AIP-438: ApeCoin Ventures

Hi ApeCoin DAO Community,

@yatsiu has completed editing their AIP Idea to be their AIP Draft.

This proposal has been assigned the AIP ID Number 438.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

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Is it possible to get an answer on this question?
To also add without proper balance, this could become a testbed to test start-ups that ultimately benefit Animoca Brands more than ApeCoin as after seed funding Animoca can then choose to fund further, but ApeCoin can’t. How to envisage this balancing out?
I speak from the fact I’ve run my own VC fund before.

I look forward to your reply

Grains (Kevin)

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Hi ApeCoin DAO Community,

Our team has reviewed and discussed @yatsiu’s AIP Draft and have sent a list of initial questions. We await answers.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

Thanks for the question.

The AIP-438 draft both describes the investment team that would include offering advice as we as the exit strategy which would probably be around the best timing when there is a possibility for liquidation which the investment team would decide on the best timing.

Animoca Brands is putting up 50% so the incentives are aligned, if there is follow-up funding and ApeCoin Ventures no longer has capital we may decide to have a new AIP for follow-on funding but we do believe it is a bit premature to do that at the moment.

Thanks for the clear answer @yatsiu. Appreciated and I think this has great potential to bring businesses to ApeCoin who don’t have the time to lobby their project through the AIP process.

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Hi ApeCoin DAO Community,

@yatsiu has responded to our questions and they are in our review once again.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

Hi ApeCoin DAO Community,

@yatsiu has responded to our questions and has provided consent to share them in this forum for the community.

Click to Expand for Interview with Yat Siu

1. Your proposal mentions that “The fund management (ApeCoin Ventures) is currently provided by ASCENT Fund Services”. It appears that ASCENT offers several unique fund solutions.

a.) Please elaborate on the services which are to be provided by ASCENT.
b.) How much control would ASCENT have over the funds investment decisions?
c.) Is there a legal entity representing the fund which would be ready and capable of obtaining title to the requested grant amount?
d.) Please elaborate on the existing structure of the fund, or how you anticipate structuring the fund.
e.) If the price of ApeCoin changes significantly during the expected term of the fund, would it impact the funds operations or any of the team’s commitments?

ASCENT in this case has a role to be a custodian and disbursement of funds, they don’t make fund decisions they are fund custodians and have no control, they are a licensed for this type of operations and we would setup the legal entity for this which would happen very quickly should the AIP be approved.

The suggestion is to liquidate this into cash as soon as practical so that we can match the amount in dollars.

2. In the event of a “Web3 specific” exit, I.E. a token launch, ApeCoin DAO would expect to receive 50% of all token proceeds upon successful exits in the form of $APE. Please give an example of how this might work.

We would liquidate the proceeds/profits and use it to repurchase ApeCoin on market and return it as $APE to the DAO. It is 50% of all token proceeds because 50% is funded by the DAO.

3. “Our investment strategy targets seed and Series A stage start-ups, prioritizing those that can integrate ApeCoin into their ecosystem with the goal of increasing the value, utilities, use cases, synergies, network effect and influences of ApeCoin.” Can you please elaborate on the expected budget for investments across any specific categories?

We indicated this in the AIP: The targeting check sizes are between US$100,000 to $250,000 per startup which would facilitate backing potentially up to 80 ventures at seed/Series A stages.

4. a.) Would this proposal entail the creation of a multi-sig wallet?
b.) If so, how would multi-sig signers be selected?
c.) Additionally, if there would be a multi-sig, is there a legal entity representing the multi-sig that would be ready and capable of obtaining legal title to the grant amount?

No because ASCENT would basically be managing FIAT so we would manage an orderly sale process. Animoca Ventures would be receiving the APECOIN and sell the APE to then deposit it as FIAT to ASCENT which would be matched with $5 of Animoca Ventures funds.

5. “A low management fee of one percent (1%) will be charged…”
a.) Does this management fee represent 1% of the requested $5m USD, 1% of the total $10m USD, or 1% of each startup investment as it’s awarded?
b.) For clarity, who exactly would be the recipient of this fee?
c.) Would there be any expected performance fee(s)?

It is 1% of the total and would be charged out of the total amount i.e. $10m (half of which is contributed by us). This is an annual management fee and as the fund intends to operate for 2 years it would amount to 100k per year and effectively 50k a year for the funds from the DAO.

There are no performance fees charged for the $5 million contribution for the DAO, normally funds operate on a 2/20 structure i.e. 2% management fee and 20% share of profits but for the purposes of this proposal we will not be charging this.

6. On which platform(s) would the quarterly investment and financial reports be made available to the community?

We would suggest to share this on Twitter and probably do updates here on the forums and hopefully the DAO can repost it.

7. “Any remaining or used $APE will be returned to ApeCoin should the fund not be deployed within the stipulated timeline.”
a.) In the interest of clarity, do you intend to say “any unused $APE” here?
b.) To clarify further, the returned $APE would be sent to the ApeCoin DAO’s treasury, correct?

Correct

8. Can you provide proof of the funds ($5,000,000) which are to be committed by Animoca Ventures?

We would provide proof but do you require proof that we have the funds at the moment? The group has reported its financial position here: https://www.animocabrands.com/animoca-brands-update-on-financial-position-as-of-31-march-2024

9. Do you anticipate raising any third-party capital? If so, please clarify, including who these anticipated third parties are, the fundraising period and any decks.

No, we have funds already.

10. a.) Regarding any granted permission to use ApeCoin trademarks by the Ape Foundation, do you expect to maintain full ownership rights to the content and/or IP which may be created as a result of the approval of your proposal?
b.) Would your expectation be to keep complete ownership of all content produced from this proposal?

I am not sure what IP rights we would be retaining here, at the end of the period should ApeCoin Ventures not be continued we have no intention of maintaining the name should someone else wish to run a similar proposal and have the same name in the future for instance. To be clear we are not requesting to take over any IP from our investment portfolios either. To my knowledge we are not acquiring any IP from the DAO for this proposal. We would be leveraging existing Animoca Ventures investment approaches but this would be considered our know-how we would contribute rather than having created any new “IP” as it were.

11. a.) Given the large size of the requested grant, would you be open to receiving the grant in increments over a period of time, for example, 1M APE tranches over 12 months? This may be facilitated by a simple email request to the Foundation if the proposal is approved.
b.) Would you also be open to only receiving a subsequent tranche once the majority of a prior tranche has been spent?

We could be open to that but it would then mean we would only match our funding amounts in a similar fashion i.e. if we receive 1M$ worth of APE we would match it with 1M$ of FIAT/USD/USDC at that time.

12. Would the community be able to provide any feedback/ or have any oversight/governance of the fund and its decisions?

This would not be realistic because many of the investment decisions would happen in confidence that cannot be shared with the community until the deal has been made. Often NDAs are executed because we will have access to sensitive and proprietary data that would not be shared. Our track record should speak for itself and most venture fund managers would probably request the same.

13. Would ApeCoin Ventures, any of the funds granted through this proposal, or any funds gained as a result of ApeCoin Ventures investment strategies be used for voting?

No as they would be sold for the purposes of investment.

14. Please provide a revision for your Steps to Implement section. As specified by the AIP Draft Template:

  • Detail any associated costs, personnel, and platforms needed for each step.

There are no “steps” because we would leverage our existing infrastructure, this is also why we only aim to charge 1% per annum. The salaries of our venture team would not be covered by 1% for example.

  • State any requests directed to the APE Foundation for each step, if any.

There are no specific requests.

15. Do you provide consent to apply updates to the relevant areas of your proposal based on your responses to the questions above?

If relevant we have no problem for this to be shared.

16. Do you provide consent to share these questions and answers with the community in this forum?

Sure

Edits have been made to this Topic, by the author, by the author’s request, or with the author’s consent. You can click the Pencil icon at the top of the post to see these edits.

A DAR package is being worked on and upon completion this AIP will move into Administrative Review. Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

I like the idea of having APECOIN VENTURES I (general fund) and APECOIN VENTURES II (ApeChain only) 50-50 or 30/70 if any. With the right incentives builders will be more motivated to build on ApeChain which will indirectly return value to ApeCoin community holders and the DAO.

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Hi ApeCoin DAO Community,

We have sent a list of follow-up questions to the author.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

Hi ApeCoin DAO Community,

@yatsiu has responded to our follow-up questions and has provided consent to share them in this forum for the community.

Click to Expand for Follow-Up Interviews with Yat Siu

1. “50% of the token proceeds will be sent back to ApeCoin DAO, with the plan (or an option) to convert profits back into ApeCoin.”
Is there an expected schedule for the distribution of token proceeds back to the DAO’s treasury? Please elaborate.

The proceeds would be returned upon an exit/liquidation event as this is dependent on each investment we cannot predict an exact timing but would typically be within a month (i.e. 30 days) of the custodian having received the returns.

2. Would you be willing to amend the proposal so that the Foundation would receive 50% of Gross Revenue in any instances of “token proceeds” returned to the DAO’s treasury? This has been the preference of the APE Foundation in the past.

If the question is if we would return tokens as is from the investment rather than doing it in APE as a way to diversify the treasury we would be amenable but would suggest that this be something APECOIN holders should vote on as part of the proposal maybe as a kind of companion AIP. The original purpose that we wanted to present was how it benefits the APE ecosystem more directly which we think using the token proceeds to purchase APE from the market is more representative of that.

3. Upon establishing ApeCoin Ventures, would the business entity be prepared to facilitate the distribution of gross revenue back to the Foundation in a way which is compliant with both the relevant local regulations and Cayman regulations?

Of course, we assume this to be the case.

4. The APE Foundation would need to coordinate with your team to ensure the safe delivery and custody of your proposed return of revenues back to the DAO. Would the Foundation be expected to engage in any other steps of the AIP implementation? If so, please specify the steps and elaborate on how it would be expected to work.

We would be coordinating this with our fund facilitator who is licensed to do the safe delivery of the returns to any organization including the DAO. Their job would very likely be to disburse funds with the DAO administrator at the time.

5. Regarding question # 2, the preference of the APE Foundation has been to receive any distribution of funds back to the DAO as gross revenue. Would you be able to commit to keeping with this expectation?

The fund will receive returns in Tokens which it then proposed to swap into Apecoin and return to the foundation as per the proposal. It doesn’t receive gross revenues as it’s not your classical operating business.

In other words if the project where to receive 100 tokens worth $1 where it to sell them it would propose to use the $100 dollars to buy ape and return the ape.

If the foundation desires to have us monetize the 100 tokens and then return it in fiat as $100 it could be possible but was not what was proposed.

I would suggest this to be a follow up AIP rather than change this one because we think the community should decide if it should return it in fiat or buy ape on market as there is a different impact to ape holders depending on the rate of return.

5. Do you provide consent to apply updates to the relevant areas of your proposal based on your responses to the questions above?

To the extent necessary yes but at the moment I don’t think changes are needed, as of yet except perhaps for an additional AIP for point 2?

6. Do you provide consent to share these questions and answers with the community in this forum?

Sure

Edits have been made to this Topic, by the author, by the author’s request, or with the author’s consent. You can click the Pencil icon at the top of the post to see these edits.

A DAR package is being worked on and upon completion this AIP will move into Administrative Review. Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

I know this is going to go forward for a vote soon, but I still don’t understand why there can’t be an explicit investment mandate to only invest in companies that plan on launching exclusively on ApeChain for their first year. Having explicit mandates like this for single LP funds is quite common. Like religious organizations that are LPs in funds, for example, might restrict the investment manager from making investments in alcohol or weapons companies.

Why wouldn’t we want to make sure our DAO Treasury money was going towards both financial ROI as well as intangible ROI that comes from more companies building on ApeChain and creating utility for ApeCoin. Again, if it’s just the DAO money going to a regular VC fund to maximize financial ROI, which I don’t think seems like a great idea given time horizons of early stage investments, why not hold an RFP process on it? I’m sure with the 0% performance fee and low mgmt fee Animoca would have a great shot at winning that.

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Hi ApeCoin DAO Community,

We have no further questions for @yatsiu. This AIP is now under Administrative Review.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

The purpose of the fund is to further the impact and utility of ApeCoin which we believe incorporates strong investment returns which can emphasize ApeChain in so far that we believe it has the best chance of positive returns which also benefits ApeCoin.

Explicit mandates for ecosystem funds are fine but their goal may not be as simple as a typical fund for instance and since we are not charging a performance fee and have a below market management fee the incentives while co-investing 50% of the capital provides a clearly defined incentive that can be easily tracked and has simple and clear KPIs and pure ApeCoin ecosystem projects are free to apply funding directly from the DAO.

Pure ecosystem funds require different constructs because success is not entirely based on pure returns such as what the World Bank fund is doing or what some of the L1/L2 ecosystem funds too as well as many other factors that aren’t purely commercial and will very likely also not be matched 50/50 by funds and while RFPs are certainly possible the amount required would be far greater than $5 million. Ecosystem funds also have concentration risks although that would not be the reason in our case.

I am in favor of considering an ecosystem fund that could go through an RFP process specifically for the benefit of ApeChain but consider this a very different proposal and subject to another AIP because both the incentive construction and defining its KPIs are going to be different. Our general view is that multiple funds can exist for ApeCoin in the same way that multiple funds exist for other ecosystems.

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Yat, Thank you for the detailed and thoughtful response. I do understand the reluctance to add in explicit mandates that might not lead to prioritizing purely financial ROI/IRR given the 0% performance fee, low mgmt fee and matching funds. This is a very generous deal for the DAO and not a standard VC offer. I understand the need to not make it even more onerous for your side by adding in non-financial metrics within the investment mandate.

I’m currently working with the SC and others on a long-term sustainable funding program for ApeChain (BANANA Bill), that is focused primarily on user incentives and commercial agreements with established companies. Those programs will also measure success, as you mention, not only by financial ROI/IRR but by other intangibles as well (utility and demand for ApeCoin, on-chain growth metrics around ApeChain, etc). However, these programs are not focused on small, upstart developers/creators.

Our hope is to have outside funds (like this one perhaps) and Ape Accelerator (run by another Animoca Subsidiary, Forj) help support the smaller, upstart ApeChain builders looking for more long-term equity capital. That’s the main drive behind my push for the explicit investment mandate.

All that being said, I do recognize how good a deal this is from the DAO’s perspective and would expect that many of the investments would naturally be good fits for ApeChain. You have my support on this. If it passes, I look forward to working with you and James on trying to drive your investment recipients to ApeChain in so far as it makes sense for them as a business decison. It’s going to be a truly epic chain so I expect it won’t be a hard sell!

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With BANANA bill just passing it seems like this one should be put on hold for the time being.

We only just received some more followup questions so this isn’t going to vote yet from the looks of it.

That said they are two very different proposals even if at the surface they share a common theme ie investment but they have two different KPIs as discussed in earlier threads and comes with contribution capital as well amongst other things.

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I like the proposal overall and the team behind it, my main concern is timing given we just established a 100M ApeCoin fund for something similar to this.

In our view the Banana Bill is an ecosystem/commercial partnership fund with an emphasis on ecosystem advancement which is akin to deficit spending but for long-term gain with effectively a separate team and operations vs Apecoin Ventures which is an investment fund designed for much more shorter-term return cycles with an emphasis on capital returns that is attached to an existing team focused purely on investment results. My view is you need both for the DAO. It is of course possible that the Banana Bill could fund Apecoin Ventures instead but we have a proviso in the Banana Bill that Animoca Brands will not gain directly from it which is problematic in an investment fund direction for many reasons. Just the mere fact that we will be co-investing with our own capital and generating potential returns is a form of a “benefit”. They are designed for fundamentally different reasons with very different underlying incentives.

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Hi ApeCoin DAO Community,

After review, this Topic submitted by @yatsiu is ready for vote under AIP-438. The proposal will be posted on Snapshot at the next weekly release date and time, which is the first and third Thursday of the month at 9PM EST.

The AIP implementation is administered by the Ape Foundation. Implementation may be immaterially or materially altered to optimise for security, usability, to protect APE holders, and otherwise to effect the intent of the AIP. Any material deviations from an AIP, as initially approved, will be disclosed to the APE holder community.

Kind Regards,

-@Facilitators

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This proposal is live for vote at Snapshot. The voting period closes 13 days from now at 9PM EST.

The AIP implementation is administered by the Ape Foundation. Implementation may be immaterially or materially altered to optimize for security, usability, to protect APE holders, and otherwise to effect the intent of the AIP. Any material deviations from an AIP, as initially approved, will be disclosed to the APE holder community.

1 Like