Proposal: Financing Working Group proposal

General
1

Hi guys.

I am excited to announce that LXDAO has successfully passed Stage1, and we are ready to move forward with Stage 2!

However, as our self-funded treasury is running out soon, we must raise additional funds and resources to support the growth of LXDAO. With this in mind, I propose the formation of a Financing Working Group from the community to help us achieve this goal.

Title: Financing Working Group

Author: Bruce

TL;DR

Our self-funded treasury for Stage 1 is running out soon, and we need to raise funds for LXDAO’s growth in Stage 2. This will be a temporary working group focused on raising money for LXDAO.

Proposal Description

Goals

Our goal is to design appropriate funding plans and targets for LXDAO’s Stage 2 growth and achieve those targets.

Working details

  • Design funding goals based on our needs
  • Create the financing deck
  • Buidl connections with potential investors and presenting our project
  • Follow up on the progress and feedback
  • Raise enough funds

Team settings

  • Leaders: 1 or 2
  • Assistants: 2
  • FAs and consultants: unlimited

Leaders will handle day-to-day management and coordinate the progress of the entire Financing Team. They will play a core role in presenting LXDAO to potential investors and should have strong English skills. They must also have enough time to devote to this initiative and be able to prepare legal files.

Assistants will support the Leaders in organizing meetings, managing investors, following up on feedback and progress, taking meeting notes, reviewing investment tables, and recording PoC. They should also have strong English skills and enough time to devote to this initiative.

Financial Advisors and consultants will be unlimited and will help refer to appropriate investors or secure funds. Their contributions will be recorded by the assistants.

Rewards

  • Financial Advisors and consultants will receive a 1.5% reward for each source they refer to.
  • Leaders, Assistants, and active consultants will receive 0.5% of the total funds raised, as well as 5000U and 5000LXP from the rewards pool based on PoC.

This is a fixed amount of money, and the sooner we close the financing round, the sooner we can receive these rewards. The more funds we raise, the more we can offer in rewards.

Key Results

Our primary objective is to meet our fundraising goals and collect enough funds to support LXDAO’s Stage 2 missions and tasks as soon as possible.

1 Like
2

That’s an excellent proposal to elaborate on the details of the fundraising working group and how to reward each member according to his/her contribution.

But there are a few things that need to be addressed as follows,

  1. SAFT either provided by the VCs or LXDAO is an important legal document, it has to be prepared or reviewed by someone who has legal background or relevant experience. Someone who help with it should be rewarded accordingly.

  2. Who will be the representative of LXDAO DAO to sign the SAFT?

  3. Does the assistant has the duty to attend the pitch session and answer questions from VCs?

  4. Should we specify the total fundraising amount for this round?

  5. “the sooner we close the financing round, the sooner we can receive these rewards” Due to the bearish market, the fundraising period could be bumpy and long, I suggest the rewards could be given in a more prompt manner instead of closing the whole round, in order to incentive the working group to work harder and achieve our goal sooner.

1 Like
3

That’s a great question. At the moment, we don’t have anyone with a legal background on the team, but we can offer rewards for filling this role. It’s possible that 8DAO may have some legal experts, so I’ll reach out to them for assistance.

For simplicity, co-initiators can be representatives of LXDAO to sign the SAFT at this stage. Mostly me. So I’ll put my information in the proposal, and see if someone wants to go against it. Later, we might design a legal structure, and I’m happy to transfer the authority if needed.

Absolutely, assistants should attend the pitch session to take meeting notes, follow up with VCs, and answer any questions they can, but they are not required to make the actual presentation.

At the moment, our fundraising goal is to secure 1.5MU to support our operations for the next two years. However, depending on the circumstances, this amount may be subject to adjustment.

That’s a great point, and I completely agree with you. We should distribute the FA rewards as soon as possible after the DAO treasury receives the funds, at the DAO payday. As for the bounty pool, I suggest we create milestones to distribute rewards accordingly. For instance, we can distribute 1/3 of the bounty pool when we reach 50% of the fundraising goal, and then the remaining 2/3 can be distributed when we reach 75% and 100% of the goal, respectively.

Actions:

  • Add more rewards for legal consultants
  • List LXDAO representatives on the proposal
  • Specify the total fundraising amount
  • Better rewards-sharing plans
4

Proposal: Financing Working Group

Title: Financing Working Group
Authors: Bruce
Editors: Bruce, Tracy, and Sally
Date Created: 2023/04/10

TL;DR

Our self-funded treasury for Stage 1 is running out soon, and we need to raise funds for LXDAO’s growth in Stage 2. This will be a temporary working group focused on raising money for LXDAO. There is no fixed duration for the Financing Working Group. This group will be dismissed when reaching the funding goal.

Proposal Description

Goals

Our goal is to design appropriate funding plans and targets for LXDAO’s Stage 2 growth and achieve those targets.

At the moment, our funding goal for Stage 2 is 1.5 MU to support our operations for the next two years. This amount may be subject to adjustment depending on the circumstances.

Working details

  • Design funding goals based on our goal
  • Create the financing deck
  • Buidl connections with potential investors and presenting our project
  • Follow up on the progress and feedback
  • Prepare SAFT and legal files
  • Raise enough funds

Team settings

  • Leaders: 1 or 2
  • Assistants: 2 or 3
  • FAs and consultants: unlimited

Leaders will handle day-to-day management and coordinate the progress of the entire Financing Team. They will play a core role in presenting LXDAO to potential investors and should have strong English skills. They must also have enough time to devote to this initiative and be able to prepare legal files.

Assistants will support the Leaders in organizing meetings, managing investors, following up on feedback and progress, attending the pitch session, taking meeting notes, answering questions, reviewing investment tables, and recording PoC. They should also have strong English skills and enough time to devote to this initiative.

Financial Advisors and consultants will be unlimited and help refer to appropriate investors or secure funds. Their contributions will be recorded by the assistants.

Duration

Flexible duration

Rewards

We adopt an incentive system

Financial advisors and consultants will receive a progressive incentive based on the amount:

  • For amounts >= 10K, they will receive 0.5% of the amount
  • For amounts > 10K and <= 50K, they will receive 1% of the amount
  • For amounts > 50K, they will receive 1.5% of the amount

For example, for a deal of 150K, the financial advisor will receive 10K x 0.005 + 40K x 0.01 + 100K x 0.015 = 1.95K.

Leaders, assistants, legal consultants, and active consultants will receive 0.5% of the total funds raised and an extra 8000U + 4000LXP from the rewards pool based on proof of contribution.

Rewards will be distributed based on funding milestones. One-third of the rewards will be released upon reaching 50% of the goal, another one-third upon reaching 75% of the goal, and the final one-third upon reaching 100% of the goal.

Questions

Who will be the representative of LXDAO DAO to sign the SAFT?

For simplicity, co-initiators can be representatives of LXDAO to sign the SAFT at this stage. Mostly BruceXu. Later, we will design a legal structure, and Bruce will transfer the authority. Please vote against it if you don’t agree or have better ideas.

Key Results

Our primary objective is to meet our fundraising goals and collect enough funds to support LXDAO’s Stage 2 missions and tasks as soon as possible, We will provide weekly and monthly work reports

5

What is the duration of the financing group?

6

Good point, I’ll add to the proposal, the WG will be stopped when reaching the funding goal. So, won’t be a fixed duration.

And we will brief the community on progress weekly.

7

I think it is reasonable to say that the duration is not fixed, but that a summary report needs to be presented according to a time cycle

1 Like
8

I think it is a good idea, I still have some doubts about the proposal reward setting, I see that the reward setting is issued according to the proportion of the financing amount, and it is a target system, there is no fixed monthly salary is it?

9

That’s right, there is no fixed monthly salary for this position. I think this might incentivize team members to try to raise funds as soon as possible.

10

I’d suggest a higher commission for the FAs involved. For early investment, considering the risk, the market percentage of commission is around 5%.

1 Like
11

usually, FAs charge 3% for u or 5% for tokens. we can set this as the upper limit and set deals case by case.
also, still have concerns about what kind of VCs would input >10k. I asked some VCs before but they only invest in investment DAOs for deal flows. The problem is most DAOs don’t have guaranteed revenues, which is also our situation.
I’d suggest that we set a timeline for fundraising through VCs, ie half a year. If it turns out to be hard to raise money in this way, we would need to figure out another way. Otherwise, we won’t have adequate runway to scale.

1 Like
12

You are correct. We could set an upper limit and deal case by case for FAs.

Yeah, DAO is out of fashion nowadays. And not many VCs like it. Some VCs might be interested in the LXDAO R&D power. They need a project pool to invest in, especially early. Some of them might be looking for some buidler community for their ecosystem.

And most important thing for us is to continue building and find the project that can attract more funds or buidlers into LXDAO. It’s hard, but just keep moving.

Yeah, we should set a timeline for fundraising through VCs, 6 months makes sense. Also, prepare other ways like crowdfunding, selling NFTs, issuing tokens, etc.

13

I have heard we may have to create a “company” with limited liability to get the investment for the next stage. This has become a concern of mine.

As far as I know, the entity of a limited company is far different from a DAO. There will be a gap between the company and DAO on governance, regulations and taxation, which requires more paperwork to make sure the company and the DAO are solely bound and the current governance by community is applicable to the company.

I wouldn’t see a shadow company of DAO as a bad idea, but I’d consider this is a strategic decision for the future of the DAO because once this is done, there will be no way to revert.

Below questions should be thought twice:

  • Is a proposal required for the creation of the company?

  • Is this a requirement from the investor? If yes, are they really a web3 investor for DAO?

  • Is it possible we run the DAO as a DAO? Is unlimited liability a problem for a DAO or the nature of a DAO?

My 2 cents.

2 Likes
14

Good questions. I will create a new topic for DAO’s legal structure discussions. Easier to present to our legal consultants to advice.