Ex-Polychain Partner Tekin Salimi Launches $125M Crypto Venture Fund
The new fund plans to convert into a decentralized autonomous organization, and involves Terra’s Do Kwon and Avalanche’s Emin Gün Sirer.
Tekin Salimi, a former general partner of crypto venture giant Polychain Capital, is launching a $125 million fund for seed investments. He said he later plans to convert the fund into a founder-owned decentralized autonomous organization (DAO).
The fund, called “dao5,” arrives as the lines between traditional venture vesting and crypto-native investment DAOs are becoming increasingly blurred, and big players are leaving the incumbent venture giants to strike out on their own.
Soon to be announced at the Avalanche Summit conference in Barcelona, Spain, dao5 has already secured the $125 million in funding, raised primarily from “crypto-native” investors and with Salimi himself contributing a portion of the capital.
While dao5 will target check sizes of roughly $500,000 to $2 million for pre-seed and seed-stage deals, Salimi is experimenting with the fund’s structure, namely, giving the founders of the fund’s portfolio company a stake in the carry by eventually converting the fund into a DAO.
“I think one venture capital ideal has always been to create a community of their founders,” said Salimi, pointing to incubators like Y Combinator, which organizes its founders into cohorts and boasts an illustrious alumni network. “It’s hard to incentivize founders to help each other. What DAOs really unlock is the financial incentives.”
How dao5 works
Every time dao5 makes an investment, the founders of the projects will receive an allocation of tokens representing the profits of the fund. Namely, Salimi and the rest of the dao5 investment team get diluted.
Over time, this process results in every portfolio founder having economic exposure to the token of every other portfolio founder. The goal is to incentivize founders to collaborate with each other, collectively driving up the value of the tokens.
Salimi admits that much of the tokenomics is still up in the air, and the fund does not plan to convert into a DAO until approximately three years in, or when at least 70% of the capital has been deployed. Additionally, the DAO’s tokens will only be valuable if the fund is profitable.
The fund’s advisory board – which will help with diligence and originate deals – boasts heavyweight founders like Terra’s Do Kwon and Avalanche’s Emin Gün Sirer.
Salimi said he’s looking to invest in “category-defining” projects that fall more into the fringes of crypto than the traditional platform or infrastructure companies. Salimi points to OlympusDAO as one project that “changed his thinking” about tokenomics, and the type of boundary-pushing experiment he’s looking to fund.
“I use the word ‘experiment’ a lot to describe this,” Salimi told CoinDesk. “On the one hand, it’s a traditional venture fund. On the other hand, it’s uncharted waters in starting a new form of founder money.”
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