Episode 40: Tesa | Fight Club - Decentralized VC
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Timestamps and Transcripts from the Fight Club - Tesa with Crypto Sapiens by Latsan#6466
Timestamps
00:00 - 00:44 - Crypto Sapiens Introduction
00:45 - 01:30 - Guest Introduction
01:31 - 02:10 - How Tesa founded herself in web3 and Dao
02:38 - 03:29 - How fight club started
03:30 - 05:02 - Tesa’s experience/background before web3
05:03 - 07:25 - Fight Club experience in the early stage of development
07:26 - 12:50 - Fight club collaborations with other DAOs
12:51 - 14:48 - Fight club transition and sustanability
14:49 - 19:03 Soulbound NFT use cases in the fight club
19:04 – 22:16 – Venture funds in web3
22:17 - 24:19 - Accreditation for venture fund for Investors
24:20 - 26:41 - Available Nfts in the fight Club
26:42 - 28:52 - Future expectations from the fight club community
28:53 – Outro
Humpty Calderon: Welcome to crypto sapiens, a show that hosts lively discussions with innovative web 3 builders to help you learn about decentralized money systems, including Ethereum, Bitcoin, and Defi. The podcast is for educational and entertainment purposes only, and it is not financial advice. Crypto Sapiens is presented in partnership with Bankless DAO. A movement for pioneers seeking freedom from the limitations of the traditional financial system. Bankless DAO will help the world go Bankless by creating user-friendly on-ramps for people to discover decentralized financial technologies through education, media, and culture.
Humpty Calderon: Hello, and welcome back to crypto sapiens. Today we are talking to TESA: Self-described cat herder at fight club. We start the conversation with her describing her journey to becoming a Bankless DAO member in the early days and the role the DAO played in launching the fight club. This conversation was super enlightening, especially in learning about the similarities and differences between traditional venture funds and venture doubts from membership deal flows to governance. We also discuss the fight club's upcoming black glove public mint, how you can earn your own glove, and the launch of their second educational cohort. So, without further ado, let's get started.
Tesa: I think it started with me like everybody else, I was just a premium subscriber to the Bankless newsletter. My day job is running a crypto hedge fund. So, I was learning defi. I was also doing other things and it was a source of information. And when they dropped their bank token, suddenly, I found myself in a DAO. That's when you're like, okay, great. And now I'm in a DAO. Let's DAO it. That was how everything got started and it kind of built on the idea that there are a lot of great people within BanklessDAO. There's a lot of leverage to the Bankless brand. So why not try to create a venture DAO around it? And I spent a lot of time researching venture DAO, and I did a piece of programming, I must stop because I'm such a slow writer. I would make my stories and then, it would take me a few months and by the time I finished, something would change. Then I'd be like I must change it. I was just way too slow as a writer, but I digress.
So that's what fight club started as. It started as a singular venture, which is why we couldn't focus in the first place because venture DAO was basically like many funds and for SEC regulation, you can't really talk about venture DAOs in a public setting. So, at that point in time, BanklessDAO was having weekly community calls to the public for some legal advice from the legal Guild. It was better not to talk about it in public. So until we were able to have our own discord and fight club kind of organically morphed from a singular venture DAO into a platform with educational programs at that point, we were able to talk about it because now we're something beyond a singular venture DAO. Now, we're much more than that. So, that's basically the genesis behind fight club.
Humpty Calderon: That's amazing. So, it sounds like you came into the space with experience in venture funding. You said you were leading a crypto hedge fund before joining BanklessDAO
Tesa: Yeah, I wouldn't say so much in terms of venture funding, I've done angel investments before, but not so much in venture funding. Moreso, my hedge fund, is like a market-neutral hedge fund. So, my background is traditional. I'm a trad fire coming from quantitative trading. So that was my background.
Humpty Calderon: That's amazing. Look, I have a lot of respect for anybody who comes from that background because just generally I have no idea what the heck is going on. I think you're in this space long enough, you're building something you're going to need to deal with investment, right? Whether that is a community-backed investment or a venture fund-backed investment, you're going to need to deal with that by understanding how that world works which I’m sure pays dividends, right? No pun intended there in terms of how you can build out a good model, that is, investible, that you can have conversations that are intelligent with people who are interested in your project and supporting it through some sort of funding.Hence, I think that is an incredibly valuable kind of background to have when you're coming into the space, probably has some influence on some of the decisions that you make generally in this space as well, because we all become these community owners of projects. And so maybe we can make much more informed decisions when we jump into a DAO and choose to support it or any other project for that matter, That's awesome. So, talk to me a little bit about the fight club, in the beginning, you were saying you couldn't talk about Fight Club, and sounds like you got good and sound legal advice there. We're now talking about Fight club.So what changed, like what was that transition from then to now? Or we can talk about it, and we'll use that as a way to springboard into some of the other things that are being built there.
Tesa: The main change happened primarily when we had a fight club and had a collaboration with FTW, for the Wind DAO to create an educational program.So, our first educational program, like how to become a venture analyst. And as soon as we had that educational program, it became a point where the fight club is more than a singular Venture DAO. Now, we can talk about it because we can talk about educational programs. And then, during that process, it became clear that we had, I think the NFT club from Bankless DAO onboard and they expressed some interest in terms of how they could probably spin something up like Flamingo DAO. We figured out the ins and outs and logistics of creating a venture DAO so, what's stopping us from creating an NFT Flamingo DAO, a Bankless version?
At that point, I think that's when it clicked that fight club could be more than just one ventured DAO. We could become a platform of ventured DAOs and, we can use the same educational program to generate analysts, and then pair those analysts with actual analysts within the VC space so that we could create due diligence teams and now people are able to gain experience, working on deals and doing the actual research. When soulbound NFTs came out, that's when it clicked again, and I was like great! You know, now that people are working on deals, we can give them an NFT or a poap. The NFT works better than the poap because it's non-transferable. So, we could give them a soulbound NFT.
So now they can build their online resume. So, everything that fight club has become has been organic in terms of evolving from that initial concept of a singular venture DAO. It’s been great because all these concepts have come internally from fight club members. So, it's been an exciting process
Humpty Calderon: That's cool, there are a few things I want to unpack there, but let's start with the educational program and for those not familiar with FTW DAO for the Wind DAO. They are also a venture fund, a decentralized venture fund. So awesome to see that there's collaboration in that space from the early stage.
So, walk me through how that came to be. I think that there are some people from FTW in the BanklessDAO community as well. So how was that relationship formed? What was the thinking behind developing educational programs around investing and then what did that first cohort look like?
Tesa: Yeah. So, it basically started because Isla Liza, and BenH Kahuna, they're the heads of FTW DAO, and they were in Bankless DAO, and they joined fight clubs. So, they're skirting both DAOs. I think at least in this early stage, or even in a later stage to find other venture DAOs as competitors. We did a round table early on with some of the other venture DAOs including Peter from MetaCartel ventures, Honey DAO, and some of the stacker ventures, and everybody was nice. We learned a lot about it. In crypto, everybody's so collaborative, that there really wasn't any reason to not work with FTW DAO. So, when Liza and BenH Kahuna said they wanted to do this educational program.
It was, it seemed like everybody else in the fight club was on board and game within the Bankless DAO community. it was one of those services. So sure, it’s a win-win. Everybody wins in this program and that was when our first collaboration started.
Humpty Calderon: Yeah. And again, just a bit of background for anybody who doesn't know BanklessDAO is the connective tissue that connects a lot of us here. So crypto sapiens, fight club, FTW, like there are people within this community that has grown together from the dawn of the BanklessDAO and then have created projects that each kind of touches in the web3 space in different ways but we're all friends, we all care for one another. We all are fans. At least I'll speak for myself. I'm a fan of the projects that are being developed within that community and a huge supporter of people and ideas and projects. So cool to see that those conversations, started within that community and then to see how they blossomed into this first initiative.
So, you then mentioned talking to the NFT club and looking at some of the other DAOs that are formed around this idea of decentralized venture funding, and then working together with them. What is it that was born from those discussions?
Tesa: What was born from those discussions was that the idea of fight clubs should be a platform for venture DAOs.Then it clicked into place that if you have a platform of venture DAOs and you want to support an educational program. Now you are operating on an endowment model where you have a treasury that you want to co-invest in these venture DAOs because you need to grow something. You need to pay for these educational programs and be self-sufficient right?
We didn't want to keep relying on Bankless DAO for funding our educational program. So, I think really that's where we are today. It was this sequential step. We went from one venture DAO having an educational program to becoming a platform of venture DAOs to clicking into this business model of operating as an endowment where our treasury will cot in these venture DAOs, and the logic is you believe in your members. You believe in the deal flow that's coming through, at some point you need to be able to sustainably grow. What better way than in investing within the venture DAOs that your community is participating in which is the evolution of the fight club and that's where we currently stand. We're probably going to evolve again at some point in the future, because, as we keep increasing our membership base, people come up with such great ideas that you want to support, push it along as long as they're within this concept, now we're of morphing into an impact out with our educational programs and the same time we're about democratizing investment opportunities, which is what Bankless DAO was about. So, we have these two kinds of mandates that we're working with and so far, we've been able to morph them and make them work together. So, it's been an interesting adventure.
Humpty Calderon: Yeah, that's great. You know, you were talking about then also bootstrapping from BanklessDAO initially. And I think even crypto Sapiens is in that stage right now in terms of how we create a more sustainable runway for us to build out these ideas together with the community. What did the transition look like there? And what are some of the things that are being built out within fight club to create this kind of self-sustaining project and community?
Tesa: In terms of Bankless DAO we're structured as a sub-DAO. In terms of what we're building out. I think we've partnered with the point as our service provider for our Bankless DAO. We are working with them on building out the smart contract and the website. For instance, if you go to MetaCartel or the lao or any of the open laws like venture DAO, it's having that unique front end. And that's something that we're with right now. Once we have those in place. Right now, Ron rife passed out, working on all the kinks to it. That could easily be spun up for any of these other venture DAOs. There are some logistics from the back end. My first one is the Genesis fund, which is a web3 fund that's operating as a Delaware, LLC. So, there are some logistics that we must go through from the legal standpoint of incorporation with the Delaware, LLC, getting a standard operating agreement, which is always kind of like a generic thing when it comes to a venture DAO because nobody really knows.
It's still kind of a test in some or an experiment in some regards, because even the oldest venture DAO is only like a year or two, so it hasn't only been tested. So, it's been an interesting space where we are going through that process, we're figuring out logistics. so, from that standpoint, that's what we're building. In addition to our educational programs, we're building out the webinars. We are listening to what kind of topics our members are interested in and trying to figure out if we can create some sort of certification program or if soulbound NFT is the way to go and whom are we going to use for soulbound NFT.So, there's all these little, small, intricate, and logistical steps that we're figuring out as we kind of go along.
Humpty Calderon: You now have brought up, soulbound NFTS a few times. I am going to have to dive into it a little bit with you and I’m curious to hear your thoughts on it. A little bit of background for anybody who doesn't know, crypto sapiens hosts, a few different podcasts, and different series.
One of them is in the space of web3 identity and we touch on, decentralized identity reputation, and non-transferable tokens as a way of, capturing both identity and reputation because there are a lot of conversations and, experimentation going on with this. What are your thoughts on it in terms of what are these soulbound NFTs, what is their role in web3 projects like fight club, and how are they different from maybe some other way of capturing reputation?
Tesa: Our use case for soulbound NFTs is for our educational participants to have a credential, we're using Soulbound NFTs we're in the process of using Soulbound NFTs to signify that you've completed our program, and also in terms of our due diligence program. We are using Soulbound NFT to mark the deals that you've worked on. So, you can build your resume. I think our mandate for the educational program is trying to elevate communities using web3 and crypto and by elevating communities, that means we're providing them with another route to access other job opportunities within the web 3 space, especially in the venture space. You know, typically if you wanted to become any sort of venture analyst, you must go to the right Ivy League school, then get a job as an investment banker, then go to business school, and then maybe you find yourself working for a VC fund.
And now, at least with crypto venture investing, you don't have to do that. Right. It's really about what is your access to deal flow. How do you look at deal flow? The analytics for how you gauge crypto deals is a lot different than what you would look at a normal angel investment deal. It's much easier to look at a traditional business and say, okay, this is what your business model is. We forecast out what the comps are on your team. Some aspects are similar, but I think in the crypto space because, everything is so new, there are a lot fewer comps in terms of actual analytics to do so.
If it's a little bit easier, I think to break into crypto from a venture analyst side, But at the same time, it's not. So, we're just providing an avenue in that regard. And soulbound NFTs are one way to have people say this is what I've done. And you know, this is my resume for this, and we have a project coming up with extrachange DAO
Now that's a play to earn DAO, Rio de Janero and they work with they're in the PAVs of Rio, teaching them how to play like AXI infinity and providing education programs with them. So, the fight club is partnering with them to provide mentorship opportunities. They have a web 2 program initiative for some of the Villa participants who are learning how to program in web 2. We are looking to find them mentors and internships so that they can learn web 3 in a junior developer type of role and another way for them to build their resume because they're coming from an underserved community that doesn't have a network within crypto. They don't even have a formal education as with soulbound NFTs, now they can say I worked on this project. You can see what I've done, people can attest to what I've done. And now they're able to build a network within crypto. They can earn a lot more than what they're currently earning as a web 2 programmer in Brazil. I think right now they're earning maybe the equivalent of like $200 a month after their learning web 2. So it's absolutely ridiculous. What you can do if we can just elevate this community of super hungry people into crypto and web 3 then You are doing what crypto is meant to do, which helps to elevate the communities. So that's our use case for Soulbound NFTs, it's more as a resume builder than anything else.
Humpty Calderon: That's very interesting. Thank you so much for the comprehensive breakdown of how you see these non-transferable assets like soulbound NFTs can potentially play a role in the project. I think that a lot of this is novel and interesting to see how new ideas and new projects will also adopt these emergent technologies. So amazing. Thank you so much for sharing that. You also started to explain a little bit about what differentiates traditional venture funding from what we'll call decentralized venture funding, but maybe we can dive into it a little bit more to clearly establish some of the ways that we can facilitate funding and access to funding projects, for example, in a decentralized project, like what fight club is spinning up through its venture funds and, compared to maybe something in more in the traditional finance world.
Tesa: Sure. That's not a problem. I think for traditional venture funds if you're not familiar with them, they start with a general partner, It's like a general partnership agreement. So, they have general partners and then the investors are all limited partners. So as an investor and a traditional venture fund, I give them my money and I rely on the general partner for deal flow and for making the decisions on what projects to invest in.
And typically my money is locked up for, whatever duration of the fund is. Sometimes they say 5 to 10 years but it's usually within 10 years, it's locked up in a venture dial space. Everybody is a managing member. There is no GP. So, everybody has the same position. You're responsible for sourcing deals. You're all responsible for voting on which deals to invest in, everybody's kind of in it together. You can opt to delegate your right to make decisions, but traditionally venture DAOs are more of like a collaborative investment where everybody is coming together to find deals and then do the due diligence somewhat together. So, that's the main difference between what a venture DAO and what a traditional venture fund is. I think if you look at the current set of venture DAOs some are structured more similar to an investment club.
I think Honey DAO and global coin research. They're more like an investment club where they'll bring in a deal. And if you want to participate, every person can choose and opt often to participate in that structure. And then a single SPV is spun up where members will then co-invest in that SPV. The SPV goes into that deal. Venture do slightly different. It's more like MetaCartel ventures and the lao where everybody is looking at the same proposals online and they're voting online, and the due diligence is done by each of the members and every member must come up with a decision.
We're doing it a little bit differently in fight club. Whereas we have a due diligence team. So rather than each individual member coming up doing the due diligence themselves, they can opt to have third-party due diligence, which is fight club, the due diligence teams do the research for them.
Humpty Calderon: That's incredible. Thank you. As I said, I'm a noob when it comes to investment ventures. So, that was eye-opening and certainly a gateway into wanting to learn more. If there are other educational initiatives around this base, please do consider me as an early applicant because I'd love to jump in and learn a little bit more about how this works and certainly how decentralized organizations are going about it differently.
So, I did notice that there needs to be accreditation for anyone who seeks to invest in a fund. That accreditation is due to some sort of legal requirement. What does someone need to do? How does someone become accredited so that they can participate in these investment vehicles?
Tesa: I just want to clarify that the accreditation standard is only for our Genesis fund for US investors. If you are non-US investors, you don't need to be accredited per se. You can participate in early investing if it's not in a US company without being accredited. So, we have a specific ventured DAO the Genesis fund for US Investors only and that requires US people to be accredited. That's the standard SCC accreditation rules. Basically, your income for the past years must be $200,000 as a minimum, or you have a million dollars in assets, so that's just the Standard SEC definition.
Humpty Calderon: Wonderful. So, anything that doesn't fit within those criteria, acts differently?
Tesa: Yeah. And it's only because it's an early-stage investment. Assuming we have the NFT venture DAO, you don't need to be accredited at all, and if anybody can buy an NFT. There's no need for accreditation there and if we have a gaming Guild, it’s the same concept, you don't need to be accredited there either because anybody can buy an NFT on the open market. It only pertains to when you do early-stage investment.
Humpty Calderon: Walk me through a little bit about the different NFTs that are available now and what each of those represents within the fight club community, and project.
Tesa: Fight club right now is sub-DAO Bankless DAO. So, we had to gate it or discord.
And so, we have different NFTs for gating. We have a gold glove, which is the OG NFT, and that's basically for the original members who've been working hard. I mean, Fight club has been around, I think since Bankless DAO started. So, it's been over a year that we've had people working on this nonstop for basically free.
I mean we took a round of Bankless financing, but really, it’s essentially for free. I think in the process of our Bankless DAO NFT mint, you must be a level one member to mint the red glove NFT and all the mint things are done on the polygon. We're getting ready for our public mint of NFTs, which is a black glove.
And that's open pretty much to basically the public to participate in the fight glove. We're not offering a lot where it's basically 1000 public NFTs that would be made available. And, and that's in general because, you know, we're a small DAO. We'd like to build out in stages and we're also coming up.
Actually, we just talked about it in the discord, and I think people are okay with it. I don’t know if we must do a poll yet, but we call it a fighter NFT where people who want to work their way in, we understand that. We want to be as inclusive as possible. You know that's kind of our goal with fight club. Its investments are for everybody. We understand this market is kind of a difficult market. We are coming out with a white glove NFT where people basically join the fight club, do a couple of Bounties, and when they do a bounty, they earn cake. So, the fighter gets fatter.As you do more Bounties, you get cake and you become fat. And then you move up a weight class as a fighter. You start off as a featherweight and then you become a moderate weight and then you become heavyweight, and then you just become a Sumo wrestler. And when you become a sumo wrestler, that's when you get your fight club NFT and you're an efficient member.
So, we had fun kind of playing around and coming up with, themes about how people can work their way into the fight club. Yeah.
Humpty Calderon: I love that. I love the whole mummification of getting into something like a pun or whatever, and just kind of having that be something fun within the project.
So, I think that’s really red. The different weight classes to then earn your way in. Yeah, I'm very excited about that obviously being a Bankless DAO level one member myself, I hold the red glove and I'm very excited to see this project continue to grow and obviously have it been a bigger part of the web 3 ecosystem as we close out here, give us, an idea of what we can expect in the future for fight club and maybe some of the ways that people can connect If they're interested in, joining the fight club initiative.
Tesa: I will say follow us on Twitter @fight_club_vc and join our discord, as I said earlier, you can come in as a guest pass and be part of our trial run of fighters, where you can contribute to the DAO, or you can wait till our public mint which I feel should be coming up soon, we are already in July, by the end of this month, we should have everything ready to go with our public mint, and again, it's on the polygon network, so lesser gas fees and that's pretty much it. Join us on discord. We are kicking up our Twitter spaces where we're going through due diligence runs and having some founders of projects come and speak live on Twitter space. Our second educational cohort's going to start. I think at the same time the public NFT launch is going to start. So, it's going to be more widely accessible, it's currently only accessible to fight club members. And Bankless level one members, which was basically all the fight club members. So, it's not as diversified as much as we would want, but that was our MVP.
So, we feel like we've done a pretty good job with our MVP. Just jump in there and make suggestions. I think I'd like to think that we're an open group and, that we value everybody's commitment and ideas. That’s pretty much it. We love to have people participate.
Humpty Calderon: And that's a wrap. I really enjoyed my chat with Tesa. I especially enjoyed learning about the collaboration that is happening in the venture DAO ecosystem. To connect with Tesa, please follow her on Twitter @defin00b. And to learn more about fight club, go to fightclub.vc and on Twitter @fight_club_vc.Thanks for listening to crypto sapiens. If you enjoyed this episode, please give us a five-star review wherever you enjoy your podcast. It caused $0 but means the world to us and helps others discover this content too. You can also find more conversations like this one by visiting our website at cryptosapiens.xyz. I look forward to reconnecting with you at our next discussion.