@jengajojo @GFXlabs @NathanVDH @PGov @jameskbh thank you for your detailed questions and engagement. We have already provided some answers but given some repeating themes we have tried to consolidate them into an FAQ. Could I ask you to check your concerns against the relevant answers and let us know if you’re still unconvinced? We very much appreciate all the constructive criticism and ultimately are trying to find a logical, viable path to work with Arbitrum. So understanding whether you remain unconvinced and why is most appreciated!
FAQ
Overall framing: this proposal is about making Arbitrum the best chain for builders. We’re also building a pipeline of projects for Arbitrum to have long-term financial sustainability thanks to diversified revenue streams and commercially sustainable ventures.
Piloting - why make it this length/size?
Compared to the M&A or AVI Proposal where very significant conceptual development is needed and that’s primarily what’s being done in the Pilot phases, each of the programs in the Infinite Launchpad has already advanced very significant conceptual development and has been piloted or even run at full scale before. Outlier has run multiple accelerators, EVM Capital worked with Consensys, and RnDAO has been operating for over two years and already run a pilot in Arbitrum (funded by PluralityLabs).
It’s also important to understand that
- we’re funding multiple programs by 3 different organisations. We have assembled this into a single proposal to ensure alignment between the programs and a better evaluation experience for delegates.
- we’re dealing with startups and the time for them to mature and show results is significant. As such, a shorter program is unlikely to provide any meaningful data.
- Smaller programs risk being statistically insignificant as typically only 1/10 startups succeed so say funding only 5 would leave us very much in the dark.
- Accelerators, venture builders and incubators are already well-proven methods to deliver innovation, what we’re trying to validate here is also the ability to connect programs and provide an integrated developer experience. As such, we’ll need time for projects to mature and graduate from one stage to the other.
Anyhow, we still resonate with the importance of managing risk (especially operational risk) and we understand that $10 million is a significant ask. Here’s how we plan to address this concern:
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Oversight Committee: we have included a committee that reports to the DAO and can stop or modify the funding for the programs.
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Funding tranches system: not all the funding is committed at once, instead we’ll divide the budget in tranches, and the release of each subsequent one is conditional upon a review of the KPIs.
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Embedding builder experience: we’ll systematise the collection of feedback from participants and include this in both our reports to the Oversight Committee as well as take it into account to continuously refine the programs.
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Continuous refinement and improvement: the proposed timeline also allows us to refine and improve. Despite the team’s significant experience in this domain, we might not get everything right the first time but we’ve created a setup where we can quickly learn and refine.
Builder experience
Our ultimate goal is to enhance the overall builder experience on Arbitrum by providing a structured pathway from idea to market. The Infinite Launchpad is designed to:
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Support All Stages: Whether a builder is just starting with an idea or looking to scale a Series A startup, our programs provide tailored support at every stage. This ensures that developers do not feel lost or unsupported at any point in their journey.
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Holistic Support: By combining technical support, market research, community building, and funding opportunities, we offer a holistic approach that addresses both the technical and business challenges builders face.
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Community Integration: We aim to build a strong community of developers, mentors, and industry experts within Arbitrum. This network will provide ongoing support and collaboration opportunities, encouraging Arbitrum to be the go-to ecosystem for Web3 innovation.
From an innovation management perspective, The Infinite Launchpad has been designed with a “best practice” in mind which is a stage-gated innovation program, where projects can progress if they’re showing the required traction/validation, thus doing effective risk management of the innovation process and capital deployment. The setup also ensures that we avoid self-confirmation bias in keeping on funding teams we’ve grown endeared to. Furthermore, the staged approach also allows programs to join at different points of maturity, thus enabling us to support both new and existing projects in a meritocratic way. Builders can also access the other resources of the DAO outside of the programs, so the experience can be tailored to the needs of each project.
We could consider the need to apply to the programs as an overhead for the projects, but it’s also discipline-inducing in the same way that talking to investors forces projects to do a deep analysis of their viability and receive feedback - not always comfortably but certainly value-adding to build viable projects.
We understand that having different programs can be confusing for builders and that’s why we have added a marketing coordination budget. This budget will be used to ensure proper communication of the program offerings (Infinity Launchpad Programs and others in the DAO) and guide builders on how to best assess their needs, routing them to the appropriate program for them. Most of this work will happen after the proposal is confirmed but one concrete idea we’ve already started prototyping in this regard is an AI-powered triage and monitoring tool that can assess a project’s maturity and recommend which resources (programs, education hubs, etc) are appropriate for them, and also allow us to have a database of projects and deals that we can track.
Relationship with the existing grant programs
The Infinite Launchpad is designed to complement, not replace, the existing grant programs. Concretely, here’s how we plan to integrate and enhance the current developer experience:
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Facilitated Transition: We’re coordinating and developing data infrastructure so that developers can easily move between the existing grant programs and our accelerator phases. For example, projects that receive initial funding through Arbitrum grants can enter our programs at the MVP stage to receive more specialized support and mentorship.
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Additional Support: Our programs would provide extensive resources and mentorship that go beyond what traditional grants offer. This includes market research, user testing, and direct access to industry experts, which can significantly increase the chances of project success.
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Continuous Alignment: We will work closely with the existing grant program administrators to ensure alignment of goals and smooth handoffs between programs. This will include regular communication and feedback loops to ensure that we are meeting the needs of developers and the broader Arbitrum ecosystem.
We believe that building a whole ecosystem requires a variety of projects and hence a variety of support methods and approaches. As long as we’re ensuring that each program is well designed and executed and we’re coordinating to enhance the builder experience, having multiple options makes Arbitrum more attractive for builders and accelerates the growth of the ecosystem at a time when L2 competition is very high.
Relationship with ARDC
We believe the ARDC and the Market & Research module are complementary:
- The Market & Research module is designed primarily to identify problems (market gaps) that can ensure entrepreneurial talent is working on meaningful solutions and not building yet another NFT marketplace without differentiation. Meanwhile, the ARDC is designed with a broader scope of supporting delegates in decision making.
- Identifying market gaps is time intensive and requires specific skills, practices, and incentives for which the ARDC is currently not structured. As such, a dedicated setup for the Market & Research module is proposed.
- As a positive externality of its activity, the Market & research module will also generate valuable market intelligence. It’s already contemplated that the documentation of this intelligence will be distributed to the ARDC, AVI, and grant programs in the DAO, enhancing their ability to operate and derisk capital allocation.
Oversight & Multisig signing
We agree with the suggestion to use the multisig-signing service. Following the design advanced in the RnDAO proposal, we suggest a 5 seat Oversight Committee (that could then be consolidated inside the AVI strcuture) that acts as advisors, reviewing performance of the programs. The Multisig Signing Service executes on transactions leveraging the advis of the Oversight Committee.
Financial Returns to Arbitrum
The programs are designed in a way that they could generate financial returns for Arbitrum. However, Arbitrum doesn’t currently count with the legal and governance structure to receive said returns and it could even be illegal. We’ve been actively supporting AVI as an initiative that can advance the necessary mechanisms to receive and govern an equities portfolio and are all working to advance in this direction. However, setting this up properly takes time (we’re calculating 12 months). It’s dangerous for Arbitrum to just wait to have AVI setup, as such we’re proposing this two pronged approach following the recommendations of a few senior delegates, where we can get the programs up and running and in parallel develop the mechanism for medium and long term financial returns. This way we’re 1) creating network effects for Arbitrum (developer growth, refining the builder experience, populating the Arbitrum ecosystem with projects to collaborate and build on top of) to ensure we sustain its relevance and 2) build solid foundations for long term financial sustainability.
We’re committed to aligning with the best practices coming out of AVI and the Gamin Catalyst proposal (e.g. grants could convert to equity or tokens) and have the Oversight Committee as a mechanism to guarantee continuous alignment with the DAO best interests.
ThankARB involvement and previous funding
PluralityLabs (now acquired by Thank ARB) funded the now-completed pilot of the RnDAO program. Thank ARB is not directly involved in the current proposal but we look forward to working and coordinating with them to grow the Arbiturm ecosystem if this proposal is approved.
Costs & Use of Funds
To understand the costs, it’s key to differentiate venture building and acceleration programs from VC and grants. While grants and VCs allocate capital and offer very limited support, accelerators do a mix of capital and support (they allocate some capital but also offer mentorship, workshops, trainings, etc.) and venture builders go even further towards support, paying staff to work in the ventures alongside the founders. As such, the cost structure of the programs we propose will include a significantly higher management fee. The fee is not lining the pockets of the program managers but instead it’s used to coordinate and deliver comprehensive support to the projects, increasing their chances of success.
Comparison of Startup Studios (a.k.a. venture builders i.e. high support/capital ratio):
Big Startup Studios Research 2023
When we benchmark the costs of our programs with other accelerators and venture builders, they’re not higher. Bear in mind that the OV program has been run across multiple ecosystems and the cost is the same. Also for the EVM Capital programs which ran in Consensys previously. In fact, we’re often paying contributors at below market rate and as such they only benefit significantly if the programs are both 1) successful in building valuable ventures 2) are renewed. This setup ensures incentive alignment between the project founders, program staff, and Arbitrum.
Importantly, we shouldn’t assess these programs in terms of their cost only, as they’re not expenses but investments. So the question is more whether we can generate enough value and for example the OV program (for which we have the most data available given their 10 year history) generally sees an average 4-7x lift in program participants’ valuation over the 12-week program, thus showing very significant value for money in creating a thriving ecosystem in Arbitrum.
There’s massive competition across L2s and there’s also massive potential (running the world’s economy on-chain), so we can ask, can Arbiturm afford to not invest heavily?
That being said, we do understand the need to manage risk and ensure the programs are well executed. Each of us has gathered strong teams with decades of experience in innovation management and venture and we have an oversight committee that can stop the flow of funds if this is not the case. Our incentives are designed to align with ensuring this outcome, leading to growing sequencer fees and sustaining the relevance of Arbitrum, and the investment is 0.0002 (0.2%) of the treasury (20 times smaller than the GCP), leading us to suggest that this is a rather viable investment for Arbitrum, with well managed risks, and high potential benefits.
If any of you would be open to have a call with us, I’d very much appreciate a chance to better understand your concerns and explore potential solutions. Thank you again
My calendar in case