Funding & governance models: constraining possibilities

--- tags: funding, governance, todo --- # Funding & governance models: constraining possibilities #### Donations pipeline - We should represent as a single entity (Economikit) vs disparate projects (H-REA, SC, VF-UI etc) - Case for: - Lack of bandwidth to manage marketing & incoming funding streams; sharing the load seems advisable - Allows us to branch out into collaboration with other projects, and develop modules outside the purview of H-REA & SC - Case against: - Potentially more difficult to communicate the mission & purpose of the group without direct attachment to a software project #### Dual licensing - We should aim for a "sponsorware" model which rewards contributors, rather than use less permissive licenses to force for-profits to reciprocate. - Case for: - Creates a more positive & inclusive social frame that rewards those close to us, rather than a negative "protectorate" culture that "others" those different to us and pushes them away. - Means we still don't discriminate to anybody about giving things away for free. Seems important in the context of more impact-driven organisations who have no option other than for-profit structures in their legal jurisdiction. - @Sid: More organic route - allows NH vision to evolve as we build - @sid: Could Sacred Capital/NH be a sponsor for EK? There's quite a few aspects to be figured out for this, but should be a fun exploration. - Case against: - Capitalists, err, capitalising on our work - More marketing / communications involved in managing sponsors (how do we keep this workload light?) - @TJSptuQkSdWyLgQxZrAUGg : Inorganic route, shortens timelines. Allows us to present a scaled working model by 2024 (Sid to share more about timelines and how he's looking at them) - Requires us to play by the needs of sponsors. Works only if they entirely 'get' the NH vision > Notes: > > - Junto [seem to have done a pretty good job of this](https://junto.substack.com/p/flux-40-junto-alpha-iii) with their crowdfunding campaign and "sponsorware" to reward early backers. > - Can [work well](https://calebporzio.com/i-just-hit-dollar-100000yr-on-github-sponsors-heres-how-i-did-it) for OSS projects if managed properly > - Possibly largely a case of having a more public presence, writing more (eg. Medium blog), and injecting "please support us" at all available opportunities like Junto are doing. #### Self-lending fractional reserves @Noah mentioned this RE Enspiral. I don't really understand anything about it, would be great to dive into what's possible & what the repercussions may be... @sid From my perspective, this seems possible when social fabric + minimal capital exists. And could very well be the goal for the collective. #### Investment modes - Investments based on expectations of capital returns are out *(@pospi: for probably obvious reasons, or should I say more?)* - Equity investments need more thought... do they subvert our ideologies? What exactly would people be getting equity *in*? - Could potential investors be happy to be labelled "supporters" and managed through the "sponsorware" process instead? #### Legal entities - We will probably need to setup a cooperative or LLC somewhere in order to accept funds collectively. @Sid suggested Singapore as an easy legal jurisdiction for doing this. - @sid: Singapore's 'Company limited by guarantee' is a good structure. #### Sponsor benefits Presuming engaging with a "sponsorware" model, what could we give sponsors as benefits? - Shift the project to another Git service or setup a more public issue tracker, and only allow sponsors to file requests - Access to the "Economikit neighbourhood", which is just a network space where we dogfood our tools. Would allow people to engage & collaborate with us more deeply - Free consulting on deployments & neighbourhood configurations #### Timelines: - @sid: This to me may be the most critical factor in defining the funding/org structure we end up using. Feels like the coming decade is going to be critical on many counts. I find I am vested in building something of socio-political significance that can shift the way humans operate at scale. - In particular, I'm concerned about the way things will pan out in less industrialised regions like India. This is probably specific to me, and due to my personal attachments, but I think things will not be pretty in the next few years. I would like to help shift that. ### Thoughts on the investment model **(Rambling by Sid based on his experience with this model over the last couple years with SC)** #### How we've done it so far at SC: - We issued them discounted credits the way a co-op would. These are basically discounted prepaid vouchers for future services. Does not offer them any say in governance (unless we want to include them in the governance council). At some point they will have the option to sell these vouchers to someone else who is interested. - The conversation with investors has always been *'we're doing something interesting, and if we pull it off it will be quite awesome. So, there's risk involved and we can't offer you any rights because you don't really know how this tech functions, but we can guarantee you a wild, fun ride :)'*. Things got more specific as the vision developed, but this approach helped keep the spirit of the investment intact. It meant that we almost never 'planned a fund-raise amount and executed accordingly'. It was very much a work-with-what-we're-getting approach. This has it's pros and cons: Pro: - Allowed us to be resilient, and pivot, accelerate or slow down based on the evolution of underlying technologies. My motivation has always been building something that's relevant, not putting something together because everyone was doing it. Con: - The amounts we've raised have surprised us both positively and negatively. So it's hard to plan things upfront Con: - This approach requires various factors to move in your favour i.e. global economic situtations, the momentum in the distributed economy space etc. So you can't wake up one morning and decided to 'just go out and force it'. Personally, it's taught me how to build something while staying vulnerable. Pro: - Taking on investors means accountability. I was wary about that at first, but a couple years ago, a mentor came up to me, offered me a blank cheque and basically said 'this is not about you anymore'. Those were his actual words Lol. To summarise what would otherwise be a long emotional story, I think it's helped me snap out of some of my narcissitic self obsession (i.e. getting into intellectual-moral loops) and keep rolling. I have begun to value being accountable to a couple dozen people. Con: - There have also been moments when I wished I could just disappear, and not be answerable to anyone. Pro: - I didn't think this would happen, but I've actually enjoyed deepening my relationship with some of the investors. This wouldn't have happened if we were just friends chatting about what we should do for the world. Also, these people end up building your eco-system for you. So developing networks, spreading the word to future users, team-members, investors etc happens pretty organically. Con: - The investor model has its share of complications. Several hours need to be dedicated to ensure you're not doing the wrong thing. It's like dodging land mines. Also I hate paperwork. Pro: - Having put in those hours, and having run cross-border operations I now feel like I have capabilities that are pretty useful. It doesn't scare me (as much) as it did a couple years ago. Pro: - I feel like this process of setting up and running investor backed companies has nuanced my view of the world. My opinions on what the issues are, how we need to solve them etc. wouldn't have developed if I was still sitting in the ashram. I would still be coming at things with a basic activist-type agenda. Pro: - Investor funds definitely act as a catalyst. They can compress timelines and accelerate what you're building by several orders of magnitude. Con: - This can also be scary, coz it feels like you're flying a plane with limited levers at times :p Pro: - It is simultaneously thrilling Lol Pro: Taking on investors (who receive no governance rights) let's you orchestrate and build in a very precise way. If you have a specific opinion on what needs to be built, how it needs to be architected and at what pace, in my opinion this model is really useful. You don't need to rely on what your sponsors/donors think, or what your clients want. You just go out and build it. Con: If you think you want to learn and make mistakes at the expense of others, the investor route can be tricky. Con: There is always going to be a healthy boundary between investors and the team. So you can't be blatently transparent about things and share everything in the journey with them. I've come to rationalise it as 'responsible honesty' as opposed to 'reckless honesty'. PS: [This was a doc](https://docs.google.com/document/d/1xK-UBYwzgGCwuaiQRrh19yoZJRfPtHE5UWTC5sSiZLg/edit) made a couple years ago, during the early days of Holo with DA :) A few terms have changed, but the financial model is still relevant.