Bain Capital Partner: DAOs are like B2B software in the early 21st century

This article is from The Block, original author: Frank Chaparro

Compiled by: Odaily Planet Daily / Hu Luoxu

Bain Capital Ventures (BCV) announced on Tuesday the establishment of a new crypto team—Bain Capital Crypto (BCC), supported by a $560 million fund. With the internal establishment of a dedicated team at Bain Capital, the number of venture capital funds focused on the crypto industry has increased this week.

BCC is Following in the Footsteps of a16z

With a fund size of $155 billion, BCC is the largest fund at BCV. According to a conversation with the team on Tuesday evening, BCC has deployed $560 million in the crypto ecosystem, focusing on investing in early-stage companies.

Partner Stefan Cohen stated, "BCC has been operational for about a year. BCV is not unfamiliar with the crypto industry, with portfolio companies including BlockFi, Zero Hash, Risk Harbor, and CoinDCX."

Stefan Cohen has been a partner at BCV since 2016, and he mentioned, "Bain Capital believes there is a need to establish a team focused on the crypto industry to increase competitiveness in the emerging crypto sector."

a16z has established a dedicated crypto team, and in a sense, BCV is following in a16z's footsteps. On the other hand, BCV has to compete with large crypto venture firms like Paradigm and Multicoin, as well as traditional venture firms like Sequoia and Tiger.

"Over a year ago, we started to establish a founder-focused fund to help founders grow from the early stages," Cohen added. "Providing advice on key economic issues, interacting with on-chain governance, and offering liquidity and staking."

The fund's co-head, Alex Evans, said the team "provides us with such a structure."

To this end, given the complexity of the crypto market, the fund hopes to embody more of a "mad scientist" culture rather than a traditional Silicon Valley approach.

BCC is Not Traditional Venture Capital

Cohen stated, "Crypto venture capital is different from traditional software investments: founders and communities have a range of different needs, and we intend to engage with protocol communities, governance decisions at the code level, and incubate projects on infrastructure that interests us."

So far, large traditional venture firms have abandoned tokens traded on exchanges. A female spokesperson indicated that Bain also plans to support anonymous founders. Investment sizes will range from $1 million to $30 million.

The new fund joins other funds that have raised capital in recent months, including Sequoia, Pantera, and the exchange FTX.

However, the announcement of BCC's establishment on Tuesday was not without controversy. A photo featuring only men sparked ridicule and criticism online. On Tuesday evening, partner Stefan Cohen apologized and pledged to hire women and invest in women-led projects.

BCC Will Invest Heavily in DAOs

Cohen and Evans expect to invest heavily in DAOs.

Although DAOs have existed for years, in 2021, the proportion of DAOs appearing in the media surged due to community-driven viral philanthropic efforts (involving purchasing a rare copy of the U.S. Constitution or funding legal fees for WikiLeaks founder Julian Assange through NFT purchases). In development, DAOs help manage DeFi protocols from Compound to Uniswap.

"As the narrative around Web3 evolves, many more inclusive DAOs have emerged. There are culturally rich DAOs, playable DAOs, which feel very intuitive," noted Darren Lau from Daily Ape in a recent episode of The Scoop. "People just want a place to hang out with friends, and having a DAO seems like the coolest way to do that right now."

At the same time, the expansion of DAOs has created investment opportunities, attracting interest from companies like BCC.

BCC plans to invest in companies that provide governance, payment, and launch-time marketing tools and services for DAOs.

In an interview, Cohen pointed out that Tarun Chitra's Gauntlet is an example of a company in this space, highlighting its automated governance platform. "Our ways of living and working will continue to evolve and create a purely crypto-native economic growth flywheel," Cohen said.

Additionally, Cohen added, "DAOs are starting to resemble B2B software in the early 21st century."