Copenhagen is a long way from the gilded technology hub of Silicon Valley. But when Nordic
entrepreneurial duo Anker Bach Ryhl and Mads Lunau Liechti wanted to raise capital for a
new NFT marketplace, they managed to get the ear of a blue-chip Silicon Valley venture
firm, Bessemer Venture Partner, through a social media campaign.
Bessemer believes the landscape of investing is evolving, and the needs of entrepreneurs
are shifting with it, including a necessity to re-think portfolio services offered by venture
capitalists, and democratise access to private markets.
But Bessemer is not your average VC. In March 2022, Bessemer committed $250 million in
capital to invest in Web3 projects across three core areas: consumer decentralised finance
(DeFi), infrastructure and other enabling technologies. And through their own decentralised
autonomous organisation (DAO), they seeded Rhyl and Liechti’s curated marketplace of
fashion NFTs.
While the funding of OWND through Bessemer’s steel DAO is infinitesimally small beans in
the capital markets world, its funding story is an important ripple in a much bigger wave – of
how DAOs are emerging as the democratic powerbrokers of the blockchain world.
Democratic purchasing power
Driven by the principle of democratic ideals, DAOs are powerful communities of founders,
creators and investors seeking to transform Web3.
DAO communities have positioned themselves at the centre of blockchain adoption, where
they see themselves as a key architectural pillar of the next version of the web that is
dependent on decentralisation powered by blockchain technology.
Community is the essence of the DAO – and the real driver behind DAOs is the idea of
communal power – to exercise democracy and consider the interests of multiple
stakeholders rather than one person or entity.
Getting the DAOlow
Essentially DAOs are a set of rules or contracts that govern entities. NFTs provide the assets
and the DAO provides the communal ownership.Some of the smaller DAOs, dwarfed by the behemoths such as Uniswap and Ape, are the most revolutionary.
For example, the Friends with Benefits DAO launched in 2021 with the mission of
constructing a social community that could coalesce around Web3 adoption and education,
as well as hosting local in-person events.
The DAO raised $10 million led by innovative blockchain VC 16z to power its global
community on and offline. The DAO demonstrated the value to be generated from growing
online communities on platforms such as Telegram.
In search of a better internet
Friends with Benefits developed its loyal community through a token-gated channel on
Discord, but it has announced it is now rolling out a social networking application through a
decentralised, members-only platform.
Friends with Benefits has expressed its aim to foster genuine relationships by allowing
members to connect with each other, read governance proposals and discover upcoming in-
person events.
It promises that its members can convene, collaborate, share, and socialise. It promises no
aggressive advertisers, no algorithms – and no spam bots. Its founders have a zeal to be part
of a movement that creates a better internet. Only time will tell, but they are, at the very
least, prepared to do things differently.
Challenges remain
It is not all one-way traffic for DAOs though. Despite their growing popularity, DAOs face
elevated regulatory uncertainty. In many jurisdictions, the legal status of DAOs is opaque.
Many traditional regulatory frameworks are intended for centralised organisations and may
not be suitable for decentralised organisations such as DAOs.
There are also some deep concerns about the potential for DAOs to become vehicles for
nefarious activity, such as money laundering and terrorist financing.
The blockchain community has a chance to build back better. While, clearly, there will be
challenges ahead, the innovative thinking that drives DAOs show there is, at least, hope in
the search for a better, more equitable internet.
