Polkadot Accelerator (fund)
Overview:
Establishing the Polkadot Accelerator Fund with a mission to expedite the development of protocols within the thriving Polkadot ecosystem. Over the next two years, we intend to deploy this funds exclusively within the Polkadot ecosystem, focusing on nurturing projects in the DeFi and social application space. Our accelerator will be under the stewardship of a CFA charterholder, ensuring a strong financial and inovative perspective. All investments will undergo rigorous review by a committee. Our focus remains exclusively on supporting parachains, appchains, and projects building on top of parachains.
Insights and motivations:
Polkadot stands at a pivotal moment, where the need to catch up with other blockchain platforms in DeFi and social is critical. The onboarding of masses is paramount for its long-term relevance and sustainability. The window of opportunity for this transformation is fleeting, given the lightning-fast pace of technological advancements in the industry.
The upcoming removal of auctions in Polkadot 2.0 presents a unique opportunity to expedite project development through strategic investments. This, in turn, has the potential to spark exponential growth within the ecosystem. We anticipate witnessing true innovation and widespread adoption as a result of these investments.
It is imperative for Polkadot to shift its focus towards proactive investment in growth as a means of creating enduring value, rather than solely relying on the belief that burning resources will inherently generate value. Embracing growth-oriented strategies is the key to establishing Polkadot as a significant and lasting player in the blockchain space.
Objectives:
The core objectives of the Polkadot Accelerator Fund encompass:
- Empowering Emerging Innovators: Our primary mission is to provide unwavering support to new founders and protocol technology partners committed to building within the Polkadot Ecosystem and embracing Polkadot 2.0.
- Expanding Polkadot's Developer Community: We are dedicated to fostering the widespread adoption of Polkadot among developers, driving the growth of DApps and appchains. Our special focus is on DeFi and Social applications that have the potential to foster large and vibrant communities.
- Closing the Usability Gap: Recognizing the importance of user-friendliness and seamless onboarding, we aspire to push Polkadot catch up with other blockchain ecosystems in terms of usability and accessibility by seeding defi and social proyects.
- Attracting reputable Venture Capital: We aim to create a dynamic investment environment that not only supports emerging projects but also incentivizes established venture funds to once again support and invest in the DOT Ecosystem, contributing to its overall vitality and sustainability. By increasing the pre-seed investments in the ecosystem we will enable venture capitalists to support later rounds like seed and Series A.
Details and Investment Mandate:
Our investment mandate is structured with this key components:
Project Focus: The fund will selectively invest in Pre-SEED and SEED projects known for their exceptional quality and alignment with the Polkadot ecosystem. Our investment scope is restricted to appchain, parachains and those building on top of parachains.
Follow-On Support: As projects gain significant community engagement and demonstrate substantial development progress, we are committed to offering follow-on investments, ensuring ongoing support for their success.
Three Stages of Long Term Growth: Our fund envisions a total of three stages or capital calls, with this proposal exclusively addressing the First Stage/Capital Call. This structured approach allows us to adapt and respond effectively to the evolving needs of the Polkadot ecosystem, ensuring long-term success and growth.
- First Stage/Capital Call: In this inaugural stage, we aim to invest in 15 to 20 Pre-seed projects, with investments ranging from 75k to 100k per project.
- Second Stage/Capital Call: As the ecosystem matures, our second stage will involve 10 to 15 Pre-seed and Seed investments, with capital allocations ranging from 75k to 125k per project.
- Third Stage/Capital Call: In the final stage, we plan to make 5-10 Seed and Follow-On investments, allocating between 100k to 200k per project to further strengthen their development and impact.
Committee Oversight: Investment decisions will undergo thorough review and scrutiny by our dedicated committee. This ensures transparency, accountability, and the prudent allocation of funds.
Investment Committee Structure:
Permanent Members:
- Fund Director/Operator: Responsible for overseeing the fund's strategic direction, investment decisions, and overall operations.
- Analyst: Engaged in in-depth market research, due diligence, and investment analysis to support the committee's decision-making process.
Non-Permanent Members:
- Fund Advisors (2 Community Members): Distinguished professionals from the blockchain and investment communities who provide valuable insights, guidance, and diverse perspectives to enhance the fund's decision-making and governance processes.
This refined structure underscores the professionalism and expertise of the committee members while maintaining clarity regarding their roles and contributions. Approval of a seed investment requires a majority vote. Each committee member possesses the authority to cast their vote as 'yes,' 'no,' or can exercise a veto. Non-permanent members have the option to rotate or change.
Structure, Fees, and Transparency
In the initial stage, we aim to allocate funds for 15 to 20 Pre-seed investments, each ranging from 75k to 100k, over a span of 1 to 2 years. We are committed to maintaining transparency throughout our operations. To achieve this, we will publish a bi-annual report detailing the allocation of funds and comprehensive expense breakdowns.
Prior to the deployment of any capital, projects will undergo a comprehensive evaluation by our investment committee, a thorough KYC process facilitated by Synapse, and a legal review culminating in the signing of all contractual agreements through the use of Docusign.
Requested DOT Amount: TBD
In the initial stage of the accelerator fund, there will be no annual management fee. Instead, we have implemented a profit-sharing mechanism to incentivize optimal return on investments. Our proposal includes a 10% carry-on returns structure, which is intentionally reduced compared to industry standards, and it will just be applicable after the principal investment is fully returned.
Key Performance Objectives
Aim to deploy over 15 projects within the polkadot Ecosystem over a span of 2 years, driving robust ecosystem growth. Strive for a financial returns goal of achieving a multiple on invested capital (MOIC) exceeding 1.5x, ensuring returning the DOT raised.
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The proposer's involvement in VC and cryptocurrency investments dates back to 2016, with their inaugural investment in the Polkadot ecosystem occurring in 2020.
Items to include in the formal proposal are as follows:
- Complete name.
- Comprehensive resume encompassing traditional finance (tradfi) and cryptocurrency (crypto) experience.
- Multisig.
Comments (11)
Comments (11)
Provide —
- Info about proposing team
- Value back to treasury?
I have multiple questions
1. What specific criteria and due diligence processes will the investment committee employ to evaluate and select projects for funding? How do these criteria align with the overarching goals of the Polkadot ecosystem, and how will they contribute to its growth and sustainability?
2. How is the financial viability of the fund ensured over the long term, especially given the absence of an annual management fee? How will the fund maintain operational sustainability while also achieving a notable return on investments for its stakeholders?
3. What measures are in place to guarantee transparency and accountability in fund management, investment decisions, and reporting? How will the governance structure, including the role of the investment committee, ensure prudent and effective use of the fund’s resources while minimizing conflicts of interest and other potential governance issues?
Provide —
I have multiple questions
1. What specific criteria and due diligence processes will the investment committee employ to evaluate and select projects for funding? How do these criteria align with the overarching goals of the Polkadot ecosystem, and how will they contribute to its growth and sustainability?
2. How is the financial viability of the fund ensured over the long term, especially given the absence of an annual management fee? How will the fund maintain operational sustainability while also achieving a notable return on investments for its stakeholders?
3. What measures are in place to guarantee transparency and accountability in fund management, investment decisions, and reporting? How will the governance structure, including the role of the investment committee, ensure prudent and effective use of the fund’s resources while minimizing conflicts of interest and other potential governance issues?