YC Alumni Launch Crypto Collective for Web3 Startups

A Web3 Startup Collective Exclusively for Y Combinator Alumni

A new organization is actively recruiting members to support web3 startups, with a specific requirement for potential entrants: proof of completion of the Y Combinator accelerator program.

Formation and Growth of Orange DAO

Launched this autumn with a core group of YC graduates, Orange DAO aims to establish a venture framework dedicated to identifying and investing in emerging cryptocurrency ventures. Its membership has rapidly expanded, now encompassing over 1,000 founders who have participated in Y Combinator.

The collective intends to leverage the decentralized autonomous organization (DAO) model to incentivize its expanding network in the sourcing of promising investment opportunities.

Core Objectives and Charter

According to its official charter, Orange DAO will facilitate the application process and acceptance of startups into Y Combinator. It will also provide both pre- and post-YC funding, mentorship for leadership teams, talent acquisition assistance, and customer acquisition strategies.

The charter emphasizes a commitment to responsible and equitable practices, asserting that the collective intelligence of its members surpasses the capabilities of any individual.

Scale Within the Y Combinator Ecosystem

The current membership of 1,000 founders represents a significant proportion of the total Y Combinator alumni base – the accelerator has supported over 3,300 companies since its inception.

Ben Huh, a serial entrepreneur and former leader of YC’s New Cities initiative in 2016, is a key figure in leading this effort. It is important to note that Y Combinator itself is not directly involved in the project.

The Power of an Alumni Network

“The emergence of an alumni group functioning as a for-profit entity, generating wealth for its members, reflects the current landscape,” Huh explained to TechCrunch. “These groups will provide both purchasing power and a form of validation; if 1,000 YC alumni endorse a particular service or tool, it suggests genuine quality given their professional backgrounds.”

Membership Verification and NFT Integration

Applicants verify their YC affiliation by linking their crypto wallet address to their YC-associated HackerNews profile. Upon verification, members receive a non-transferable NFT, confirming their status as a YC founder and participant within Orange DAO.

Precedent and Evolution of Alumni Funds

Orange DAO is not the first initiative to harness the networks of YC alumni for investment purposes. In 2017, a group of approximately 200 YC graduates established the Pioneer Fund, a more conventional venture capital fund leveraging the expertise of past YC founders.

Understanding DAOs and Their Applications

Decentralized autonomous organizations (DAOs) utilize blockchain technology to enable collective decision-making. They gained prominence during the cryptocurrency bull market as a means for groups to pool resources for acquisitions, such as the attempt by ConstitutionDAO to purchase an original copy of the U.S. Constitution. DAOs are also employed by crypto projects for decentralized governance.

DAOs as the Future of Organizations

“DAOs represent a collective technology rather than an individual one,” states Will Papper, co-founder of Syndicate. “They are potentially the next iteration of the corporation, embedding both voice and exit mechanisms into their core structure.”

Syndicate’s Role in DAO Formation

Syndicate, a DAO startup, assists groups in establishing and navigating the complex regulatory environment surrounding DAOs. Papper’s expertise was instrumental in guiding ConstitutionDAO’s bid and also provided early guidance to Huh regarding Orange DAO.

Legal Structure and Investment Strategy

Orange DAO employs an unusual structure designed to balance experimentation with legal compliance. The DAO itself operates as an LLC, while the investment fund, Orange Fund, is a separate legal entity managed by Huh and other general partners. Orange Fund has already completed an initial fundraise and invested in around 30 startups, including DeFi project Goldfinch.

Huh explains, “We’ve developed a method to integrate the investment entity structure with the DAO structure – they remain distinct but function synergistically. Our ultimate goal is to operate according to the principles encoded in the smart contract.”

Governance and Incentive Mechanisms

The DAO operates through committees, organizing its 1,000 members into focused working groups. A key aspect of Orange DAO’s structure is rewarding active members who contribute significantly to individual deals with internal governance tokens. Details regarding how fund performance will translate into returns for DAO members are still being finalized, but the GPs of Orange Fund will contribute their carried interest to the DAO’s treasury.

Branding and Future Outlook

Initially known as the “YC Crypto DAO,” the organization has evolved its branding to reflect its broader ambitions, adopting the name Orange DAO and a new mascot: a pixelated, bespectacled citrus fruit playfully dubbed “Juicy Returns.”