DAO or decentralised autonomous organization is a collection of people who own and govern a set of rules encoded in computer code. They’re developed with smart contracts—self-executing scripts that automatically enforce pre-defined rules—grouped around a set of rules on the blockchain.
There is no centralized leadership in DAOs. They are governed by members in charge of decision-making and community participation.
The process of creating a decentralised autonomous organization is straightforward. A smart contract is developed, followed by the DAO’s governance structure. The DAO project will then need to raise funds to get started. DAOs usually get their money by issuing DAO tokens. The members of the DAO can vote using these tokens. Finally, the operation of the DAO is realized. The blockchain is used to store everything. If the DAO needs to make a decision, the members of the community must vote on it.
After you’ve incorporated DAO, the next step is to raise money from VCs. Let’s understand those steps further:
1. Write a white Paper
You must write a white paper once your DAO is incorporated. A white paper is a crucial document outlining your DAO, what it does, and how it functions. It should be easy to comprehend, crisp, and clear.
White papers are used to encourage potential traders to assist your DAO, it must be well-written and appealing.
2. Creating a Pitch Deck
You’ll need to prepare a pitch deck in conjunction with white paper. A pitch deck is a small presentation summarizing your DAO’s mission and goals.
Your pitch deck ought to be clear, visually intriguing and uncomplicated to observe. It should also include statistics about your group, your progress to date, and your long-term goals.
3. Create a Website
The next stage in raising funds for your DAO is to create a site. Your website should be professional and informative. It should include your white paper with other essential data about your DAO, alongwith a method for interested traders to contact you. It can be fulfiled through a contact form, an email address, or a social media account.
4. Reach out to VCs
You can start reaching out to venture capitalists after establishing a white paper, pitch deck, and website. It is essential to be clear about your goals and what you’re searching for when approaching VCs.
Some venture capitalists may be hesitant to invest in your DAO if they trust the objective. Others may be concerned with the financial return that investing in your DAO would provide.
5. Shut the Deal
After you’ve found a VC interested in investing in your DAO, you will need to negotiate the terms of the investment. It includes the amount of money the VC will invest with any equity stake they may receive in exchange.
When negotiating with VCs, keep in mind that your situation is appropriate. Despite all this, they’re the ones who are reluctant to put money in your DAO. As a result, it is best to aim for phrases advantageous to you and your company. It includes obtaining a high fairness stake and a huge DAO valuation.
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You must put the money to productive use after you’ve sealed the deal and secured the funding. It means using it in a way that will help your DAO accomplish its goals. Hiring people, advertising your DAO, and introducing innovative alternatives are just a few of the things you may do with the funds.
It is also essential to mention that you’ll have to report back to the VCs on how you’re spending the money. As a result, your bills and progress are properly documented.
Finally, you must repay the venture capitalists. It could be executed by a business sale, an initial public offering (IPO), or another exit strategy. Paying back the VCs is a significant factor in a DAO’s life cycle. It is also a terrific method to show them you care about your company and are concerned about its future.