Request for Investment DAOs

Hydra Ventures
September 22, 2023
min read

Hydra Ventures aims to reshape the investing landscape by funding the next generation of community-driven investment DAOs. As a new type of decentralized investing, community-first investment DAOs represent a huge upgrade over traditional structures

We are calling on founders, subject-matter experts, and visionaries to start their own investment DAOs. We’re here to help you make it happen.

Why start an Investment DAO? 

An investment DAO is the best way to empower a community to foster innovation and growth. It provides a flexible structure for investing in a specific thesis or sector. Experts and capital providers can collaborate, sharing their respective expertise to make better investment decisions. 

Investment DAOs offer tangible benefits over traditional vehicles like angel investment syndicates:

  • Expanded Participant Set: Angel investor syndicates are run by 1-2 individuals, and traditional VCs are run by small groups of generalist investors. Most LPs of syndicates or funds are not value-additive because they have relatively little incentive, expertise, or time to make substantive contributions. Investment DAOs welcome a wider range of participants, including founders, operators, and researchers. This allows a diverse set of voices to contribute to investment decisions, which leads to better investments and wider access to promising early-stage projects.
  • Aligned Incentives: Hydra's investment DAO framework emphasizes the alignment of economic incentives among its members. This approach rewards valuable contributions, fostering a collaborative and productive ecosystem and tackling the free rider problem. 
  • Beneficial Constraints: We understand that too much choice can be costly. Our design imposes essential constraints to focus collective energy on fundamental investment functions. This approach streamlines operations, reduces disputes, and ensures impactful participation.
  • Community as Killer App: Beyond mere financial gain, investment DAOs serve as unique community incubators, providing a "third place" between work and private life. These values-driven communities are a breeding ground for trust, learning, and camaraderie.

To address potential challenges, we have developed a framework that makes the process easy and minimizes the downsides by providing strong legal and incentive structures. Our goal is to facilitate similar growth that was unlocked by the development of the Delaware LLC and the Y-Combinator SAFE but for decentralized investing. 

How to start an Investment DAO

Here are the concrete steps to get started:

  • Define Your Investment Thesis: Your DAO's thesis and mission are essential. Outline what your focus area will be. 
  • Collaborate with Hydra: As a fund-of-funds composed of experts in DAO design and operations, we will guide you through the entire process, from legal frameworks to incentive systems.
  • Assemble Your Community and Raise Capital: Gather like-minded individuals who share your vision. We will help you develop a compelling pitch that resonates with potential investors. 
  • Build and Operate: With our organizational model and full-stack operational framework, you'll be able to quickly deploy your DAO to start making investments and growing your ecosystem.

Investment DAO Ideas

The best investment DAOs are focused on a particular thesis. These theses can vary widely, ranging from niche areas of web3 to regional-focused groups to rare physical items. While we are open to a wide range of ideas, especially with the right summoner, we wanted to share some potential Investment DAO concepts that we would be excited to support or incubate. We hope they can serve as potential inspiration for your own exploration.

Focus Area
Quick Description
Real World Assets
Investing in technology that bridges traditional finance and DeFi by tokenizing assets to unlock value and reduce transaction costs.
Regional Focus
Focus on investment opportunities in specific regions or emerging markets, for example, Japan / East Asia.
Private RPC
Investing in the decentralized private RPC space, with opportunities in MEV profit sharing and privacy tools.
DAO run by AI Agents
Investment decisions guided entirely by seed-funded AI agents, aligned with set goals and focus areas.
Modularity Middleware
Investing in middleware beyond infra for the appchain thesis
Streamers & Creators
Investing in rights from small and medium-sized content creators across various platforms.
Quantum Computing
Investing in quantum secure encryption and messaging services.
Focused on aging and investment in various types of luxury aged alcohols, such as whiskey.
Web3 Gaming
Investing in decentralized gaming initiatives and assets.
Value Tokens
Acquiring undervalued tokens from important projects in the DeFi and broader spaces.
Investing in decentralized physical infrastructure projects like wireless networks and autonomous machinery.

This is just a small subset of the possibility space. If you feel inspired by one of the ideas or think you have a great investment DAO thesis, reach out to discuss why you’d be the right creator for it. 

When NOT to start an Investment DAO

Investment DAOs are not a one-size-fits-all solution. They have specific attributes that may not align with everyone's investment goals or management style. Here are some elements where an investment DAO might not be the best fit:

  • Centralized Control: If you prefer to have sole authority over investment decisions, an investment DAO is not advisable. These structures thrive on collective intelligence and decentralized decision-making.
  • Discomfort with Ambiguity: If you prefer a straightforward, linear path to decision-making and aren't open to collaborative solutions, an investment DAO might not be for you. 
  • Low-Risk Tolerance: If you're risk-averse, the experimental nature of DAOs and the assets they often deal with might be a poor fit.

Final Thoughts

The future of investment is decentralized, community-driven, and rapidly evolving. If any of the ideas presented here resonate with you, now is the time to step into the arena. If you are a top-tier investor, founder, or subject-matter expert and believe you can start the next big investment DAO, reach out to us here

We have more content and events on the horizon to further explore the potential of investment DAOs. Follow us on Twitter and join our newsletter to stay up to date.

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