META GAMMA DELTA - GRANT PROPOSAL
FTW DAO (https://www.ftwdao.com)
We’ve been obsessed with the topic of how to drive more funding to diverse teams for the past five years. The main area that we realized is key to address is driving more diversity in the investment ecosystem at a greater scale.
FTW DAO is a revolutionary community-based approach to find, fund, and foster diverse founding teams with world-changing ideas at an early-stage. FTW DAO aligns incentives, offers transparency, accessibility, and inclusivity, and fosters collaboration among founders, operators, investors, and talent by building a $billion ecosystem funding pool and scaling the number of diverse investors, operators and founding teams in the tech ecosystem.
With the collective action and networked power of DAOs, we can unlock the diverse-led startup opportunity faster, and bring more people with us. We want to gather and grow a swarm of investors who reflect the diversity of the society we live in and enable them to make investments together in an efficient, transparent, and founder-friendly way.
In the US, a measly 2.2% of VC funding goes to female founders, just 2.6% to black and LatinX founders, and in Europe, the vast majority of funding (93% of VC) is going to all-male founding team, while a mere 5% of it is going to mixed-gender teams (and the numbers haven’t been improving). This represents a market failure at play, which means everyone is losing: the LPs, the VCs, the founders, and ultimately, society.
Many VCs, when challenged, repeat the tired and defunct ‘it’s a pipeline problem’, which serves to deflect and distract from the actual data. The data shows that the pipeline of diverse talent is bountiful. In many developed countries, women outnumber men in the graduate and postgraduate ranks. Across Europe, the US, and Oceania, women make up around 30% of graduates from top MBAs and tech universities. Approximately 21% of all technology founders in Europe are women. Keeping in mind that gender is just one form of diversity, it is likely that 50% (or more) of top graduates across Europe and the US represent diversity of one kind or another.
Strong evidence shows that when there is more diversity on investment teams, significantly more investment rounds and funding go to diverse-led teams, indicating that the so-called pipeline problem is simply an unwillingness or inability of existing fund managers to find and fund the diverse talent that is emerging, and not a pipeline problem. Funds with women VC partners are twice as likely to invest in startups with at least one woman founder and more than three times as likely to invest in startups with a woman CEO. Funds with women partners also tend to be much more diverse in ethnicity.
Research from Babson College shows that 92% of the partners in the VC industry are men, mostly white, and a good percentage of them went to elite business schools. In Europe, 87% of decision-makers in VC firms are white and male. According to US data, 40% of venture partners went to one of just two schools: Harvard and Stanford, while 79% of VC capital in the US is allocated to companies in just three states, despite start-ups outside these states often outperforming their metropolitan peers. This lack of diversity in VC firms means the vast majority of diverse talent isn’t identified by VCs, and that even when VCs do come across diverse founding teams, they are unlikely to fund them due to biases in their perceptions of which ideas hold merit and offer the potential for value creation at scale.
Diversity in all its forms is a strong indicator and/or pre-condition for future success. There is not just one type of founder that is better than the other. Leaders who are leveraging talent from the widest pool, and hiring the best talent for their companies will ultimately prevail over those who don’t and many studies - from McKinsey to BCG, Harvard, and the World Economic Forum - have confirmed this: the business case for diversity is overwhelming.
Diverse-led start-ups achieved higher revenue and delivered more than twice the financial return on each dollar invested, despite receiving less than half the investment dollars that their non-diverse peers were given. McKinsey found that having more women on the senior executive team provided the single biggest performance uplift in their data-set on company performance: with every 10% increase in gender-diversity, EBIT rose by 3.5%. And it’s not just that better firms have a better chance of hiring a wider group of people, Harvard Business Review checked that scenario, and was able to confirm that it truly is a case of causality: more women (i.e. more diversity) led to better performance. Diverse-led start-ups are also less likely to fail, and interestingly, achieve exits faster.
This market failure is not just a problem for diverse founders. It is also a problem for VC firms, their investors, and society at large. Funds with diverse investment teams are also shown to perform 20% better on average and a study in Harvard Business Review found that VC firms, which increased the number of female partners by 10% experienced a 1.5% increase in fund returns each year, as well as 9.7% more profitable exits.
More than just returns, VC plays an important role in society: funding groundbreaking innovations that solve important problems at scale, while they are in their earliest and riskiest stages, and other forms of finance aren’t yet available. When potentially half of the innovations that could serve and improve our society aren’t being funded, we all miss out. Morgan Stanley estimates the value of these missed opportunities at $4.4 trillion in the US alone.
FTW.DAO is building a community-led ecosystem, focused on diverse founding teams with bold visions for the future of society globally. Our 5 year vision includes developing a $billion ecosystem grants fund to support our mission of finding, funding and fostering diverse founders. Our focus will be on teams that are leveraging innovations to solve large, meaningful problems. We aim to foster a swarm of investors who reflect the diversity of the society we live in and enable them to make investment decisions together in an efficient, transparent, and founder-friendly way. All this can be achieved without centralised leadership or investment committees.
With a community-led model, we will create opportunities for young and upcoming investors to build their track record in a supportive environment, while at the same time leveraging the incredible knowledge and networks of some of the best serial founders, investors, and operators around the globe. Leveraging the hive mind will allow the DAO to overcome existing biases with unprecedented transparency, flexibility, and autonomy. We want to get rid of ‘winner takes all’ and start building diversity, for the win.
We believe that in order to achieve our goals, an entire ecosystem of sub-DAOs, partners and initiatives will need to be spawned by the DAO. The Social DAO (i.e. FTW DAO) is the beating heart of the FTW Ecosystem, and other sub-DAOs and projects will evolve around it over time to achieve FTW’s vision of finding, funding, and fostering diverse founding teams globally. In the next 1-2 years, we envision the ecosystem to entail the Social membership DAO, a Venture DAO, and a Mental Wellness DAO to coach founders in their journeys and prevent burnout and other mental health challenges founders often face
How are you encouraging other women/minorities to be part of your community?
We’ve reserved around 20% of our NFTs (memberships) to be given to women and overlooked groups in tech who would otherwise potentially not have access to our DAO. Our entire brand identity and artwork has been extremely carefully designed to be inclusive of all groups, and project an atmosphere that is inviting to a truly diverse audience of passionate minds. Our co-founders worked on corporate programs around inclusion and de-jargonizing finance, have seen a huge volume of data and research on designing inclusive products and services, and are deeply aware that brand, identity and well-designed communication will play a huge role in achieving our diversity, equity and inclusion goals.
In launching our education program cohorts, we took great care to design materials that were inclusive, and actively raise awareness around diversity issues in our materials. We are also partnering with women-led communities like Surge Women to specifically attract women and other underrepresented groups to be part of our education program, encouraging them to join and participate in the world of angel investing and venture capital.
Finally, our founding team and founding membership is gender-balanced and we have been very mindful in hiring and recruiting members to the DAO who share our values, are kind and welcoming and who come from diverse backgrounds, making our DAO an open and welcoming place for everyone.
How does the project relate to blockchain or web3?
We believe that the fastest route to real change at scale for diverse founders and investors will come by leveraging the networks and networked power of communities and ecosystems globally, uniting their knowledge, ideas and capital to invest in diverse founders outside of traditional funding structures.
Decentralising the investment process brings advantages in three critical areas of the investment value chain.
- More diversity and scale in the sourcing pipeline
- Permissionless, let anyone contribute opportunities anywhere
- More diverse lenses filtering deals and opportunities
- Diverse lenses mean better decisions
- A great breadth of opportunities can be explored with experts from many verticals and industries
- Most investors struggle to support their portfolio sufficiently
- Community in DAOs can act as a supporting platform for founders
- With aligned incentives and shared ownership, collaboration of community is enhanced
- Community can make founders feel less alone in their journeys, and help prevent and address mental health of founders, which is an important issue
When it comes to coordinating capital and community at scale, few movements can parallel the achievements of the blockchain, DAOs, and the Decentralized Finance (DeFi) community in recent years. We believe DAOs are the future of work and that the future of venture funding is decentralized.
That’s why at FTW DAO, we’re building a decentralised ecosystem of projects around the yet to be launched $FTW token with FTW DAO’s community serving as the beating heart and engine room of the ecosystem. Our VC training program gives people the knowledge and connection to our community to start contributing to a venture DAO, earning reputation and building a track record.
Validation / Traction / Progress so far
FTW.DAO was founded in November 2021, with an Association set up in Switzerland to protect members from any liability. Since then, it has seen steady growth in its community of NFT holders and contributing members, generating around $40k in NFT sales, primarily from founding members who aim to invest in diverse founding teams. Our founding family comes from 6 continents, bringing experience in venture capital, strategy, finance, marketing, governance, product, design, development, and project management. Our founding team is full-time in web3 and dedicated to building FTW DAO.
Over the past 3 months, FTW has transformed from a founder-led organisation into a squad-led organisation. The first, and possibly most critical step towards decentralisation is complete, as has gone far better than we ever dared to hope for. We’re absolutely thrilled by the hive of energy and execution that moving into DAO mode has generated.
The growth of our community (we now count around 70 members) during the first half of the year has led to great progress in the development of our different products. We launched the 2nd batch of Venture DAO Capitalist Education Program (with paid members from Fight Club by Bankless DAO and FTW DAO). We’ve trained a total of 40+ new venture analysts through our two cohorts, with extremely positive feedback.
We are also piloting our Angel Lounge, a private community for angel investors and small VCs looking for a high-quality curated flow of investment opportunities. FTW’s Angel Lounge members get access to deal assessments for curated investment opportunities in diverse startups from around the world, support from experienced VC analysts in assessing investment opportunities and support in closing deals including due diligence research, term sheet reviews, financial modelling, etc. The angel lounge provides a training ground for new analysts and allows them to learn by doing with our more experienced team.
Previously part of a European VC fund, investing in seed stage startups throughout CEE & Baltics. Two companies Isla scouted at pre-seed have gone on to become unicorns. Determined to see more capital going to diverse teams, she spent five years working with the world’s largest wealth manager, primarily working on channelling private capital into gender-lens investments and diverse-led companies. Isla is a regular speaker on decentralised governance, DAOs, impact and Web3. As someone who has recovered from burnout and depression, Isla is deeply cognizant of the need for sustainable organisations, and she is passionate about building a venture ecosystem that is mindful and inclusive of mental health and neurodiversity, taking care of the founders it relies on to deliver outsize returns.
Ben has more than 10 years experience in financial services, and worked in Germany, the Netherlands, Switzerland, Turkey, and the US. Having worked together intensely with Isla on innovative financial products, starting FTW together was a natural step. He spent seven years at the world’s largest wealth manager, leading development and implementation of innovative financial tools and products (incl. a gender diversity ETF with $1b+ in AUM, a female tech accelerator pilot, a financial education program for investors, and gender-lens investing thought leadership) as well as large-scale business intelligence implementation programs and has been working together with Isla for close to five years now.
Hana is our Spanish community extraordinaire. As a serial community and business-builder, author and speaker, she has a knack for people, marketing and rocking projects. She’s coached and mentored hundreds of people, and is now heavily involved with DAOs and Web3. Outside FTW DAO, she runs an early stage impact start-up (PivotDAO) building the female workforce of the future.
Vaida is the education lead at FTW DAO, as well as online learning spaces designer, and holistic career development coach. Over the past years, she designed, launched and managed 10+ online education cohorts, and led 50+ career development workshops. She founded PowHER - web3 professional community for women. Vaida has dedicated her career to solving the diversity and skills gap in web3.
Grant Amount Requested
What will it be used for?
We will use the funding to fund the part-time salary of our new education lead for the first 4-6 months of our upcoming monthly cohorts and program. The cohorts will generate revenue and we hope that at the end of the 3 months, we are able to finance the education lead role independently from cohort revenue.
Monthly salary of $2-2,500 USD for our education lead/s x 4-6
We will run three 4-week cohorts of 30 participants each in Q1 2023. Thus, in total 90 participants with the goal that they can start scout deals for investors after the graduation within the angel lounge. If the funding covers a longer period, additional cohorts will be run with the funding.
The funding would also support us in offering our scholarships to diverse participants, as some of our costs are covered.
Attach any additional documents/resources about the project if you have any.
Alina, #2 Venture Capitalist Cohort Student. Also, CFO, CPA, Founder, Angel Investor & mum of 2.
“The program is phenomenal! Isla is a guru at anything and everything venture capital. I am learning so much from her. I’ve been enjoying taking my angel investing knowledge to the next level by immersing myself in venture capital. One of my favourite aspects of the program so far has been learning about different approaches to assessing companies depending on their industry or stage of maturity.”
Raad #2 Venture Capitalist Cohort Student. Also, Founder and Angel Investor.
“After reading the blog posts on FTW’s website, I was immediately intrigued with their vision & mission. Joining FTW’s Venture DAO Education Program has been one of my best decisions in 2022! I have always been interested in the angel & VC space, but never knew where to start. Now, I’m learning so much from Isla and Ben, every session again and have been able to take my angel investing to the next level.”
www.web3vc.education - Curriculum Homepage
How did you hear about MGD’s Funding program?
Isla has been a member of MGD for a while and heard a great presentation at ETH CC where Danielle explained the funding program. Separately, Santiago, one of our members suggested it would be a great way to support the education program.
“Study: Startups with Diverse Leadership Perform Better” by Erin Brodwin, Business Insider: https://www.businessinsider.com/startups-with-diverse-leadership-perform-better-study-2017-10
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