[Non-Constitutional] Pilot Phase: Arbitrum Venture Initiative

[NON-CONSTITUTIONAL] Pilot Phase: Arbitrum Ventures Initiative


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 been adjusting the timeline, so the relevant AVI work can start 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.

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%)
Against - 10M ARB (6.62%)
For [Full scope] - 8M ARB (5.27%)
Abstain - 1.8M ARB (1.17%)


TLDR

We are proposing a pilot of the Arbitrum Ventures Initiative
Scope:

  1. A 2-month pilot sprint of the core team focused on executing the market consultation part of the scope.
  2. 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



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 team’s 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 AVI’s 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.
  • 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.
  • 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.
  • 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).
  • 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.

Reference: Market Consultation Report produced by fellow team member Konstantina: Head of Equity Financial Instruments in a EUR 1.3 billion Fund of Funds

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.
    • LinkedIn
  • 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
  • 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
  • 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.
    • LinkedIn
  • Paul

    • Entrepreneur with 7 exits worth $4.7B and later head at Innov8 a $250m Singtel corporate venture fund.
    • LinkedIn
  • 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.
    • LinkedIn
  • 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, he’s served as a strategy consultant for Accenture and Capgemini, working with banks like HSBC and Lloyds.
    • LinkedIn

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 don’t 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 DAO’s capital and, even after they get funded, compete for future allocations. If there isn’t 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 Foundation’s 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, RnDAO’s 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 it’s 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. It’s 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:

Full AVI proposal

Previous GOV HACK AVI proposal

AVI Workgroup thread

What do Want from Arbitrum Venture Funds

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.

We’ve 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 team’s 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 ‘pilot sprint’, where we’ll:

  1. 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;
  2. 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 AVI’s 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

  1. 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.
  2. Align the DAO on strategic targets by providing strategic analysis and coordinating key stakeholders and delegates.
  3. Provide a platform for open discussion as well as active collaboration as we advance towards the next phase of the Arbitrum Venture Initiative (AVI).
  4. 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.
  5. Produce general exposure and community engagement.

Deliverables
  1. 3 market opportunity mapping workshops (online)*A.
  2. 3 Briefs for Delegates to prepare for the Thesis Building Event
  3. 1 AVI Thesis Building event where key experts related to the thesis will be invited (1-day event in London / 20-40 ppl).*B
  4. 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
  5. 30 interviews with builders.
  6. 15 interviews with General Partners and other fund managers from various ecosystems
  7. 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 Arbitrum’s 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: Paul Burmester - Private AI | LinkedIn

  • 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’s advised projects like Ripple and Ocean protocol and contributed to Ethereum swarm. Additionally, he’s served as a strategy consultant for Accenture and Capgemini, working with banks like HSBC and Lloyds
    Linkedin: Anish Mohammed - SMAPE Capital | LinkedIn


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


Helpful links:

AVI proposal

Previous GOV HACK AVI proposal

AVI Workgroup thread

What do Want from Arbitrum Venture Funds

8 Likes

Lino, I heard you on the call today.

I have no doubts about the proposal, and I feel it is heading in the right direction.

As a founder based in Latin America and traveling to Spain at least three times a year, I just want to say that I am available to offer my insights on our company, the VC industry in Latam, review significant projects, or even help with initial conversations with Spanish-speaking founders.

At WakeUp, we work with many startups that are developing their first versions of their products, and it could be interesting to provide our opinion.

Both my co-founder and I will be in Brussels, so we would love to stay close.

If you need to reach me, here is my Telegram: @Gonzacolo

3 Likes

@Gonzacolo, this sounds great! Looking forward to meet you in Brussels and most definitely, with @ana.vc we’ll will followup with the registration form for the consultation interviews. :raised_hands:

1 Like

Thanks for the proposal @lino I agree with the fact that this pilot phase is necessary to test the feasibility and refine the strategy for AVI before full-scale deployment. It’s also nice to see the flexibility in the location and format of events, however I’d like to see some data collected by organising virtual events to see if its a cost effective way of deploying the events strategy. On top of investment themes which are widely known, it maybe worth looking at a few non consenus themes which have high potential but haven’t been able to latch onto a narrative yet.

@jengajojo, thank you for reading through and offering feedback!

Help me understand this feedback better. What I’m hearing is that your concern is that we might end up allocating a budget to do a number of activities, but not producing enough value, due to risks that get poorly managed?

Given your experience with the Arbitrum community and similar events and workshops, how would you describe the risks that we should really understand?

And in terms of data, what would be a good metric in your book?


Yes! Our team is almost more excited about going into new fields and emerging categories or even creating them. However that is likely to require more patient capital. At the same time a core objective is ongoing financial sustainability. And that definitely entails defending the areas, in which Arbitrum is already strong in or focusing on the current hot trends.

Different people and approaches would be needed for the different categories and the point is to create a broader functioning group of contributors and getting the pieces to fit together.

1 Like

Hi @lino, in the interest of transparency I will share here the main points that we discussed on our call about this proposal.

Although I do see the value in a Venture Initiative for Arbitrum, I am concerned that there is significant overlap with existing large scale initiatives such as the Gaming Catalyst Proposal (GCP) which is working with the Foundation to create an entity structure for the DAO.

As the GCP proposal states:

The GCP working group and Arbitrum Foundation are actively exploring entity setup to ensure DAO transparency while following the rigorous compliance guidelines that surround any entity focused on investments.

This effort also involves DAO members from the M&A, Ops Co, VCDAO, and other initiatives.

Furthermore, I am not sure that it’s the right approach to fund interviews and research (as you write, the budget is for a core team to conduct 2 months of interviews/research for 50k and then another 45k for thesis development). I would expect that for the level of caliber of the core team that you present (multiple times founders, multi exits, etc.), you would already come to the DAO with a thesis.

Lastly, as we discussed on our call, the core team that you propose to bring is new to Arbitrum DAO, therefore there is probably still reputation building to be done before a funding ask is made.

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Hi @RikaGoldberg, thank you for taking the time to speak the day before and for writing up your thoughts here!

Comments below:

Yes that was indeed potentially the case at the time all these initiatives started. We’ve since had numerous conversations with delegates and the foundation. It was a legitimate concern, which we also shared, and it has now been largely resolved. As a result of the GCP passing successfully the foundation would likely have to incorporate a legal structure that can also support initiatives like AVI, the M&A proposal, etc. Hence, from our perspective our proposal is complimentary.

Depending on how this pans out the implication would be that the overall budget in the original AVI proposal might drop by over 50% as a result of piggibacking on the progress made by GCP.

We were encouraged by delegates to focus on the components of the work that would be value generating regardless of how the GCP and legal structures pan out. And this pilot proposal is the result of that. The scope of it has no overlap with other inititaves to our knowleage.


A key distinction to stress is the difference between:

  1. The primarily profit-oriented thesis proposals of individual funds.
  2. The ecosystem investment thesis of Arbitrum, which aims to be profitable for sustainability, but prioritizes ecosystem value.

We are focusing on the latter, and the DAO not funding it creates the wrong incentives.

Furthermore, especially in a DAO, we believe this should be done through open and inclusive participatory design, which is what we are trying to enable.


While the team’s general experience, including in the Web3 space, is easily referenceable, I acknowledge that some members may be unfamiliar to many in the Arbitrum community. We are keen to address this.

I appreciate the focus on risk management. In proposing this pilot phase, we believe it represents a balanced approach to create the necessary capacity on a timeline relevant to market demand. We welcome any appropriate oversight. If delegates indicate otherwise, we will adhere and course correct.

Savvy DAO has voted FOR the Pilot Phase: Arbitrum Ventures Initiative

See delegate thread for reasoning. Savvy DAO - Delegate Communication Thread - #43 by SavvyDAO

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Voted “For”…
The pilot aims to refine investment strategies, identify key sectors, and align stakeholders, laying a solid foundation for effective and impactful venture development within the Arbitrum ecosystem.

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I’m voting ‘For’ because this pilot strategically aligns investments with ecosystem needs and sets a solid foundation for future growth.

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I am voting ABSTAIN on this proposal.

I really like the idea. We should pursue the venture investment thesis for our DAO. We are in a phase of our industry mature enough in which this is doable.

Just, I think this pilot phase as it is doesn’t make too much sense.

If I read both the current AVI proposal that has been published in snapshot just a couple of days ago, compared to the tally m&a proposal already approved, this is what we can read.

  • In the M&A proposal we have: value upside analysis […], Assessment […], Facilitating interactions across the DAO […] strategic analyses of target areas […], Integration options […]
  • In the AVI proposal we have: 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 clearly shows for the AVI initiative not only very similar deliverable of the M&A, but also a very similar semantic, without the specificity (not reported here but available in tally) of the specific, different field: ventur capitalism. Amost a 1:1 overlap, up to the point in which in the AVI initiative there is also the willingness to have an IRL event much as in the m&a initiative that will participate to GovHack at EthCC.
The above is especially true when i read about new initiatives such as Elixir which adds a lot of detail to the venture considerations, despite being a younger one.
And speaking about Elixir, another thing to consider, which could be secondary but worth some reflection, is how AVI proposes to “funding and oversee” eventually initiatives like this one and others in venture capitalism, without really providing any meaningful detail.

Don’t get me wrong: i am ok in AVI going for a pilot phase, I am ok with it doing also an IRL event, much as m&a. The fact that the structure is a copy carbon can likely mean that the pilot phase for this type of initiatives should be structured this way.

But to me it just seems strange that the outcome is exactly framed in the same way as the m&a activity without the same specificity for its specific field - being in the venture capitalist industry -.
If I also look at the cost being double, $99k, compared to the $52k of m&a, it raises even more doubts for me.

I don’t know if the proposal will go through or not. My hope is that, if it goes through, the above will be addressed before tally at least.

Let me reiterate again: I think this is a good idea for our dao, and i think there are differences compared to m&a and, partially, with gcp. I just think we need to better tailor the initiative.

Finally, just to be crystal clear and shred any doubt: i have actively participated to the m&a working group, but i am not currently part of areta which is leading that initiative. So I am relative neutral to this, and giving opinion mostly from the standpoint of an arbitrum builder looking at the future of arbitrum. Yes, let’s do venture, but let’s do it in the right way.

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Thanks @lino and the team for working on the initiative for a while and putting together the proposal.

While the budget seems reasonable for the pilot phase of a potentially huge initiative, we echo @RikaGoldberg and @JoJo 's concerns that there are many similarities to other initiatives that reserve quite a huge amount of funding from the DAO. We feel the DAO is very much in rush to do all the things without proper coordinations. Would we be able to wait for, say the M&A pilot program to find any relevant issues to be addressed in AVI and start working on them in the future?

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I’m voting “For”. This is a well put together proposal and the budget is not too high. I have the same concerns raised by the other comments above on the fact that there are already quite a few similar initiatives (specifically m&a) and there is no rush to keep opening new ones before we see the results, but given the relatively low cost it is still worth exploring this pilot phase. I do hope to see the proposal be refined before going on tally and the above delegate’s comments be addressed.

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0x_ultra thank you for the support. And also @JoJo, @tane I appreciate the concerns and our team is committed to address them not only before Tally, but also ongoingly during the execution of the project.

It’s true that we are following some of the same steps as the M&A team. And especially we think how they’ve engaged the DAO has been exemplary and we’ve been adopting this and other good practices observed. But the nature of the larger scale projects and their outcomes are quite different. We’re committed to building on what M&A or any other groups has already developed to avoid waste.

I’ve read the original M&A proposal repeatably and engaged @Bernard, to get more insights. Once I speak with him, I will update the FAQ section here with more details, as well as commit to whatever steps aligns the work being planned better.

Additionally, the AVI pilot timeline has built-in flexibility around when the core work gets done to create optimal staging and integration. All relevant collaboration activities are also provisioned for and we have anticipated having Areta invited to whatever we organise and have planned to participate in any format they make available too.

And as there was uncertainty around exactly these activities during delegate conversations we introduced a voting option to support with reduced scope and thus cost. This became not too clear during the Snapshot vote due to unforeseen character limitation, but this what the [No IRL Event] option was meant to indicate.



Our teams have prior relationships and we’ve been familiar with their work leading to this proposal. As was made clear during the governance call yesterday, while coming to the forum now, it is not a new/young initiative, but rather the product of thoughtful work with a lot of embeded complexity.

How it is to be to be supported to some extend covered in the full AVI proposal and the reasons it’s not detailed more is partially due to uncertainty from a legal pov. Our operational assumption has been the setup of Arbitrum exclusive evergreen fund of funds that invests in initiatives like the Elixir’s proposal. And builds the core capacity to create efficacy metrics and reporting that can continuously be aligned to Arbitrum strategic priorities beyond financial RoI.

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I have concerns around allocating too much of the treasury towards venture type initiatives with the GCP set to pass… and with other initiatives under this category, in addition to the AVI, continuing to march forward. Additionally, I find little value in the IRL workshop given ETH CC in Brussels is just around the corner and I believe that the logistics to organize such an event will prove much more difficult in practice.

With that being said, Lino, Ana, and the rest of the AVI team have put a tremendous amount of time and effort into this initiative, and I think $54k is a reasonable ask to put together a highly detailed plan IF we believe this has a chance at passing post pilot phase. Otherwise, we are wasting the AVI team’s time/resources as well as the DAO’s contributors.

The vote is live on snapshot here.

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Voted FOR. This proposal is good for the Arbitrum ecosystem to enhance its venture development.

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@swmartin, thank you for commenting, and for all the support and engagement up to now.
By way of comments:

  • the IRL event idea came out naturally out of delegate discussions, but our team is not particularly attached to it. We’d be keen to fit in the activities of other groups facilitating delegate engagement as long the objectives can be accomplished. If this ends up being the conclusion we’d be most happy to descope that part of the budget.
  • A key point here which I think we have not been fully successful to convey is:
    • Supporting AVI is not inviting more overall investment in venture necessarily, unless the desire is to not fund anything besides the GCP.
    • Rather it’s trying to prevent a piecemeal approach on first come first serve basis from all the other proposals, of which there are more to come, for something that’s so strategic and long term in its nature. One example that a delegate gave yesterday after discussing this proposal is that it’s akin to how Base are setting up the trifecta of Development Platform, App Ecosystem and Capital Markets in a more deliberate way. We haven’t looked into what they do there deeply yet, but sounds exactly right as far as the venture aspect of the capital market is concerned. The conclusion of AVI’s work can be that the correct decision is that no more money is invested in the next year until xyz is met.
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This vote was quite conflicted for us. We believe something like this could be very useful, but frankly, it is just not the right time for something like this. With prior support for M&A pilot group being passed and also the significant gaming fund likely to pass, we think the DAO should let these bets sit and come to fruition for a little bit of time before moving with these venture and fund projects.

Overall, the concerns associated with this project and certain other specific things have been discussed. We’d like to talk about a possible framework the DAO should adopt for these venture funds as to not crowd and spend too much of the treasury at once?

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I’d like you to consider a couple more points in your future report:

  1. Consider the possibility of not determining all promising venture operations yourself, but delegating this to professional VC (how we do with RWA)
  2. Analyze all investments taking into account the Bull/Bear market.
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@PGov , thank you for the comment. I think we’ve done a really poor job at communicating this clearly enough, but the motivation behind AVI is:

a) venture investment is something that should start replacing purely grant based above a certain scale to preserve the sustainability of the treasury among other things. And we’ve stated that at time of writing it looks like high volume investment in the ecosystem is on order based on macro conditions. The timeline anticipated is up to 12-18 months to structure that, at the scale suggested and integrate any other commitments that might have happened along the way. This would in fact allow plenty of time for learnings from other initiatives like GCP that is already 9 months ahead to materialise.

b) more importantly as things like the GCP are starting to happen we need to avoid a piecemeal approach where a number of these initiatives happen without an integrated strategy, thesis, theory of change, logic model and efficacy metrics, that connects to the lifecycle of the DAO and it’s core business.

hence supporting AVI is directly aligned with alleviating the concern you’ve raised.

Would you be for joining a call on that topic or a twitter space, which we can open to others too to tackles these issues?