Interview – Democratizing venture capital: Hatu Sheik, CMO of DAO Maker

Even with the turbulence in markets over the first half of 2022, the crypto industry remains one packed with innovation. 

While valuations may have pulled back somewhat, venture capital is at the heart of many exciting projects aiming to disrupt the legacy financial sector – and sectors, beyond. 

Today we look at DAO Maker, which aims to innovate venture capitalism itself. 

One of the biggest criticisms levelled at VC’s in crypto is that it is elite and inaccessible. Time and again, we see VC’s make out with a killing, even in cases whereby the product or token ends up falling massively in value. It is retail who end up holding the bag, while the VC’s make their cash – when the everyday investor had no chance to get involved. 

This is where DAO Maker comes in. A novel blockchain-domiciled project which aims to clean up incentives with VCs, democratise access and ultimately make create a fairer system for all. It’s quite an intriguing DeFi application, so we had some questions for Hatu Sheik, CMO of DAO Maker,

Invezz.com (IZ): Hi Hatu! Thank you for joining us today. Please tell us your crypto story and where the idea for DAO Maker came from.

Hatu Sheik (HS): Hi! I am Hatu Shiek, CMO and co-founder of DAO Maker. Thank you for having me onboard. 

Okay! Let’s begin with my education. Soon after graduating high school, I moved to the USA for my higher education to get involved with the global startup scene here. I pursued Business Finance Concentration and Mathematical Economics from Stony Brooke University, New York. Even during college, I strived to master as many entrepreneurial skills as possible, and by the time I graduated, I had four ventures of my own. 

In my quest to pursue entrepreneurial skills, I developed a love for marketing and strategy. I realized that I love analyzing and strategizing different approaches for business growth. So, I went on to co-manage a $3 million county budget and facilitated $65 million in ICO funding before joining DAO Maker. I also worked closely with various blockchain-based projects and tokens to manage their marketing strategies. 

As someone closely associated with the startup space, I observed the VC approach to startups and how the centralized nature of the VC market puts startups in a chokehold. Luckily, this is also when DAO Maker and its vision to bring retail investors VC market caught my attention. I loved the idea and decided to co-found the venture. 

IZ: Okay, DAO Maker’s vision is quite intriguing. But the VC market on its own is extremely successful. What is the need for retail investors in this space?

Yes! The VC market is and will always be quite successful. In fact, in 2021 alone, VCs shelled out a whopping $621 billion on startups. But the term success here is quite subjective. The market might seem successful from the VCs’ perspective but not so much from the startups’ perspective. This is because VCs operate with a growth-first perspective and focus more on profit than startups’ welfare. And, in pursuing their own profit, they push a lot of promising startups into oblivion. 

From the get-go, VC-backed startups have immense pressure to grow and scale prematurely. They don’t get the required time to establish a strong market for themselves. And scaling without having a proper market is a recipe for disaster. The few startups that get it right survive. All the others are either bought by the VCs or are liquidated. Estimates even suggest that three out of four VC-backed startups fail. 

This is the present state of the VC market, and if allowed to continue, we might be left with a startup space that puts innovation on the back burner and focuses on short-term growth. For innovation to thrive, the market needs to be democratized. In other words, the power needs to shift from the hands of VCs. This is only possible by opening the VC door to retail investors. And thanks to blockchain technology, it is now easier than ever before to bring retail investors into VC. 

IZ: That’s a great insight. Can you tell us how blockchain technology helps onboard retail investors and match them with suitable startups?

Okay! The rationale here is quite straightforward. We need innovation to thrive, so the only way forward is to democratize the VC market. And to democratize the VC market, we need to achieve complete transparency, unmatched security, and trustlessness, all of which are only possible on the blockchain. For startups, blockchain technology opens the door to a global investor pool and helps automate their funding. It also eliminates the need for middlemen and centralized authorities, giving them full control over their ventures. 

For retail investors, blockchain technology makes the VC market accessible by allowing them to pool resources with millions of others across the globe to fund startups. So, investors can invest at their convenience without the pressure to put in a huge capital upfront. Moreover, we at DAO Maker use the on-chain behaviour of investors to match them with startup ventures that suit their preferences and risk appetite. 

IZ: Give us further insight into DAO Maker, the vision, and how the platform democratizes the VC market. 

Sure! So, with DAO Maker, we built a holistic platform to onboard retail investors and make the VC market accessible to them. Our vision is to democratize the VC space and prioritize the welfare of startups while providing retail investors an opportunity to capitalize on their growth. In other words, we make it possible for the public to participate like VCs. Our investment products are designed with retail investors’ expectations in mind. Yet, the welfare of startups is also our priority, so retail investors on our platform take three-year commitments just like VCs. Moreover, we provide no-VC, public-only early-stage funding programs for startups. In a very short time, the native assets of these platforms went on to out-perform the VC-funded ones. Even in bear markets, DAO Maker prioritizes public funding over VC funding. 

IZ: Your vision is quite intriguing. But, that being said, the VC market is inherently a risky space. How do you think the risk associated with such investments can be reduced? 

Well! When millions of investors pool in resources to fund startups, the risk is distributed. No single investor takes the fall completely. So, we can say that the risk associated with the VC market is significantly reduced. But that being said, it is still riskier than any other personal finance investment. Retail investors look for steady income growth, unlike VCs, who aim for the highest returns and are prepared for the losses. 

So, if we truly want retail investor participation in the VC market, we need to accommodate 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 in a way to reduce as much risk as possible while still giving investors steady yields and income growth. For instance, our flagship product Venture Bonds guarantees an 8-10% interest for investors, with almost zero associated risk. 

IZ: Lastly, what advice would you give to retail investors eyeing the VC space?   

The VC market is undoubtedly an excellent opportunity for income growth that retail investors have been deprived of for decades now. Just imagine investing in Google or Tesla in their nascent stages. Yes, the risk was high, but the returns were even higher. 

But here, with platforms like DAO Maker coming into the picture, retail investors have the opportunity to invest in the Google of tomorrow while significantly reducing the associated risk. It is a win-win situation. So, my advice for retail investors is to grab onto this opportunity and invest as per their risk appetites and expected returns. 

It is now in their hands to help democratize the VC market and take home a share of the profit pie in the process. 

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