Interview – Democratizing venture capital: Hatu Shiek, CMO of DAO Maker
Even with the turbulence in the markets during the first half of 2022, the crypto industry remains full of innovation.
While valuations may have retreated somewhat, venture capital is at the heart of many exciting projects aimed at disrupting the legacy financial sector – and sectors, beyond.
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Today we look at DAO Maker, which aims to innovate venture capital itself.
One of the biggest criticisms of VCs in crypto is that it is elitist and inaccessible. Time and time again, we see VCs get away with murder, even in cases where the product or token ends up dropping massively in value. It’s the retailers who end up holding the bag, while the VCs make their money – when the ordinary investor had no chance to get involved.
This is where DAO Maker comes in. A new blockchain-based project that aims to clean up incentives with VCs, democratize access, and ultimately create a fairer system for everyone. It’s a pretty intriguing DeFi app, so we asked Hatu Shiek, CMO of DAO Maker, a few questions.
Invezz.com (IZ): Hi Hatoo! Thank you for coming today. Please tell us your crypto story and where the idea for DAO Maker came from.
Hatu Shiek (HS): Hi! I’m Hatu Shiek, CMO and co-founder of DAO Maker. Thanks for taking me on.
OK! Let’s start with my education. Shortly after graduating from high school, I moved to the United States for my graduate studies to get involved in the global startup scene here. I pursued a concentration in corporate finance and mathematical economics at Stony Brooke University, New York. Even in college, I tried to master as many entrepreneurial skills as possible, and by the time I graduated I had four projects of my own.
In my quest for entrepreneurial skills, I developed a love for marketing and strategy. I realized that I like to analyze and develop different strategies for business growth. So I co-managed a county budget of $3 million and facilitated $65 million in ICO funding before joining DAO Maker. I have also worked closely with various blockchain-based projects and tokens to manage their marketing strategies.
As someone closely associated with the startup space, I have observed the VC approach of startups and how the centralized nature of the VC market places startups in a bottleneck. Luckily, that’s also when DAO Maker and his vision to bring retail investors into the venture capital market caught my eye. I loved the idea and decided to co-found the company.
IZ: Agreed, DAO Maker’s vision is quite intriguing. But the venture capital market alone is extremely thriving. What is the need of retail investors in this space?
Yes! The venture capital market is and will always be very successful. In fact, in 2021 alone, VCs shelled out $621 billion for startups. But the term success here is quite subjective. The market may look thriving from a VC perspective, but not so much from a startup perspective. This is because VCs operate from a growth perspective and focus more on profit than startup welfare. And, by pursuing their own profit, they push many promising startups into oblivion.
Right off the bat, VC-backed startups have immense pressure to grow and scale prematurely. They don’t have the time to establish a solid market for themselves. And scaling up without having a proper market is a recipe for disaster. The few successful startups survive. All others are either bought out by the VCs or liquidated. Estimates even suggest that three out of four VC-backed startups fail.
This is the current state of the venture capital market, and if allowed to continue, we could end up with a startup space that puts innovation on the back burner and focuses on short-term growth. For innovation to thrive, the market must be democratized. In other words, the power must pass from the hands of the VCs. This is only possible by opening the door to venture capital for retail investors. And thanks to blockchain technology, it is now easier than ever to bring retail investors into venture capital.
IZ: It is an excellent idea. Can you tell us how blockchain technology helps onboard retail investors and connect them with suitable startups?
OK! The rationale here is quite simple. We need innovation to thrive, so the only way forward is to democratize the venture capital market. And to democratize the venture capital market, we must achieve full transparency, unparalleled security, and zero trust, which are only possible on blockchain. For startups, blockchain technology opens the door to a global pool of investors and helps automate their funding. It also eliminates the need for middlemen and centralized authorities, giving them complete control over their businesses.
For retail investors, blockchain technology makes the venture capital market accessible by allowing them to pool resources with millions of others around the world to fund startups. Thus, investors can invest at their convenience without the pressure of investing huge capital upfront. Additionally, at DAO Maker, we use on-chain investor behavior to match them with startups that match their preferences and risk appetite.
IZ: Give us an overview of DAO Maker, the vision and how the platform is democratizing the VC market.
Sure! So, with DAO Maker, we have built a holistic platform to onboard retail investors and make the venture capital market accessible to them. Our vision is to democratize the VC space and prioritize the welfare of startups while providing retail investors with an opportunity to capitalize on their growth. In other words, we allow the public to participate like VCs. Our investment products are designed taking into account the expectations of retail investors. Yet the welfare of startups is also our priority, which is why retail investors on our platform make three-year commitments, just like VCs. Additionally, we provide venture capital-free, public-only seed funding programs for startups. In a very short time, the native assets of these platforms have surpassed those funded by VC. Even in bear markets, DAO Maker prioritizes public funding over VC funding.
IZ: Your vision is quite intriguing. But, that being said, the venture capital market is inherently a risky space. How do you think the risk associated with such investments can be reduced?
Good! When millions of investors pool their resources to fund startups, the risk is spread. No investor completely takes the fall. Thus, we can say that the risk associated with the venture capital market is significantly reduced. But that being said, it is still riskier than any other personal finance investment. Retail investors seek steady income growth, unlike VCs, who aim for the highest returns and are prepared for losses.
So if we really want retail investors to participate in the venture capital market, we need to consider their varying risk appetites and expected returns. Low-risk participation frameworks are the solution here. Investors should be able to invest as much or as little as possible. Investment products should be designed to minimize risk while providing investors with stable returns and income growth. For example, our flagship product Venture Bonds guarantees an interest of 8-10% for investors, with almost zero associated risk.
IZ: Finally, what advice would you give retail investors eyeing the VC space?
The venture capital market is undoubtedly an excellent opportunity for income growth that retail investors have been deprived of for decades. Just imagine investing in Google or Tesla in their early days. Yes, the risk was high, but the returns were even higher.
But here, with the arrival of platforms like DAO Maker, retail investors have the opportunity to invest in the Google of tomorrow while significantly reducing the associated risk. It’s a win-win situation. So my advice to retail investors is to seize this opportunity and invest based on their risk appetite and expected returns.
It is now up to them to help democratize the venture capital market and earn a piece of the profit pie in the process.
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