Learn on SubDAO: What is a Venture DAO?

SubDAO Protocol
7 min readMay 1, 2022

With the rise in Blockchain technology and cryptocurrency adoption, many startups spring forth, each looking to solve existing problems with unique approaches. Regardless of the diversity in their propositions, one thing common to these startups is the need to get key investors. Like regular startups, crypto companies in infancy need Venture Capitals to jack them up, betting on them by investing huge amounts with high hopes of success.

Unfortunately, the centralized nature of traditional Venture Capitals is contradictory to the core purpose of Blockchain and cryptocurrency — decentralization. It makes no sense to subject the funding process of a decentralized project to the corruption and nepotism prevalent in centralized systems; as a result, Decentralized Autonomous Organizations became favored as the go-to method for funding crypto startups.

DAOs make it possible to democratize the investment process without central regulation, hence expanding access; therefore, anybody can participate in startup investment easily, without having to “lobby” a few influential people. This birthed the term “Venture DAO.”

Venture DAO is coined from two terms; venture and DAO. Therefore, to perfectly understand the concept of a venture DAO, it is essential to get familiar with each concept, i.e., “venture” and “DAO.”

What is a Venture?

In simple terms, a venture is a business enterprise that involves risking capital in the hope of huge profit. For example, a venture capitalist invests in new businesses, risking a lot of money to ensure the business succeeds; if it does, the investor makes a fortune.

What is a DAO?

DAO is an acronym for Decentralized Autonomous Organization. Traditionally, an organization of people with a common goal usually involves a central authority, a leader, or a group of leaders. However, with the rise of blockchain technology, decentralization has become an increasingly adopted concept, and DAOs were birthed.

With Decentralized Autonomous Organizations (DAOs), decisions are collectively made by all members; there is no CEO, COO, CFO, or any other “leader” who can make rash decisions at the expense of others. DAOs are powered with smart contracts that require a consensus before executing any command. Before money is spent from the treasury, the group has to collectively approve it; hence, all members of a DAO have a say in decision-making.

So, how do we coin both definitions to perfectly describe a Ventures DAO?

Simply put, a Venture DAO is a decentralized organization that seeks to invest the combined resources of its members for huge returns. Hence, a venture DAO is a development that seeks to instill decentralization into traditional investment organizations, making it such that a few select individuals do not decide the fate of hundreds or thousands of people. Instead, the community makes joint investment decisions via voting and consensus.

Since Venture DAOs are decentralized, not managed by any individuals, but with computer codes (smart contracts), how do they function efficiently?

To make important investment decisions, community members must agree on a consensus by signing off on their votes using their private keys on a multi-sig wallet. Depending on the consensus results, the smart contract will accept or reject a proposal. Some DAO projects built on Aragon issue voting tokens to each member, allowing each member to vote on a proposal by spending tokens.

Regardless of the model, whether multi-sig or tokenized, the takeaway is that decisions are made in consensus.

To pick the points, A Venture DAO helps to:

  • Avoid corruption in investment organizations.
  • Avoid autocracy in investment organizations.
  • Involve all members of an organization in decision-making.
  • Achieve equality in opinions.
  • Avoid privileged access to funds by a select few since everybody has to sign off to allow access to the treasury.

Why Venture DAO is the Future of Crypto-Based Investments

The world is further transitioning towards decentralization. Web 3.0 provides a blockchain-based internet, where data isn’t controlled by a single entity, and this paradigm shift will expectedly cut through every sector, including finance, investments, organizations, etc.

With the help of the Blockchain, autonomous transactions are possible via smart contracts; hence, no corruption is possible, unlike in the traditional world where several politics can be played to alter the consensus to please a few influential people.

Venture DAOs also make it possible to fund blockchain projects without necessarily waiting for the “big boys.” In other words, instead of waiting for billion-dollar Venture Capitals, several individuals can come together in a DAO to fund a project. This helps the crypto community, as more people can contribute to development, with a larger pool of ideas to pick from, without anyone imposing their idea on another.

According to data from DeepDAO, DAOs have raised over $11 billion, each with different purposes; safe to say, THE FUTURE IS NOW.

Below are some examples of Existing Venture DAO projects as of Q1 2022

  • MetaCartel Ventures: Metacartel was the first venture DAO created in 2018. It was created for making angel investments into early-stage DApps to make handsome returns. Metacartel Ventures is open-sourced, and its tools are available for other DAOs to improve on.
  • The LAO: The LAO is a US-based DAO built on the Ethereum network. It allows users to pool resources to invest in projects and share profits.
  • Angel DAO: Angel DAO is a venture DAO built on Aragon — an Ethereum-compatible DAO protocol. Angel DAO invests in community building, network participation, and software development projects.
  • Flamingo DAO: Flamingo DAO is another US-based DAO built on the Ethereum network. It is a DAO that makes it possible for members to develop NFT-focused investment strategies.
  • Komorebi Collective: Komorebi collective is a DAO founded by “Women in Blockchain,” “she256,” and Kinjal Shah, an angel investor at Blockchain Capital. It is a DAO that seeks to fund promising crypto startups established by women and non-binary people.
  • CSP DAO: CSP DAO is a community-driven DAO that focuses on investing in Web 3.0/blockchain projects. CSP DAO has its native token (NEBO), which is used to organize fundraising and allocate community rewards.
  • Honey DAO: Honey DAO is a decentralized venture that allows DeFi projects to apply for funding by submitting project details on their website. They aim to grow the DeFi ecosystem by funding as many projects as possible.
  • Stacker Ventures: Stacker ventures is a venture DAO that pools funds to support promising crypto projects before they become mainstream.
  • Duck DAO: DuckDAO is a decentralized venture with a large community of over 25,000 members; they have invested in over 50 projects, providing incubator services for them while also creating a “DuckFARM” for investors to provide assets for yield farming and staking. Duck DAO has its native token, “DUCK,” which is used to govern the ecosystem and receive rewards.
  • New Order DAO: New order DAO is a venture DAO based on the Avalanche network. It serves as a launchpad for innovative Web3.0/blockchain products, tools, and applications in line with the DAO’s vision of achieving financial composability and interoperability.

Why SubDAO Venture DAO Template?

SubDAO is a multi-chain DAO protocol that allows any decentralized organization to swiftly create and manage DAOs. We are committed to facilitating a seamless Web3.0 entry by providing blockchain-based digital agreement signing, DAO social networking, asset management, and other tools and services.

We released the SubDAO ventures DAO template as our first project because we believe that Ventures DAO is currently the most critical use case of DAOs, particularly with the growth of venture capitals in sync with the paradigm shift of the internet from Web 2.0 to Web 3.0. Like other venture DAOs, the SubDAO’s template allows multiple users to establish decentralized venture capital; hence, crucial financial and investment decisions like fundraising, asset management, and equity settlements can be completed on-chain.

So, what makes the difference? What sets SubDAO apart from the rest?

  • Interoperability: Some of the platforms that provide necessary tools for efficient DAO governance are only available on a single chain. Aragon DAOs, for example, are only available on Ethereum.
  • Decentralization of Decision Execution: SubDAO templates are built to facilitate a widespread decentralized decision-making system by ensuring that decision-making in DAOs isn’t limited to simple voting. Typically, a voting system is limited to two choices — YES or NO, AGREE or DISAGREE. However, this limits choice and confines the decision possibilities of an organization.

Critically examining the situation, it is possible to have thousands of varying decisions. Hence, to improve existing DAOs, the SubDAO system has improved consensus by developing a voting system that executes decentralized decisions, so choices are no longer reduced to binary.

  • Fully Decentralized Processes: Many organizations using existing DAO platforms have complained severally about their DAO tools. Due to this unsuitability, organizations only decentralize access to funds by using a multi-sig wallet, while other aspects of governance remain traditional (centralized).
  • Sophisticated System: To combat the suitability issues above, SubDAO boasts of sophisticated yet simple-to-use tools for DAO governance. As a result, decentralized organizations can keep all their processes decentralized without compromise.

Not many protocols can boast of this; in fact, hardly any existing DAO system can meet up with SubDAO venture DAO’s level of sophistication. This makes it possible for governors to adopt advanced decision-making and dividend distribution mechanisms.

SubDAO’s ventures DAO Template also supports both primary and secondary market investments, as well as NFT assets purchase. In the future, the SubDAO team will upgrade the ventures DAO Template to allow DEX transactions by supporting dApps like Uniswap, dYdX, PancakeSwap, SushiSwap, and more.

About SubDAO

SubDAO is a multi-chain DAO protocol. It allows any decentralized organization to swiftly create and manage DAOs. We are committed to serving as a Web3.0 entry by providing blockchain-based digital agreement signing, DAO social networking, asset management, and other tools and services.

The founding team of SubDAO is composed of the former Technical Team leader of the IBM Group and many early well-known developers from Polkadot. SubDAO has completed multi-million dollars financing from dozens of institutions including Hypersphere, Huobi Ventures, OKEx Blockdream Fund, as well as investment by Messari founder Ryan Selkis.

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SubDAO Protocol

SubDAO is a DAO infrastructure that helps manage digital assets through middleware, multi-sig, and other decentralized features.