Discovery summary
- Deck for Market Consultation
- Consultation Schedule of 45+ participants (incl. groups that have made proposals to the DAO)
- Anonymised data
- Findings and summary
Thesis and Strategy Report for Investment and Venture Fund
- Types of funds, instruments, and initiatives to target (venture funds, accelerators, incubators, venture studios, etc.)
- Development of foundational hypothesis for key strategic sectors for growth, investee profiles across multiple stages of maturity, and which markets and trends to focus on (integrated with active work of other working groups)
- Portfolio construction
- Evaluation frameworks for funds and initiatives (initial version)
- Evaluation frameworks for Ecosystem Fund's - Impact on the Arbitrum ecosystem and long-term value creation (initial version)
Set of Strategic Recommendations
- Roadmap for the next AVI phases (considering emerging constraints and synergetic structures and work groups)
- Analysis of strategic investment priorities and steps for fund deployment (building on Areta’s M&A Pilot)
- Specific analyzed target deals
A detailed operational plan for the next phase of the Arbitrum Venture Initiative
- Timeline and milestones for key activities and deliverables
- Resource allocation and team roles
- Budget breakdown for next phases with an overall target allocation for Arbitrum having been considered
Community Engagement Report
- Recordings of engagement and educational events
- Decks, Miro boards, and workshop summaries
- Participation of AVI team in sessions opened by other working groups
- Proactive engagement with relevant groups (GCP, M&A, DAO Budgeting, etc) to include their inputs on thesis, operations and legal
- Findings on activities and formats producing valuable inputs for venture thesis development, strategy, and execution
- Key learnings embedded for future community engagement to maintain transparency
Other Considerations
- Proactive engagement and alignment with other working groups and streams including:
- DAO Budgeting
- Treasury Management
- GCP
- M&A
- Full alignment with legal structures and frameworks:
- GCP legal umbrella setup
- Governance considerations:
- Top level oversight and control should be based on a committee with roles elected by the DAO
- DAO votes should be triggered for decisions with high material impact like additional capital allocation, liquidating the structure, or actions outside the approved mandate for the roles above
- Best practices on DAO engagement
- Transparency
- Accountability
- Participatory design (where feasible)
Steps to Implement
To kick off working towards the Ecosystem Fund, we’re proposing the initial phase that includes:
- Creating the State of Arbitrum’s Venture Ecosystem Report to surface valuable insights from the community, bringing all stakeholders up to speed. This report will highlight successful initiatives and uncover gaps through dozens of discovery and market consultation interviews.
- Building a Thesis and Strategy Report for Investment and Venture fund set-up in the Arbitrum Ecosystem where we explore funds, instruments, and initiatives to target (venture funds, accelerators, incubators, venture studios, etc.), develop the foundational hypotheses for key strategic growth sectors and markets, and explore portfolio construction and evaluation frameworks.
- Leveraging these reports, we’ll produce a set of strategic recommendations and proposal for AVI to set up the initial iteration of the Ecosystem Fund to manage investment allocations, funding proposals, structuring deals, and managing the outcomes with the likes of RnDAO, EVM Capital, Outlier Ventures, Elixir Capital, and the relevant accelerators coming from ThankARB’s RFP programs. It is intended to be structured as a Fund of Funds, resilient to capture by any one group’s special interests.
To tackle this challenge, we are bringing a team with deep expertise in investment (including a decade in web3), early-stage and growth builders, and ecosystem building around frontier technologies, with 100s of millions deployed, billions in exits, and intimate knowledge of Arbitrum. Profiles are outlined on the forum and Snapshot proposal.
Core Full time team
Lino & Ana
Subject-matter experts:
Paul, Konstantina, Joseph [Immutable Lawyer], Anish, Bart
DAO representative:
Alex Lumley
Timeline
Overall Cost
Total - $87,000.00
Arb to be transferred to a Safe MSig (arb1:0x9271A08958C0406F59fc0E0510141563A2FFcD28) composed of the following signers:
- Lino Velev: arb1:0xFf46A0dF4fB1729679420D71089a7dcc16C7fFad
- Ana-Maria Yanakieva: arb1:0xbE6fE3cE690b8B2e86FA2d4B358386d2211feE1A
- Alex Lumley: arb1:0xA9cD2D7Fe90321BadD16ebf6b5dB7A6Be099ef2E
The ARB amount to be transfered is based on the USD equivalent at time of submission with a 35% buffer. After swapped to USDC, any excess over $87,000 will be immediately returned to the DAO.
Links
- Full AVI proposal (pending updates due to DAO developments since published): here
