TL;DR
This article presents the strategic recommendations for achieving the full-scale vision for Arbitrum Ventures, expanding on the logic presented in the ecosystem investment thesis and context-setting articles.
- Goal: Establish an investment fund that fuels long-term ecosystem growth.
- Strategy: Stage the execution of an evergreen fund-of-funds in three stages:
- Pilot (Now): Analyze and Propose
- Phase 2 (Next): Build
- Phase 3 (Final): Deploy
- Key Programs:
- Strategic Direct Fund: Investing in strategic deals or co-investment in high-performing deals with non-captive partners.
- Scouts Program: Community-led early-stage investments.
- Thematic Funds: Vertical-Specific programs for emerging Web3 markets.
- Captive Liquid Fund: An investment program that’s anchored by AV funds, designed to attract 2–3x in external LP capital once the strategy is validated. It focuses on providing patient, sticky liquidity for the trading of key Arbitrum protocols aligned to our strategy.
- Why It Matters: Balances short-term returns with long-term ecosystem expansion.
In this post, we will first explain the full-scale vision, then detail the steps and considerations for bringing it to life.
Context
With a growing number of investment proposals coming to the DAO, the AVI team set out to create a framework allowing mature handling of investment mandates funded by the DAO’s treasury.
As part of this effort, the AVI pilot conducted market research, developed an investment thesis, and determined strategic recommendations for building a scalable investment fund. An overview of the pilot is available in the AVI Pilot Final Report.
We are aligning with stakeholders on the second phase, where the necessary structures will be developed, deals warehoused, and long-term investment mandates established. This will culminate in a full-scale evergreen fund-of-funds with the flexibility to evolve alongside market conditions. Besides investing in external (aka Non-captive) funds, it is also how we think about the creation of various direct investment programs (virtual or captive funds) that might be managed by different teams in the DAO but share the same backend.
Full-Scale Vision: Evergreen Fund of Funds (FoF)
The full-scale structure of the investment fund will be an evergreen fund of funds (FoF), where AV is primarily balancing directly investing the DAOs capital and attracting external LPs to its captive funds, as well as backing venture funds alongside other LPs.
Evergreen fund
The Evergreen Fund is perpetual, recycling proceeds indefinitely, but the programs and funds it invests in are target term closed-end funds. This ensures that capital remains actively deployed while also providing predictable exit timelines and return-driven incentives at the program level.
Characteristics:
- Evergreen: Maintains continuity by default, reinvesting proceeds in perpetuity.
- Investments in Termed Programs: The fund sets up or backs specific programs that have a predefined lifespan, ensuring structured capital deployment and return mechanisms.
- 6-Year Deployment Cycle: Funds are deployed over an initial six-year period, with each investment strategy executed in alignment with AV’s evolving investment thesis and the DAO’s strategic objectives.
- Staggered Return Horizons: Different strategies yield returns on different timeframes. The Liquid Fund Strategy is expected to provide the initial cash flow supporting the evergreen structure while other portfolio components mature over the mandate.
Read more about the portfolio construction here.
Structure: Captive and Non-Captive Vehicles
Using captive and non-captive programs together, creates a complementary strategy that enables a balance between ownership, efficiency, and diversification.
- Captive Vehicles: Directly controlled by the DAO, ensuring strategic alignment with Arbitrum’s growth objectives.
- Non-Captive Vehicles: Managed autonomously, allowing exposure to broader market trends and access beyond Arbitrum-native projects.
This setup allows the fund to both lead ecosystem development and benefit from mobilizing external capital, ensuring a sustainable and scalable investment strategy. The rationale for this structure is explored in Captive and Non-Captive Vehicles.
Non-Captive
AV may take minority Limited Partner (LP) positions in external funds or participate in investment DAOs, providing access to diversified opportunities while leveraging the expertise of established investors. These approaches allow for flexible capital deployment, enabling exposure to emerging verticals without requiring direct management of every investment.
Potential Fund Participation
One option is investing as an LP in structured funds that align with AV’s investment thesis.
Example: AV is exploring an LP position into a VC fund with the following parameters:
- $5M commitment in a $100M fund
- 10-year fund, incl. 3-year deployment period
- Capital distribution that may include:
- Initial investments deployed over the first few years.
- Reserves for follow-on funding to support portfolio companies.
- Management fees and operational costs in line with industry norms.
- Proceeds are typically expected between six and eight years, depending on fund performance.
Part of AVI’s phase 2 will be to solidify investment criteria and define appropriate funding ranges.
Engaging with Investment DAOs
Another approach involves participating in investment DAOs to gain early exposure to emerging markets and technologies. This could include:
- Small, flexible investments (e.g., $200K allocations) in operator- and/or investor-led DAOs targeting specific verticals.
- Capital deployed over a two-to-three-year period to support early-stage ventures.
- A structured monitoring process to manage exposure and assess long-term potential.
- Proceeds expected to be returned within five years, depending on market conditions.
Captive
Captive investment initiatives leverage AV’s resources and fall into two categories:
- Some initiatives like accelerators would be managed by external parties with fixed mandates, e.g. 1-year commitment to 2 startup cohorts where AV pays for the cost of the program and co-invests in select deals via AV-operated vehicles like the Strategic Direct Fund.
- Other programs, like the Strategic Direct Fund itself, will be fully managed by the AV team. These programs focus on co-investments and scaling high-potential projects, ensuring that AV plays an active role in growing and shaping the ecosystem.
These captive programs have varying lifecycles, from 1 to 3 years of active deployment, depending on each program’s purpose and strategy. They’d be reviewed regularly to establish whether they’re still fitting the long-term investment objectives or they need to be re-designed or discontinued.
The Fund-in-a-Box structure described in the following section allows the AV team and the community to spin up new programs, scale them or discontinue them with as little overhead as possible. For certain captive programs, e.g. the Captive Liquid Fund, we’d be able to include external LPs interested in supporting the Arbitrum ecosystem alongside AV.
Initial Program Rollout
The Accelerator, Strategic Direct Fund, and Captive Liquid Fund have been identified as the most suitable programs for the initial phase, with additional initiatives introduced over the full-scale six-year investment term in alignment with AV’s investment thesis and the DAO’s strategic objectives.
- Programs Operated by the AV Team
- Strategic Direct Fund: A fund managed by AV, for example deploying up to $50M over six years into top-performing deals sourced from AV’s broader investment programs.
- 75% of capital deployed in the first four years, with 25% reserved for follow-on investments.
- Proceeds returned to AV after the six-year mark to maintain capital efficiency.
- Strategic Direct Fund: A fund managed by AV, for example deploying up to $50M over six years into top-performing deals sourced from AV’s broader investment programs.
- Programs Originating from the Community
- Scouts Program: Enables community members, including founders and domain experts, to identify and fund high-potential deals.
- For example, each scout deploys $100K across five selected deals over a one-year term.
- 1–2 scouts per category, with new cohorts introduced annually.
- Top-performing scouts can graduate into roles within Thematic Investment Funds.
- Thematic Investment Funds: Focused on specific market categories based on emerging opportunities.
- For example: DeFi Thematic Fund - Expanding Arbitrum’s DeFi stack with investments ranging from $500K to $10M, deployed over 2–3 years.
- Funds structured to test and scale new verticals, such as SocialFi, ensuring the Arbitrum ecosystem has exposure to the vertical via AV.
- Typical maturity period: 6–7 years.
- Captive Liquid Fund: A liquid fund seeded by AV and managed by a specialist hedge fund manager.
- Provides sticky and deep liquidity to the Arbitrum ecosystem.
- Initial deployment period: one year, with the potential to extend and add external LPs.
- For example: create a segregated managed account with a regulated Web3 Hedge Fund that runs the liquid strategy anchored by AV, and together we work on attracting other LPs with appropriate profiles into the vehicle.
- Scouts Program: Enables community members, including founders and domain experts, to identify and fund high-potential deals.
Fund-in-a-Box as an enabler for the captive programs
Find-in-a-Box is a tool for simplifying and scaling fund administration. For many funds, the cost of compliance, legal, and administration can exceed $500,000 annually, making them unviable. The set-up is simplified, cost-efficient and relatively quick to spin up which enables AV to launch new investment programs in alignment with DAO priorities while navigating the fast-paced environment. It serves a purpose to establish stronger access to already promising market categories or to experiment with nascent verticals.
As an example:
- We can apply this to the Scouts Program where AV empowers deep domain experts to deploy a number of small investment tickets (e.g. 5 tickets at $20k each over the course of a year) across early stage deals.
- If the pipeline shows early success, it can be scaled to a small fund built around the scout’s dealflow allocating $2m-$3m and attracting co-investment from other LPs before AV allocates further.
- If the scout-led fund proves unsuccessful, it is discontinued with the remaining investments managed professionally through the Fund-in-a-Box framework.
Balancing Short-Term and Long-Term Priorities
AV’s investment strategy focuses on strengthening DeFi in the short-to-mid term while positioning for emerging opportunities, ensuring both immediate impact and long-term sustainability.
Short-Term: Leveraging Arbitrum’s Strength in DeFi
DeFi is Arbitrum’s strongest vertical, making it the natural priority for early large-scale investments. The majority of initial capital should be allocated here, ensuring the ecosystem retains its competitive edge and deepens its liquidity base. This includes expanding the DeFi stack into new use cases (eg. enterprise adoption as suggested in our Plaid for Crypto mini-thesis).
Long-Term: Front-Running Emerging Narratives
Beyond DeFi, the ecosystem investment thesis outlines the importance of creating a framework that supports investment initiatives supporting a growing onchain GDP and bringing real world economy use cases with their respective data, assets, capital and user bases on-chain. This requires us to allow for proactive investment in nascent market categories and verticals before they gain mainstream traction. Often this is done by deploying capital, for example 12+ months ahead of the market once there’s a somewhat clear path to ROI on a more predictable time horizon. An Evergreen Ecosystem Fund-of-Funds, grounded in established practices for CVCs and sovereign wealth funds, is a viable option because it prioritizes additional benefits beyond financial ROI (e.g. improved defensibility, strategic partnerships, market access, capturing returns via fees or other mechanisms, etc).
In this approach, these activities can be funded by recycling returns from the investment activities in areas which have high product market fit (DeFi in this case), allowing for a dual focus that optimizes the existing strength in DeFi while positioning for emerging opportunities by:
- Providing patient capital to underdeveloped but high-potential sectors, ensuring Arbitrum leads, rather than follows, key trends and gets positioned early at lower cost.
- Enabling the fund to proactively establish new investment categories instead of reacting to existing ones.
- Engaging non-captive investors for follow-on funding ensures external validation of new verticals, helping determine where to focus future captive investments.
How We Get There: Fund Staging and Execution
This setup, in which the investment entities are oriented toward ecosystem development and are attached to Arbitrum DAO, requires additional considerations in comparison to setting up purely financial return oriented funds. The complexity requires a staged approach.
In the case of Arbitrum DAO, there has been an optimisation exercise to design structures which are sufficiently ambitious but well-considered and built to last. Avoiding doing things at scale prematurely can lead to postponing important strategic choices for as long as possible, especially since Arbitrum DAO is still a relevantly nascent organisation which has gone through many dynamic changes in its 2 years of existence. The staged approach below attempts to allow for immediate action, while allowing appropriate time for strategic alignment, with specific consideration of creating the CapCo to dynamically integrate with other DAO structures (e.g. various incentives/grant programs, DAO-wide governance frameworks, and the OpCo).
The following represents what we believe is the best configuration of trade offs available at time of writing.
Phase 1: The AVI Pilot
Meant to do a ‘spike prototype’ to produce a broad exploration of the problem space, which has produced a list of investment opportunities we can explore in more depth in Phase 2. While we also used it as a chance to establish working dynamics and relationships with all respective working groups and units in the DAO, AF and OCL, our primary focus was on the most important stakeholders - the founders and the market participants.
More about this phase can be found in the AVI Pilot Final Report.
Phase 2: Further Development, Interim Investment Capacity & Vehicle Setup
Prior to full deployment, the fund will execute interim investments while establishing key structures. This phase is crucial for testing strategy execution and governance mechanisms, leading to further validation and de-risking long term commitment decisions.
Key Steps:
1.Thesis Development: During Phase 1 the focus has been on a broad exploration and identification of relevant examples that demonstrate the overall ecosystem strategy. Phase 2 involves provisioning more resources to fine-tune the details and validate them in the market.
2. Governance Structure: There are 3 main parts of the organisation during Phase 2
- The Working Group Principle Executor and Facilitator: There should be an organisation and team tasked with the responsibility for the majority of the work during Phase 2, including breaking it out in the appropriate work streams and coordinating them.
- Supporting Contributors: As there are a variety of relevant experts that have capacity and desire to contribute, the approach should allow for broader consultation and subcontracting specific parts of the scope where relevant.
- Oversight: The Working Group should operate within a simple accountability structure receiving support and reporting to an Interim Expert Council representative of the DAO.
- The Interim Expert Council (IEC):
- The Interim Council consists of 3 - 5 seats, where 2 or 3 are proposed during the Tally of Phase 2 and are subject to confirmations. The final 1 - 2 are elected by the DAO.
- The profile of the Expert we aim to include in the Tally proposal are people who have relevant domain expertise and strong incentive alignment with the success of the DAO (e.g. partners in funds that are significant backers of OffChain Labs (OCL), key staff at OCL or Tandem).
- The Arbitrum Foundation should either have one of these seats or be involved as an additional observer role.
- All interim expert council members/advisors sign agreements limiting future employment and fund-management with CapCo (12–24 months).
- Waiver thresholds should be approved by Council/DAO.
- More details about the Interim Expert Council and the discussion thread focused on governance staging can be found here.
- Investment Committee (IC):
- The Principle Executor nominates and the Interim Expert Council (IEC) approves an Investment Committee comprised of 3 members who make investment decisions with simple majority.
- At least one of the members should be a representative of the Principal Executor of Phase 2.
- The IEC can terminate any IC member with a simple majority vote, triggering the procedure for the Principle Executor to nominate a different one.
- IEC members should appoint one member to the IC.
- The 3rd member should be any qualified person free of prohibitive conflicts of interest that the principal executor nominates and the IEC votes in.
- IEC has the right to object to or veto any investment decision within 14 days of the respective IC vote. They need to provide rationale.
- Capital Allocation:
- $5 million is allocated to MSS (coordinated with AF), to be disbursed for Phase 2 investments via decisions of the IC. This is known as the Interim Investment Facility (IIF).
- Additionally, up to $10m more can be allocated to the IIF via Snapshot votes to be invested under the discretion of the IC.
- $[ x ] to be allocated for the Working Group costs in the MSS managed by the IEC, funds are to be used for (compensation of the principal executor, supporting contributors, advisors, travel, conferences, etc).
- $[ x ] to be allocated for the administrative setup of the CapCo in a MSS controlled by the Arbitrum Foundation (AF). These funds shall be stewarded by the AF and utilised under the guidance of the IEC to cover costs such as legal, compliance, advisors, state fees, tax analysis, etc. Incorporation of new entities and associated costs will only be undertaken after appropriate conditions are met and approved via a Snapshot vote.
- Up to the time where the new CapCo entity is set up, investment will be undertaken by using the AF as a counterparty. This should be made available as a solution for the Working Group in a reasonably short time frame after the vote passes.
- Any excess funds in any of the three MSSs will be returned to the DAO at the end of Phase 2.
- Deal Warehousing: While it is a natural outcome of our market engagement via the market consultation to lead to deal opportunities, once there’s a more concise direction and commitment picked and investment capital is available, broader sourcing will be undertaken. During Phase 2, the main objective will be to validate the capability to source, evaluate, undertake due diligence and execute deals derisking the key assumptions around the setup of the CapCo and the different long-term investment mandates being explored, including:
- Investees Selection & Deployment Pace
- Access and Ability to Structure Deals with Top-Performing GPs
- Capital Call & Liquidity Management
- Economics (fee structure remains competitive)
- Building a Co-investment Network
- Legal
- Performance Benchmarking and Reporting
- Framework Development: Creating clear frameworks under which we can work both Captive and Non-Captive programs as well as with direct investments. Namely:
- Integration with other Arbitrum structures
- The use of mini-thesis such as Plaid for Crypto to align stakeholders to drive benefits for the mother entity
- CapCo Entity (Optional): Approve incorporation with a snapshot.
- Proposals for Phase 3: Develop and put to a vote well-articulated Phase 3 proposals.
Phase 3: Full Deployment & Ecosystem Support
At full scale, the fund shifts from setup to sustained capital deployment.
Key execution priorities:
- Deal Execution: Fully executing Phase 2 deals.
- Non-Captive Expansion: Expanding the non-captive side with at least three LP positions.
- Dedicated Working Group: Formalizing an investment strategy workgroup to ensure long-term alignment.
- Accelerator Program: Launching an Arbitrum-focused accelerator to support native ecosystem builders.
- Captive Liquid Fund: Launching a captive liquid investment fund for targeted growth investments.
- Scouts Program: Engaging scouts to increase deal flow and opportunity sourcing.
- Strategic Direct Investments: Maintaining low-intensity direct investments to support strategic objectives.
- Thematic Captive Funds: Organizing captive direct investments into structured, thematic verticals.
Deploying the Fund in USDC
A key structural decision for the fund is to deploy investments in USDC rather than ARB. This simplifies operations and ensures predictable, efficient capital deployment across both captive and non-captive investment vehicles.
USDC provides several advantages:
- It simplifies decision-making for ecosystem participants, making it easier for investors, founders, and partners to evaluate opportunities without needing to account for ARB price fluctuations.
- It ensures predictable liquidation of ARB, avoiding volatility risks when capital needs to be deployed or reallocated.
- ARB, while central to governance and soon staking, is not a key utility asset for many of the fund’s investment areas, making stablecoin deployment more practical.
- Non-captive funds - those managed externally - are already denominated typically in USD equivalents, ensuring alignment when collaborating with external investors.
For the captive side of the fund, USDC provides flexibility to attract LPs who think in USD terms rather than BTC, ETH, or ARB. However, over a longer time horizon (5+ years), the fund may explore selective ETH-based investments where it makes strategic sense. This approach allows for stability in the present and flexibility for future asset allocation.
Use of Performance Warrants
To ensure alignment between founders, investors, and the DAO, the fund will introduce Performance Warrants - a structured mechanism that incentivizes long-term commitment.
- Upside Participation: Provides investment teams with additional equity or financial upside tied to strategic milestones.
- Performance-Based Mechanism: Rewards projects that meet predefined targets, ensuring alignment with the ecosystem’s growth.
- Non-Speculative Structure: Designed to drive engagement rather than enable short-term trading.
By tying incentives to long-term success metrics, Performance Warrants help attract high-quality projects while maintaining alignment with Arbitrum’s strategic objectives.
Growing the DAO’s Influence & Talent Base
To scale effectively, the DAO must attract, develop, and retain top talent while facilitating long-term engagement and alignment. This requires both structured pathways for leadership and active community participation, such as:
- Culture-Building: Foster a sense of purpose, belonging, and clear, attainable goals.
- Engagement Activities: Publish research, host events, and encourage peer-to-peer learning.
- Leadership Development: Allow contributors to organically emerge as leaders, with formalized paths to roles like:
- Scouts
- Venture Partners
- Early-stage investment managers
Community Participation
As outlined in the Community Engagement Report, active community participation is key to AV’s long-term success, creating a stronger and more resilient ecosystem.
- Scouts Program: The Scouts Program, mentioned above, is the most direct way for members to contribute, empowering them to identify high-potential opportunities, deploy small investment tickets, and help shape Vertical-Specific Fund-in-a-Box (FiB) programs (pilot initiatives focused on emerging growth areas). By participating, scouts play a direct role in AV’s investment strategy and innovation pipeline.
Beyond scouting, there are multiple ways for community members to engage:
- Venture Partners or LPs: As Limited Partners (LPs) or Co-Investors, members can align capital with strategic opportunities by investing in Captive Vehicles, fostering stronger ties across the ecosystem.
- Early-Stage Investment Managers: Qualified contributors can provide insights and recommendations to refine investment strategies and adapt to evolving market trends and conditions.
To recognize and incentivize contributions, AV is developing reward mechanisms that allocate a portion of the Fund-of-Funds (FoF) carry to active participants, including scouts and builders. An AV Community/DAO token (if implemented) should be non-tradable and designed for long-term alignment rather than speculation. This ensures that those who help shape AV’s future also benefit from its long-term success.
Engaging Key Protocols Already Running On Arbitrum
To strengthen Arbitrum’s ecosystem, it is crucial to engage with key protocols already operating on the network. These projects drive liquidity, user adoption, and innovation, making them essential partners in scaling the ecosystem. To do this, we can:
- Create an environment where they can have a voice in responding on how major strategic investments or changes of direction would affect them. Both from a threat perspective, making sure we don’t create unnecessary shocks to the system, but also from an opportunity perspective. We should have a ‘portfolio-as-a-stack’ mentality where we consider how to make the sum bigger than the individual in terms of coordinating and providing support and security to the key players that make Arbitrum successful. This should of course be balanced with the open and permissionless nature of the platform where we want to avoid being seen as picking winners and keep the environment open to all.
- Some of these protocols that either already run on Arbitrum, are considering it or are synergetic are platforms themselves. As such they are also actively deploying ecosystem funds supporting their go to market efforts and demand creation. We can have them as co-investors, co-marketers, share platform services or have them be LPs in captive programs. Such interest was verified from Kleros, LI.FI, Vertex, GaiaNet among others.
- We can further develop the relationships with some of these in ways that provide the fabric of Arbitrum’s ecosystem across Orbit chains. Examples include liquidity solutions by Camelot, working towards a governance tooling stack with Tally and interoperability with Espresso and Everclear. We can have investment activities leading to adopting, expanding and making these solutions industry standards.
Vertical-Specific Teams
As Arbitrum’s ecosystem evolves, specialized investment teams will be essential to effectively navigate emerging markets and drive long-term growth. Structuring these teams requires careful balance to ensure they are adaptive, forward-thinking, and not constrained by existing market assumptions.
Avoiding an Echo Chamber
While Arbitrum has established a strong presence in DeFi and is making strides in Gaming, the broader Web3 landscape is expanding quickly and builders are engaging across a variety of domains. Over-specializing investment teams only in DeFi risks creating an insular perspective, where teams focus too narrowly and miss opportunities in emerging sectors. A rigid structure could limit adaptability, making it difficult to anticipate and invest in transformative use cases beyond the familiar categories.
Solution:
- Recognizing Emerging Investment Teams as Core Drivers: Teams specializing in emerging Web3 domains should be treated as key players in AV’s investment strategy, with the authority to lead new pipelines, shape best practices, establish reputation structures, and build an investment culture that is not constrained by legacy frameworks.
- Balancing Horizontal Expansion with Strategic Cohesion: Scaling into new investment areas must be balanced with resource allocation, ecosystem alignment, and return potential. While specialization across blockchains is still evolving, the long-term structure of ecosystems remains uncertain. Some may differentiate based on specific use cases, i.e. ecosystems becoming highly specialized in areas like gaming, infrastructure, or institutional finance. Or they might end up competing for shared audiences with similar offerings, not unlike traditional finance where thousands of retail banks provide overlapping services.
- Navigating Uncertainty: To navigate this uncertainty, the AV structure should support the rapid creation of vertical-specific programs while ensuring:
- Alignment with Arbitrum’s strategic goals: New investment programs should strengthen the broader ecosystem rather than operating in isolation.
- Efficient capital deployment: Resources should be allocated to sectors that offer both ecosystem fit and sustainable returns.
- Market-driven specialization: Investment focus should evolve based on real market opportunities, rather than being dictated by past performance.
- By embedding these principles into its investment decision-making, AV can expand into new sectors without losing strategic focus.
Ensuring Long-Term Success: Impact Measurement and Operational Execution
The fund will implement structured impact measurement and oversight.
Impact Measurement
A Theory of Change (ToC) framework and logic model will assess how investments drive meaningful outcomes, ensuring all investments are measured against clear criteria to ensure accountability and alignment with Arbitrum’s strategic goals.
Based on the ToC and logic model, impact measurement will be directly tied to the Ecosystem Investment Thesis, which focuses on: Onchain GDP growth, strategic capital allocation, and creating a builder-friendly environment.
By embedding these principles, the fund will prioritize initiatives that drive adoption, innovation, and resilience.
Operational Execution & Roles
In-house capacity needs to be built not only for investment management activities, but additionally:
- Extensive platform support which includes key to Arbitrum’s market advantages the deployment of which can justify and deliver on performance warrants;
- Managing the day-to-day for strategically relevant to Arbitrum deals via non-captive funds and ensuring the smooth execution and full lifecycle support for captive programs;
- Propagating the learnings and strategic value from the investment activities into other relevant parts of the Arbitrum ecosystem.
Key Activities of the AVI Team
- Investment Strategy Development: Translating Arbitrum’s ecosystem goals into a practical investment roadmap.
- LP Investments & Position Management: Ensuring strategic alignment while avoiding restrictive capital constraints.
- Direct Investments & Ecosystem Partnerships: Strengthening relationships with key projects and protocols.
- Platform & Back Office Support: Managing LP relations, deal flow, and fund operations.
Additional Roles Needed
- Core Team Oversight
- IEC
- Permanent Oversight Structure
- Investment Committee Members
- Interim Phase
- Any investment committees at full availability
- Community Contributors
See Governance and Oversight Staging for Arbitrum Ventures for the proposed staging of the necessary structures.
Conclusion: A Fully Integrated Investment Framework for Ecosystem Growth
AVI has laid the groundwork for a long-term investment strategy that keeps capital flowing while staying adaptable to the ecosystem’s needs. By structuring AV as an evergreen fund-of-funds, we ensure that investments aren’t just one-off bets but part of a sustainable, growing engine that fuels innovation across Arbitrum.
As we move into the next phase, community involvement remains a key driver. The Scouts Program gives builders and contributors a direct role in identifying high-potential opportunities, while LP and co-investor models allow for deeper participation. The Fund-in-a-Box framework makes it easier to test and scale new investment programs, ensuring that Arbitrum stays ahead of emerging trends.
Once this structure is in place, Arbitrum’s investment fund will transition from experimentation to full-scale deployment. The staged approach ensures:
- Efficient capital allocation via an evergreen fund-of-funds model that reinvests proceeds to sustain long-term ecosystem growth.
- Strategic balance between short-term and long-term investments, leveraging DeFi for immediate returns while positioning early in emerging market narratives.
- Strong alignment between incentives, governance, and ecosystem growth, ensuring contributors, builders, and investors remain engaged and rewarded.
This framework enables Arbitrum to deploy investment strategically, cementing its role as a long-term Web3 leader and fueling ecosystem development.