Investment DAOs with Jules Miller
Jules Miller is an investor, 3-time entrepreneur, corporate executive, and ‘intrapreneur.’ She is Partner and US Lead for Mindset Ventures, investing in seed - Series B enterprise tech startups, and splits her time between Nashville, TN, and New York, NY. She is also actively working on VC3 DAO, an investment DAO.
Previously Jules co-founded IBM Blockchain Ventures, launched/ran two IBM Blockchain Accelerators with Columbia University, and was head of the IBM Blockchain Garage for North America. Prior to that she was a partner at LunaCap Ventures, a venture debt fund investing in diverse founders, and was COO of gender lens investing pioneer BRAVA Investments.
Jules co-founded and led two legal tech companies: Evolve Law (acquired by Breaking Media/Above the Law), a digital media and events company for legal innovators, and Hire an Esquire, a venture-backed tech startup providing attorneys on-demand to law firms and in-house legal teams. She also founded Carbonado Group, an environmental sustainability consulting firm, and spent 7 years as an ‘intrapreneur’ helping companies including EY, Salesforce.com, and Tiffany & Co. to launch and grow new business units around environmental and social responsibility.
Jules earned her BA from UCLA and her MSc from The London School of Economics. She is a Kauffman Fellow and an EIR at 500 Startups.
Eve #wealthwednesday Highlight 77: Jules Miller, Partner at Mindset Ventures and Founder of VC3 DAO
How and why you got into your space? What inspired you?
I was inspired by the promise of blockchain technology for sure. I started 2 companies in the legal tech space and when I first saw some of the early smart contracts companies, I immediately thought that this is the future of how we do contracts, tax, and accounting. The concept to me was revolutionary - how we audit and track things, how you can create programmable and automatable contracts.
After being a founder, I got into the Venture Capitalist side accidentally. I didn’t intend to be a venture capitalist because I like being a founder but pretty quickly realized that I was raising capital as a “female founder” building companies with other female founders. With that, I discovered that it was not a meritocratic environment. I grew up without the connections that a lot of people in Silicon Valley have but I hustled really hard. We raised several million in venture funding but not nearly as much as some of our peers with inferior products or less traction. This was a hard but important lesson, and I realized that instead of complaining about it, the way to change it was to be on the capital allocation side.
After working for a couple of smaller funds, I went to IBM and ran their Blockchain Ventures Group, where I got to focus full-time on the blockchain, specifically enterprise blockchain. Instead of talking about investing in diverse founders, which still gave people the impression (incorrectly!) that you were doing impact investing and charity, I just made sure to incorporate diverse founders into our pipeline and made a conscious effort to prioritize this without talking about it.
I will always focus on the best deals and teams, but the opportunity to give a fighting chance to founders, investors, and people who are not necessarily part of the entrenched ecosystems that already exist is phenomenal. Investment DAOs are a huge step in the right direction to enable this in a meaningful way. It’s going to be hard, but there is an opportunity to discover and participate more actively in underrepresented networks when the process is decentralized, global, and scalable. Those things get me excited - it's about changing the landscape of venture and how we can support real improvements in venture capital as an industry with a decentralized structure.
What role does Investment DAO play in wealth creation?
An Investment DAO is a decentralized autonomous organization (DAO) with the specific purpose of making investments. A DAO is not a radical idea - it’s essentially a flattened entity that operates using voting and more democratized processes than it would if there was a CEO with a management team and everyone has individual decision-making authority based on hierarchy. In theory, we should make decisions as organizations based on something that is a little more democratic and meritocratic.
Investment DAO’s are the best use case for DAOs - it’s the easiest, simplest, and purest form of a DAO. You participate in the ecosystem and vote based on your token holdings. It is the Utopia of investment. When you invest in a DAO, you bring, evaluate, and vote on deals together. You automatically do the deals as the vote passes and there are thresholds and governance for that. Being in the crypto and the securities worlds, you do have to navigate some tricky regulations to make sure this is done in the right way. My view is that the SEC and all the laws in this space, especially in the US, exist for a very good reason, to protect consumers. We have a deep respect for the regulatory landscape and are focused on being the most compliant and thoughtful DAO out there. It helps that our members, who are all venture capitalists, deal with securities every day in their normal jobs, so we’re comfortable navigating this space.
There are 2 categories of Investment DAOs. First is what we call investment clubs which is most similar to angel investing or crowdfunding. There are some things that you can’t do there that weren’t appropriate for our group. One example would be in order to comply with the Investment Advisors Act, you can’t technically do due diligence together. If 2 people are a member of the same investment club, they have to make their own independent research and decisions, and as VCs, we wanted to make sure we completed full due diligence on every deal.
The second generation of investment DAOs, of which we are one at VC3, is more of a venture model. We have a DAO with members, tokens, deals, governance, portfolio support, and more, plus a traditional fund that deploys capital on behalf of a DAO. We have set it up in this way because we care deeply about compliance, but we do hope to move to a more on-chain investment model eventually as regulations evolve.
There are multiple steps and votes along the way as a deal progresses through our process, but it generally only takes 2-3 weeks, which we’re still trying to shorten. We also have an active co-investment program, so our members have the opportunity to invest in the deals directly. We’re not just a bunch of random individuals that are deploying angel capital, almost every one of our 175 members is attached to their own fund and we ask for a bigger allocation than our normal check size to offer the rest to our members, who then invest directly. This is unusual for investment DAOs but one of the things we’re most excited about continuing to build at VC3.
To summarize, an Investment DAOs (in theory)decentralizes the deployment of capital in a way that more people are making decisions and providing insights, intelligence, and influence. This should provide better returns for investors and a monumentally better experience for founders, which is what early investment DAOs like VC3 are starting to demonstrate.
How is a token used in a DAO?
There is the current state and the ideal state. Currently, tokens are mostly used for voting and governance, but the ideal state, for VC3 at least, is to stake tokens on the deals and co-investment opportunities, which can lead to some pretty interesting outcomes. We’re working on this but are pretty far away from it being a reality.
One of the easiest use cases of tokens that we do at VC3 is to give all of our founders tokens. Those tokens can then be used by the companies to post bounties to the community and ask for support. For example, a founder can be looking or hiring a VP of Finance. It’s an important role, here are a thousand tokens. It’s no additional cost to the founders and people are incentivized to help them more than they would otherwise be because they get those tokens.
We’re kind of experimenting at the moment but I think the key for this to work is if there’s a real token economy where you’re not just earning tokens but you’re spending and earning them. I will say we are not there yet but we are moving in the right direction.
What do you believe is the most exciting thing you’ve learned from the experimentation that you’ve been doing and want others to know?
The power of community.
Investment DAOs are a lot of work. There are days when we will ask ourselves if it’s worth it - can’t we just do a normal venture fund? Why did I do this crazy thing? But then the power of community happens. One example was when we were hosting our annual offsite in Puerto Rico. We announced it and within 30 minutes people connected us to a sponsor that committed $100,000 and several recommendations on venues and speakers from the local community. The community is very powerful especially when you have a good, connected, motivated group that is excited about what you are doing.
Is there a person or a company that’s really inspired you?
Orange DAO and Origami - we were one of their first partners and they really helped us get set up at VC3 in a way that resonated with us as VC investors, not angel investors. We were Origami’s first customer and we also made an investment in them.
They think differently in terms of how to build a sophisticated investment DAO. I like the way they're thinking about it as they’re doing incredibly well, and they created this interesting community of other investment DAO. We are all on a discord channel and kind of learning from each other. We’ve also made some changes to the model that works for us, which is all part of the industry evolving.
What advice would you give to someone who is planning to start their own Investment DAO?
I would start with a community. Whatever community you’re involved in right now - build that first. It can be offline, or on WhatsApp, it doesn’t need to be tech-enabled. I would encourage everyone to build the community first and then build the DAO around the community versus the response. The tools aren’t good right now and things won’t always work. You have to start with a community that cares about the thing that you’re doing and not the process of being a DAO at the beginning.
How can we stay in touch?
Feel free to follow me (@JulesEMiller) or VC3 (@vc3dao) on Twitter and other social media channels. Reach out and connect with me on LinkedIn. You can also sign up for our newsletter at vc3dao.xyz
We invest in early-stage Web3 startups broadly at an early stage. We don’t generally encourage inbound leads, as we require a member to sponsor each deal, usually when they’re already investing. As with all DAOs, the best way to connect is to be an active part of a community and connect with others that way.
Have thoughts on this week’s topic or question for me or Jules? Post your thoughts in the comment section. Until next week.🙂
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DISCLAIMER: The thoughts and views expressed in this video do not constitute financial or investment advice.
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