Fundraising With DAOs

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

DAOs bring a new level of community engagement to startup fundraising.

The community within the DAO can support the startup not only with investment dollars but also by promoting and supporting the startup.

Here are some key issues with using DAOs for your startup.

The DAO in most cases is not a legal entity but rather an unincorporated partnership.

This means the members of the DAO are personally liable for any damages the DAO may cause.

DAOs use a network of people to constitute the DAO rather than a formal hierarchy of leadership.

This means there’s no one person to go to for a decision.

All decisions are made by community votes.

A startup fundraising campaign must be able to engage the community as a whole.

Most DAOs transact with their native token.

This means the value is not tied to a fiat currency such as the dollar and can swing in value drastically.

To fund a startup there needs to be a mechanism for moving the tokens into dollars for the startup to deploy for hard costs such as paying taxes.

Charitable organizations raising funding must also consider that distributing tokens for donations may not qualify as a charitable contribution.

Consider these issues with fundraising through a DAO.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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