[NON-CONSTITUTIONAL] Pilot Phase: Arbitrum Ventures Initiative
The Tally vote is now live: here
Our team wants to thank the many who offered feedback thus far!
As a result we have updated the text of the proposal for better readability and clarity, specifically on the topic of community and delegate engagement and specificity of deliverables.
Furthermore we have been following the latest developments around GCP and the M&A proposals and have made sure to integrate with any work being committed and to actively communicate with the relevant stakeholders. As a result we have adjusted the timeline, so the relevant AVI work starts after all the deliverables related to selection of key strategic areas for Arbitrum have been shared by Areta. There are similarly named deliverables in this proposal, but what is meant by them is often different between M&A, early stage investment or investing in VCs, accelerators, etc. Avoidance of duplication of effort is being ensured.
We have additionally reduced the overall cost from $99,000 to $87,000 after removing the hard costs associated with running a live even, after the **For [No IRL Event]** option was selected on Snapshot.Please also check the FAQ section for more details on the above.
Pilot Snapshot - Passed on 12 June 2024 with:
For [No IRL Event] - 133M ARB (86.94%)
For [Full scope] - 8M ARB (5.27%)
Against - 10M ARB (6.62%)
Abstain - 1.8M ARB (1.17%)
Abstract
The AVI (Arbitrum Venture Initiative) teamās 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. Weāll 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 partyās 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 Arbitrumās 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 Fundās - 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 Aretaās 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, weāre proposing the initial phase that includes:
- Creating the State of Arbitrumās 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, weāll 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 ThankARBās RFP programs. It is intended to be structured as a Fund of Funds, resilient to capture by any one groupās 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
FAQ
1. What happens if we donāt do this now?
-
Our prior experience in similar situations has seen stakeholders come in and create a less elaborate version of an ecosystem development strategy that is just enough to get buy-in for them to meet their other commercial objectives. We see nothing wrong with them doing that. However, the problem arises after a number of them start trying to raise from the DAOās capital and, even after they get funded, compete for future allocations. If there isnāt a mature and clearly communicated strategy in place, which is then followed through with a Theory of Change, Logic Model, and Efficacy Measurement Framework, this creates a less healthy environment. One where the incentives become for all stakeholders to find the simplest and most well presented way to win a popularity contest with an audience that cannot possibly be expected to follow through in the appropriate level of understanding and detail. We have seen this play out unfavorably in other areas of our previous work, only to later be painstakingly fixed over years at much higher cost and complexity.
-
In simple terms we believe that the DAO should develop its own capacity towards creating RFPs for the initiatives it funds in these categories and have the management complexity to govern the funded service providers in alignment with its own best interest.
2. What is the outcome of this pilot proposal? How does that tie to a larger vision?
-
The outcome of this pilot proposal is to produce a detailed investment thesis, market consultation findings, community engagement feedback, strategic recommendations, and an operational plan. This ties into the larger vision of establishing a comprehensive, sustainable, and community-driven venture initiative within the Arbitrum ecosystem.
-
After a number of developments with the GCP, conversation with the Foundation, and various delegates, the scope of what was in the original proposal is changing drastically. We anticipate the overall cost of getting AVI operational should be less than half or what we shared in March.
3. How does this compare to other proposals? Aren't other people already working on this (Foundation, Treasury Working Group, GCP, M&A, BoB, Elixir, etc.)?
This proposal complements existing efforts by focusing on the strategic alignment and engagement of the community. While other groups work on specific areas, our initiative aims to create a cohesive and inclusive ecosystem investment strategy that leverages insights from all stakeholders.
Quick overview of the landscape:
-
M&A will naturally focus on areas where it serves as a key growth driver to improve Arbitrum products, offering and/or userbase via acquisitions of other projects. While AVI focuses primarily on developing an ecosystem on top of said offerings via the funding of new protocols and ventures. Furthermore the M&A initiative would create an exit environment for these funded projects. There is a good working relationship in place that would make even occasional overlaps complementary without duplicating effort and costs.
-
The current direction seems to indicate the Foundationās legal teams will handle a lot of the incorporation of entities on the back of work done around the GCP, which would make initiatives like AVI, the M&A, etc plug into that legal framework.
-
Betting on Builders - Infinite Launchpad, RnDAOās proposal, the Elixir Capital Startup Collective proposal, etc. are examples of proposals that AVI could eventually enable the funding for and oversee (and others less similar to this initial set). Moving forward itās extremely important to have a comprehensive strategy and thesis developed by AVI that would serve as a guidance to all of the aforementioned groups. That being said, we want to be clear that we are not advising that all of these should be delayed until AVI becomes fully operational. Rather we believe in a pragmatic step by step approach, where the different groups should continuously be enabled and where appropriate funded via grants to work in parallel independently in a decentralized manner.
4. Aren't there parts we need to wait to be established, like the VC entity or OpCo?
- While certain elements depend on the establishment of specific entities or operational structures, the pilot phase does not and it enables us to progress with the foundational work, which in many ways the other initiatives can benefit from or might depend on themselves. This ensures we would have made the timely smaller investments in order to move quickly and efficiently once those structures are in place and they can take into account the direction of work as they are getting set up.
5. How does this relate to the OpsCo and GCP entities?
- This initiative is designed to complement and align with the efforts of the OpCo and GCP proposals and all entities that might get setup as a result of them. By developing a community-driven ecosystem investment thesis, we provide an additional perspective to the strategic foundation that these initiatives also exist in.
6. Why is the IRL event not being done in Brussels?
-
Organizing the event in Brussels was considered, but due to scheduling conflicts and the aim to avoid overwhelming activities, we are exploring alternative locations and formats to ensure maximum participation and impact. Currently, we are favoring a live event in London, however we are in consultation with Entropy, GovHack and L2Beat as well as other interested delegates to find the best possible approach and location.
-
That being said our team will be present in Brussels and actively participate in GovHack as well as any other relevant activities that might emerge.
7. Given the seniority of the team, why don't you already have a thesis? How come other initiatives seem to have more specific proposals?
-
The most important thing to stress is the difference between the investment thesis of a for-profit fund and the Ecosystem Investment Thesis of Arbitrum, where the main objective is ecosystem development, which is achieved through a financially self-sustainable evergreen structure.
-
We are working on the latter and, especially in a DAO, this should be done through an inclusive participatory design, collaborative process with timeline aligned with the cycles of a number of other initiatives in the DAO. For example, outputs from the treasury working group, setup of the OpsCo, software releases of the core product, milestones in the market development of Orbit chains, etc.
-
All of this should in turn support a simple, independently viable, investment thesis to the individual investment initiatives under it.
Proposal Version from Snapshot vote
TLDR
We are proposing a pilot of the Arbitrum Ventures Initiative
Scope:
- A 2-month pilot sprint of the core team focused on executing the market consultation part of the scope.
- Running a series of online and IRL events before, during and after the 2 month sprint dedicated to the creation of an Arbitrum Ecosystem Investment Thesis. This thesis will help integrate the various investment initiatives already being run or proposed to the DAO.
Pilot Phase Shortcast
https://x.com/Sinkas_/status/1796573051414302910
Context:
This proposal builds upon several delegate and contributor discussions during ETHDenver, the ArbitrumDAO Hackathon, and a subsequent six weeks of conducting the Arbitrum Venture Initiative (AVI) Working Group. The AVI Working Group, over the six-week term, organized weekly workshops, held asynchronous conversations, and scheduled multiple one-on-one meetings with delegates to discuss, align, and structure the AVI.
As a result of the above, the AVI Working Group has identified existing pain points within the ArbitrumDAO related to venture development and investment frameworks, and has proceeded to submit this proposal with the intent to formulate an eventual comprehensive go-to-market strategy for the AVI.
This proposal, informed by the feedback received, focuses on developing an optimal strategy for fund deployment; taking into account factors such as the digital asset funding landscape, the economic factors underpinning an optimal capital allocation strategy, together with the optimal go-to-market strategy for AVI. This holistic approach towards this initial pilot-phase aims to bootstrap the knowledge-base necessary for the materialization of the AVI; ensuring it can launch within an efficient time-frame once the appropriate prerequisites are met.
References: AVI Working Group Thread
Abstract:
The AVI teamās mission is to grant the ArbitrumDAO an effective and practical knowledge base so as to equip delegates and future AVI contributors with the necessary toolkit to deploy the AVI Ecosystem Fund (or nomenclature equivalent).
Why conduct a pilot phase?
Operating AVI represents a bold and pioneering initiative for blockchain ecosystems and as such it is also a complex undertaking that involves high capital needs. It also is one of several such initiatives the Arbitrum DAO that require complex stakeholder alignment around setting up legal and governance structures. Thus, it is not appropriate to rush before the relevant structures have been put in place.
At the same time, there is a significant opportunity cost in not progressing with good velocity on at least the components that can already clearly be acted on. A lean and pragmatic pilot phase to analyze key themes thoroughly and develop the necessary clarity, will provide us with a solid foundation to build on.
A pilot phase will help us derisk the AVI initiative, provide a better understanding of the landscape and options at hand, surface and validate key assumptions, and engage and align key stakeholders. Running a pilot phase will help us refine and optimize our investment strategy to cater to investors and target developers of highest strategic significance and return potential to Arbitrum, while at the same time further fleshing out the next steps and cost assumptions. Ultimately, our goal is to foster iterative learning, robust and effective investment approach, and strong engagement from key ecosystem participants.
Pilot approach
The pilot sprint outputs intend to provide the DAO delegates and stakeholders with sufficient information to decide on advancing the Arbitrum Venture Initiative (AVI), or parts of it into the next phase of development, including its operationalisation and funding requirements. The sprint is designed to fund the operational team for 8 weeks and is the natural progression of our existing Working Group efforts. We will also be hosting the IRL thesis development event and online workshops before and after the core sprint. Thus, producing an overall timeline of up to 18 weeks.
The sprint will kick off in-depth research and workshops to identify opportunity areas (thesis development).
The pilot sprint will provide concrete data and analysis from various ecosystem participants and stakeholders. Armed with this information, we will have the strategic perspective (thesis development) ready for AVIās operation.
Key Output // Deliverables
- Thesis Development Report:
- A detailed thesis report outlining the strategic vision, objectives, and target areas for investment within the Arbitrum ecosystem. This should include:
- Identification of key sectors (e.g. within DeFi, Social, Consumer, DeSci, DePIN, etc) and their relevance to Arbitrum.
- Analysis of market trends, opportunities, and competitive landscape (while collaborating on any work done by other groups with clear overlap).
- Potential impact on the Arbitrum ecosystem and long-term value creation.
- Foundational hypothesis development on strategic relevance of key sectors and investee profiles.
- A detailed thesis report outlining the strategic vision, objectives, and target areas for investment within the Arbitrum ecosystem. This should include:
- Market Consultation Findings:
- A synthesis report from market consultations (Indicators in mind: 30 founders and 15 funds). This should cover:
- Insights into market perceptions and expectations.
- Identification of potential challenges and opportunities from the perspective of market participants.
- Recommendations based on feedback for refining the investment strategy.
- A synthesis report from market consultations (Indicators in mind: 30 founders and 15 funds). This should cover:
- Community Engagement and Feedback:
- A summary of community and stakeholder engagement activities, and feedback collected, including:
- Details of public events and their outcomes.
- Assessment of the effectiveness of alternative community engagement activities.
- Summary of feedback from community members and how it has been incorporated into the strategy.
- Plans for ongoing community engagement and transparency.
- A summary of community and stakeholder engagement activities, and feedback collected, including:
- Set of Strategic Recommendations:
- A conclusive set of strategic recommendations for the ArbitrumDAO, encompassing:
- A clear roadmap for the next phases of the initiative.
- Analyzed specific strategic investment priorities and actionable steps for fund deployment.
- Substantiating the above with examples for potential deal warehousing.
- Metrics for evaluating the success and impact of the venture capital arm (initial version).
- A conclusive set of strategic recommendations for the ArbitrumDAO, encompassing:
- Operational Plan and Budget:
- A detailed operational plan for the next phase of the Arbitrum Venture Initiative. This should encompass:
- Timeline and milestones for key activities and deliverables.
- Resource allocation and roles of core team members.
- Detailed budget breakdown for the pilot phase and anticipated future phases.
- A detailed operational plan for the next phase of the Arbitrum Venture Initiative. This should encompass:
The aforecited Market Consultation Report is merely representative of Deliverable [2] above with the full deliverable report being in a different format.
Team
The AVI team brings deep expertise in the investment landscape (web3-specific and Venture Capital), working with early-stage builders and in ecosystem building (Development Venture Capital) around frontier and emerging technologies.
-
Lino
- 3x founder, 15 years of experience in developing startup ecosystems and specifically through VC instruments with development aspects. Founder of Farstar.
-
Konstantina
- Head of Equity Financial Instruments in a EUR 1.3 billion Fund of Funds, focusing on Venture Capital ecosystem development. MSc in Investment Banking and Securities from the London School of Business and Finance.
-
Ana
- web3 VC, 8 years of experience in web3, deep expertise in investing through executing 80+ deals as well as actively supporting early-stage founders in fundraising, strategy and navigation of various ecosystems. Co-lead of Farstar Swarms DAO.
-
Bart
- Former design researcher and founder with expertise in entrepreneurship education and community-based venture creation. He is Entrepreneur in Residence (EiR) at Hogeschool Arnhem Nijmegen and Guest Lecturer Entrepreneurship at Wageningen University in The Netherlands. At Farstar he is head of ecosystem products.
-
Paul
- Entrepreneur with 7 exits worth $4.7B and later head at Innov8 a $250m Singtel corporate venture fund.
-
Joseph [Immutable Lawyer]
- Lawyer & Regulatory Analyst at Axis Advisory; a digital asset law firm founded by Joseph which is based in Europe; with expertise in legal & corporate structuring as related to capital raising, investment strategies and DAO-Oriented investment vehicles. Joseph is part of the dYdX Operations Team which operates the dYdX Chain.
-
Anish
- Co-founder, Chief Scientist, and CTO of Panther Protocol, focusing on privacy for DeFi. With over 20 years of experience in security and cryptography, he advised projects like Ripple and Ocean protocol and contributed to Ethereum swarm. Additionally, heās served as a strategy consultant for Accenture and Capgemini, working with banks like HSBC and Lloyds.
Timeline
- Kickoff: Within 2 weeks after approval and KYC.
- Initial discovery interviews: Weeks 1-2 after kickoff
- Workshops Identifying 3 key areas to focus the research: Weeks 2-4 (the team will try to leverage participating in Brussels to progress this, discovery interviews and recruiting participants for the market consultation)
- Market consultation interviews: Weeks 4-8
- Market Opportunity Mapping workshops: Spanning weeks 6 to 10
- Ecosystem Investment Thesis Development Event: Weeks 10 to 16
- Assumption is an IRL 1 day event in London. Fallback to other locations, formats (e.g. 2 day retreat) or going fully online would be supported and chosen in consultation with key stakeholders.
- Findings pack shared 1 week ahead of the event and draft report presented during the event
- Completion and submission of final report: No later 18 weeks after kickoff
- Updates to the forum for community engagement and transparency will be done every other week.
*More detailed plan and GANTT chart will be attached ahead of a Tally vote once the potential specific kickoff date is more clear. While our team is committed to run on the shortest timeline available here is an illustration of what might be a realistic one:
Budget
| Items | Team | total |
|---|---|---|
| Core Team for 2 months (interviews, research and report production) | Konstantina (lead), Ana, and Lino + Immutable Lawyer, Paul and Anish 1 to 4 d/mo capacity | $50,000.00 |
| Data Services and Misc Items | $4,000.00 | |
| Running a Thesis Development Event (IRL) with 3 preliminary opportunity mapping workshops and continuous community and stakeholder engagement | Lino (lead), Bart (facilitator), Ana | $45,000.00 |
| Total | $99,000.00 |
Additional Considerations
The AVI team extends our gratitude to everyone who provided feedback and engaged with this initiative so far!
The most common concern raised has been organizing the live event and selecting an appropriate time and location. While some prefer an online format, many see the benefits of in-person meetings. Attaching the event to a major conference is ideal, but finding one not already overwhelmed with activities (e.g., EthCC) is challenging.
We are discussing solutions with the Entropy, GovHack, and L2beat teams. We are committed to inclusivity and finding an optimal balance. Our goal is to conduct insightful research, provide meaningful findings, and create valuable learning experiences for delegates. We also aim to include high-caliber external experts and stakeholders to ensure a useful gathering for Arbitrum.
FAQ
1. What happens if we donāt do this now?
-
Our prior experience in similar situations has seen stakeholders come in and create a less elaborate version of an ecosystem development strategy that is just enough to get buy-in for them to meet their other commercial objectives. We see nothing wrong with them doing that. However, the problem arises after a number of them start trying to raise from the DAOās capital and, even after they get funded, compete for future allocations. If there isnāt a mature and clearly communicated strategy in place, which is then followed through with a Theory of Change, Logic Model, and Efficacy Measurement Framework, this creates a less healthy environment. One where the incentives become for all stakeholders to find the simplest and most well presented way to win a popularity contest with an audience that cannot possibly be expected to follow through in the appropriate level of understanding and detail. We have seen this play out unfavorably in other areas of our previous work, only to later be painstakingly fixed over years at much higher cost and complexity.
-
In simple terms we believe that the DAO should develop its own capacity towards creating RFPs for the initiatives it funds in these categories and have the management complexity to govern the funded service providers in alignment with its own best interest.
2. What is the outcome of this pilot proposal? How does that tie to a larger vision?
-
The outcome of this pilot proposal is to produce a detailed investment thesis, market consultation findings, community engagement feedback, strategic recommendations, and an operational plan. This ties into the larger vision of establishing a comprehensive, sustainable, and community-driven venture initiative within the Arbitrum ecosystem.
-
After a number of developments with the GCP, conversation with the Foundation, and various delegates, the scope of what was in the original proposal is changing drastically. We anticipate the overall cost of getting AVI operational should be less than half or what we shared in March.
-
A major driving factor of how much it would cost is the question of the level of preparation at which funds should start being allocated. Our original proposal assumed 12-18 months from kick-off. This is not unreasonably long, however market demand informs the need to act faster, so it might make sense to enable a number of initiatives in parallel or launch the whole thing much quicker.
3. How does this compare to other proposals? Aren't other people already working on this (Foundation, Treasury Working Group, GCP, M&A, BoB, Elixir, etc.)?
This proposal complements existing efforts by focusing on the strategic alignment and engagement of the community. While other groups work on specific areas, our initiative aims to create a cohesive and inclusive ecosystem investment strategy that leverages insights from all stakeholders.
Quick overview of the landscape:
-
M&A will naturally focus on areas where it serves as a key growth driver to improve Arbitrum products, offering and/or userbase via acquisitions of other projects. While AVI focuses primarily on developing an ecosystem on top of said offerings via the funding of new protocols and ventures. Furthermore the M&A initiative would create an exit environment for these funded projects. There is a good working relationship in place that would make even occasional overlaps complementary without duplicating effort and costs.
-
The current direction seems to indicate the Foundationās legal teams will handle a lot of the incorporation of entities on the back of work done around the GCP, which would make initiatives like AVI, the M&A, etc plug into that legal framework.
-
Betting on Builders - Infinite Launchpad, RnDAOās proposal, the Elixir Capital Startup Collective proposal, etc. are examples of proposals that AVI could eventually enable the funding for and oversee (and others less similar to this initial set). Moving forward itās extremely important to have a comprehensive strategy and thesis developed by AVI that would serve as a guidance to all of the aforementioned groups. That being said, we want to be clear that we are not advising that all of these should be delayed until AVI becomes fully operational. Rather we believe in a pragmatic step by step approach, where the different groups should continuously be enabled and where appropriate funded via grants to work in parallel independently in a decentralized manner.
4. Aren't there parts we need to wait to be established, like the VC entity or OpsCo?
- While certain elements depend on the establishment of specific entities or operational structures, the pilot phase does not and it enables us to progress with the foundational work, which in many ways the other initiatives can benefit from or might depend on themselves. This ensures we would have made the timely smaller investments in order to move quickly and efficiently once those structures are in place and they can take into account the direction of work as they are getting set up.
5. How does this relate to the OpsCo and GCP entities?
- This initiative is designed to complement and align with the efforts of the OpsCo and GCP proposals and all entities that might get setup as a result of them. By developing a community-driven ecosystem investment thesis, we provide an additional perspective to the strategic foundation that these initiatives also exist in.
6. Why is the IRL event not being done in Brussels?
-
Organizing the event in Brussels was considered, but due to scheduling conflicts and the aim to avoid overwhelming activities, we are exploring alternative locations and formats to ensure maximum participation and impact. Currently, we are favoring a live event in London, however we are in consultation with Entropy, GovHack and L2Beat as well as other interested delegates to find the best possible approach and location.
-
That being said our team will be present in Brussels and actively participate in GovHack as well as any other relevant activities that might emerge.
7. What does the timeline actually look like?
- The core pilot sprint is 8 weeks, focusing on the market consultation report. Additional activities such as workshops and the IRL event extend the overall timeline to approximately up to 4 months. Itās still in discussion when this 2 month sprint will commence and how the other activities surrounding it are organized. We are aiming for the shortest feasible timeline given stakeholder availability and dependencies between the activities.
Ahead of going to Tally we will link a GANTT chart with the latest plan.
8. Given the seniority of the team, why don't you already have a thesis? How come other initiatives seem to have more specific proposals?
-
The most important thing to stress is the difference between the investment thesis of a for-profit fund and the Ecosystem Investment Thesis of Arbitrum, where the main objective is ecosystem development, which is achieved through a financially self-sustainable evergreen structure.
-
We are working on the latter and, especially in a DAO, this should be done through an inclusive participatory design, collaborative process with timeline aligned with the cycles of a number of other initiatives in the DAO. For example, outputs from the treasury working group, setup of the OpsCo, software releases of the core product, milestones in the market development of Orbit chains, etc.
-
All of this should in turn support a simple, independently viable, investment thesis to the individual investment initiatives under it.
Next Steps
We plan to submit the pilot sprint proposal for a Snapshot vote before the end of the week given that we have already discussed the Arbitrum Venture Initiative proposal on the forum and with multiple DAO delegates and community members. We appreciate your feedback online and offline!
Acknowledgements:
@AlexLumley, @krst, @Djinn, @Bernard, @Sinkas, @coinflip, @dk3, @Caesar, @DisruptionJoe, @MattOnChain
Helpful links:
Original Version of the Pilot Proposal Archived for Reference
Context:
This proposal picks up from the conversations we had in Denver and 6 weeks of running the Arbitrum Venture Initiative (AVI) Working Group, including weekly workshops, async conversations, and multiple 1-1s with delegates.
Weāve confirmed existing pain points within the community, formulated an overall vision for the Arbitrum Venture Initiative, developed a high-level strategy for deployment, and started aligning with interested parties.
We are planning to submit a pilot phase proposal for a Snapshot vote this week based on all the feedback received so far, with a focus on developing a concrete strategy (thesis) for funds deployment and test case with allocators (VCs and other programs) while advancing stakeholder alignment. This will enable the initiative to launch successfully once the appropriate legal setup is ready and avoid delays leading to significant opportunity costs for Arbitrum.
We want to make sure to highlight our commitment to integrate the work that we are doing into any larger construct/umbrella that the DAO decides on if this should materialize and not create any conflicting workstreams. As well as to make all the learnings and insights produced available to the DAO or Arbitrum Foundation.
Further context in the original AVI proposal and AVI workgroup thread.
Abstract
Our teamās mission is to enable the Arbitrum DAO to boost the development and financial sustainability by:
- defining an effective approach for ArbitrumDAO to setup an Ecosystem Fund that would fund ventures aligned with the ecosystem through venture programs (e.g. VCs, venture builders, accelerators, etc.) and direct investing;
- and then executing on the said approach.
This proposal is focused on a āpilot sprintā, where weāll:
- Facilitate an IRL thesis development event and series of online workshops leading up to it, together with experts and the key stakeholders to develop the thesis and strategy in agreed-upon target areas for venture programs;
- In parallel do a market consultation with at least 30 founders and 15 funds, to test how the market sees the opportunity
The learnings and resulting thesis will be documented in a report to equip the delegates and group working on the thesis with the relevant insights.
Why conduct a pilot sprint?
Operating AVI represents a bold and pioneering initiative for blockchain ecosystems and as such it is also a complex undertaking that involves high capital needs. It also is one of several such in the Arbitrum DAO that require complex stakeholder alignment around setting up legal and governance structures. Thus, it is not appropriate to rush it before the relevant structures have been put in place.
At the same time, there is a significant opportunity cost in not progressing with good velocity on at least the components that can already clearly be acted on. A lean and pragmatic pilot phase to analyze key themes thoroughly and develop the necessary clarity will provide us with a solid foundation to build on.
Pilot sprint approach
The pilot sprint outputs intend to provide the DAO delegates and stakeholders with sufficient information to decide on advancing the Arbitrum Venture Initiative (AVI), or parts of it into the next phase of development, including its operationalisation and funding requirements. The sprint is designed to fund the operational team for 8-weeks long and is the natural progression of our existing Working Group efforts. As well as hosting a series of activities, workshops and an IRL thesis development event. The later would run before the 8 week sprint and and after it shaping up an overall timeline of up to 18 weeks depending on the approval date and scheduling constraints of various stakeholders.
The sprint will kick off in-depth research and workshops to identify opportunity areas (thesis development).
The pilot sprint will provide concrete data and analysis from various ecosystem participants and stakeholders. Armed with this information, we will have the strategic perspective (thesis development) ready for AVIās operation.
Key Output
An in-depth report detailing a shared, well-researched understanding in the Arbitrum community of where the opportunities related to investment lie.
Expected Outcomes
- Equip the DAO delegates and community participants with a deeper shared understanding about a strategy and approach to a coordinated and optimized horizontal strategy for Ecosystem funding and venture development.
- Align the DAO on strategic targets by providing strategic analysis and coordinating key stakeholders and delegates.
- Provide a platform for open discussion as well as active collaboration as we advance towards the next phase of the Arbitrum Venture Initiative (AVI).
- Engage a broad range of builders, capital allocators and talent around new ventures and value creation related to Arbitrum, while embedding their needs and ideas with deep empathy in future design.
- Produce general exposure and community engagement.
Deliverables
- 3 market opportunity mapping workshops (online)*A.
- 3 Briefs for Delegates to prepare for the Thesis Building Event
- 1 AVI Thesis Building event where key experts related to the thesis will be invited (1-day event in London / 20-40 ppl).*B
- 1 public evening event (on the same day as the thesis event), during which key insights and talks will be presented including a bigger community (80 - 120 ppl). *C
- 30 interviews with builders.
- 15 interviews with General Partners and other fund managers from various ecosystems
- A Synthesis Market Consultation Report summarizing key challenges and opportunity areas that the VC funding should address. *D
A* Examples of thesis exploration ideas that would be discussed during the online workshops and honed down on during the IRL event. DeSci and DePIN are two important current trends. DeSci is interesting from an Arbitrum perspective, among other reasons, because it naturally requires handling a lot of data and transactions on chains. DePIN solutions are relevant in that regard, however as things stand at present it is likely that a lot of these applications might get scattered across different L2s. In that case this would make them computationally inefficient, as they would have to work via the L1. But if a well considered cluster of such applications get attracted to Arbitrum this can create a particularly powerful network effect, making the natural place for such a well defined category. This is an example of a type of scenario that can benefit from being studied in depth to inform a thoughtful ecosystem investment strategy. While this is not necessarily the particular focus being proposed, it illustrates the sort of areas of exploration that might require the attraction of a diverse group of experts. Some of whom might not yet be natively in the Arbitrum ecosystem or in Web3 altogether.**
B* Location: The Farstar team favors doing the above work in London, where we have access to a broad engaged community to pull experts from. And our team has access to a variety of excellent locations that we can make use of. That being said our team is keen to maintain flexibility to run on another location if more accessible for key Arbitrum stakeholders as well as leverage EthCC in the build up to the event.
C* While the purpose of the event is to be optimized for the participation of effective delegates and other key stakeholders, which implies making it more intimate. In the evening after the event we would like to make this said central location open for the broader interested community and allow some of the ideas coming from it to spread creating visibility and excitement for Arbitrum.
Photo from a recent Web3 unconference our team ran in a venue we might use:
D* Here is an example report that was produced by Konstantina recently: https://www.fmfib.bg/media/20240314_Doklad_za_pazaren_test_FIP_i_FTT_clean_EN.pdf
Our team appreciates that a different format of the deliverable might be more appropriate in the context and will consult delegates and the community to adjust accordingly.
Team
We bring deep expertise in investing (web3 and VC), working with early-stage builders and in ecosystem building (Development VC) around frontier topics and emerging technologies. We have a long-term vision for Arbitrumās venture development and are committed to building for the community.
-
Lino: 3x founder, 15 years of experience in developing startup ecosystems and specifically through VC instruments with development aspects. Founder of Farstar.
Linkedin: https://www.linkedin.com/in/lvelev/ -
Konstantina: Head of Equity Financial Instruments in a EUR 1.3 billion Fund of Funds, focusing on Venture Capital ecosystem development. MSc in Investment Banking and Securities from the London School of Business and Finance.
Linkedin: https://www.linkedin.com/in/konstantina-voynova-5b660575/ -
Ana: web3 VC, 8 years of experience in web3, deep expertise in investing through executing 80+ deals as well as actively supporting early-stage founders in fundraising, strategy and navigation of various ecosystems. Co-lead of Farstar Swarms DAO.
Linkedin: https://www.linkedin.com/in/ana-maria-yanakieva/
-
Bart: is a former design researcher and founder with expertise in entrepreneurship education and community-based venture creation. He is Entrepreneur in Residence (EiR) at Hogeschool Arnhem Nijmegen and Guest Lecturer Entrepreneurship at Wageningen University in The Netherlands. At Farstar he is head of ecosystem products
Linkedin: https://www.linkedin.com/in/bartdoorneweert/
-
Immutable Lawyer: Lawyer & Regulatory Analyst + Founder of Axis Advisory; a digital asset law firm based in Europe with expertise in legal & corporate structuring as related to capital raising, investment strategies and DAO-Oriented investment vehicles. Immutable Lawyer is also part of the dYdX Operations Team which operates the dYdX Chain.
Linkedin: https://www.linkedin.com/in/joseph-axisa-1b86141b4/ -
Paul: Entrepreneur with 7 exits worth $4.7B and later head at Innov8 a $250m Singtel corporate venture fund.
Linkedin: https://www.linkedin.com/in/paulburmester/ -
Anish: co-founder, chief scientist, and CTO of Panther Protocol, focusing on privacy for DeFi. With over 20 years of experience in security and cryptography, heās advised projects like Ripple and Ocean protocol and contributed to Ethereum swarm. Additionally, heās served as a strategy consultant for Accenture and Capgemini, working with banks like HSBC and Lloyds
Linkedin: https://www.linkedin.com/in/anishmohammed/
Timeline
- Kick off - within 2 weeks after approval and KYC.
- Initial discovery interviews - week 1-2 after kickoff
- Workshops Identifying 3 key areas to focus the research weeks 2-4 (the team will try to leverage participating in Brussels to progress this, discovery interviews and recruiting participants for the market consultation)
- Market consultation interviews - week 4-8
- Market Opportunity Mapping workshops - spanning week 6 to 10
- Ecosystem Investment Thesis Development Event - week 10 to 16
- assumption is an IRL 1 day event in London. Fallback to other locations, formats (e.g. 2 day retreat) or going fully online would be supported and chosen in consultation with key stakeholders.
- Findings pack shared 1 w ahead of the event and draft report presented during the event
- Completion and submission of final report - no later than 18 weeks after kickoff
- Updates to the forum for community engagement and transparency will be done no less than bi-weekly
*More detailed plan and and GANTT chart will be attached ahead of a Tally vote once the specific kickoff date is more clear
Budget
| Items | Team | total |
|---|---|---|
| Core Team for 2 months ( interviews, research and report production) | Konstantina (lead), Ana, and Lino + Immutable Lawyer, Paul and Anish 1 to 4 d/mo capacity | $50,000.00 |
| Data Services and Misc Items | $4,000.00 | |
| Running a Thesis Development Event (IRL) with 3 preliminary opportunity mapping workshops and continuous community and stakeholder engagement | Lino (lead), Bart (facilitator), Ana | $45,000.00 |
| Total | $99,000.00 |
Next Steps
After the results of the snapshot vote and the discussion on this forum topic are analysed we will update the working group thread with next steps. In the mean time please comment and vote.
Acknowledgements:
@AlexLumley, @krst, @Djinn. @Bernard @Sinkas, @coinflip, @dk3, @Caesar, @DisruptionJoe, @MattOnChain
