# Hypha Seed Investment Strategies

## Context

* We're one year in with Distributed Press
* We need more sustainable funding to keep the project going
* Preferred route is to not seek traditional VC funding
* Looking for $1M~ funding
* Two issues
* Funding for DP itself
* Longer standing ecosystem problem itself of funding for tech in cooperative ecosystem
* Potential partners
* Jason Weiner
* https://jrwiener.com
* Zebras Unite
* Jacquelyn (sp?), Andi met at Platform Co-op course
* https://weirdghosts.ca - writing in their FAQ resonates with us
* Open Collective
* Christina Bowen at Social Roots

### Distributed Press

- amount of funds: $1M seems high given how it was used in the last round
- OTF funding possible
- grants versus investment conversation
- could also stitch together multiple grants for $1M
- Staffing: project could use more fulltime people; really needs this for institutional memory to carry project forward
- Why did we not spend enough?
- not spending because need FT hire to lead it
- How do we make it attractive to work on projects full time?
- It was very hard to get the project started, who was working on what
- We didn't hire for another engineer on the project
- We don't need someone with high knowledge of p2p / compsci info to help us with DP
- We also need redundancy for Mauve, if they need to step away
- When you have the resources you can make the committments, but also can't get the resources if you don't have the committments
- Finding product market fit is also labour; how to value this work and fit it alongside the development work
- Who's on the team to do this work?
- DP needs a product manager
- What about From Later?
- Someone from Superbloom? Ngoc Trieu
- Ben: $1M over the next two years, we need runway
- What is our pitch to funders, and customers?
- Fauno: Need to scale up projects for Sutty
- Tech is ahead and business is behind

### Coop + Capital

* General allergy to investment in the co-op space
* Voting vs nonvoting - governance rights
* Investment vs. loan - ownership vs. paying for money
* Grants - scoped project, no money strings attached
* Thing that you want to build doesn't get that far because it doesn't have momentum
* >> Culturestake, Quadratic funding app with Furtherfield
* How do other FOSS projects sustain themselves financially?
* Co-op capital
* How to push the conversation forward on this? Policy-wise?
* How to get major co-op funding?
* https://sharedcapital.coop/borrow/ (US only)
* https://ccif.coop/ (Canada only)
* https://www.codeforsociety.org/incubator
* Gitcoin: how they figured out airdrop, shared ownership
* Grants fund the outputs of work, but not the people
* Doesn't support institutional memory
* More of a Fellowship model?
* Based on outputs, no pressure for product market fit
* reshaping the governance of DP so it's more co-operative
* DP as a platform co-op
* Roles
* Internal governance
* External sales

### Next steps

* Seed investment group engage with others (ex. Christina Bowen, Zerbras) to think through this overall strategy
* Distributed Press: We need to shift our thinking around money and how much we need
* Who do we hire / what do we hire for to be successful?

## 2023-08-23

Two problems:
- coops and funding
- distributed press part

- Mai and mauve in DP, but might not need to be tasks with the coops bit.
- Andi and Ben care about the general problem. Want to improve for coops
- What is this work, what are folks aspirations.
- Mai: Since this is broader than DP, and touches on hypha, there's more context for Canada. Doesn't feel appropiate for mai in some ways as a non member. Have ideas and like thinking through things. Juggling a lot right now. Can help DP be an example project to try something. Don't think it makes sense for broader strategy.
- Ben: Do you want to be in charge of fundraising and broader strategy within dp?
- Mai: think it's my role but,
- Ben: Roles could be updated since we're at the end of year one. You were editor of compost, also pm for the grant. Ambiguous if part of role long term.
- Mai: not as good at it atm, needed help with PMing. It got collpased into a role but doesn't have to be.
- Andi: interested in coop sector finances and policies
- not super excited about but willing to develop fluency in this area
- tied to long term hypha strategy
- require so much heavy lift...
- Mauve: exp running small scale grants, interested in taking on more... coordination of developers
- talking about collaborations
- not much knowledge about the coop space
- DP is good experience, coop governance...
- not sure if right value prop
- getting the funding for the project plus meta issue for co-op and capitalization
- Hypha is more interested in the latter
- Ben thinks this is not super difficult to onboard into this space
- right now, the question is who is interested in actually learning this
- Mauve: would love to learn these skills
- Mai: talked to gerben from nlnet fo 3 hours on this stuff. "How can we have these infrastructural technologies not keep begging for money and not sell out". Can it be sustained as software that's relied on by others but to keep with their values. Big convo about cooperatives and ownership
- Need to have more of a foundation for how this works
- U.S. has created a container that's part LLC and part co-op - called an LCA (is there an equivalent in Canada)
- Understanding Convo in coops @dwebchat important. Social roops incorporated as hybrid llc/coop. Q: why not getting investments. Want to know criticisms against the org form. E.g. "You're a coop so I can't make money from shares".
- Who owns control of company important for investors. In democratic org you dilute ability to make decisions that prioritizes the investment. Board usually appoints a CEO to prioritize the investment. Coops mean losing control and wrong people can come into control. E.g. DAOs have poor democratic decision making. Important to understand why coops can't attract investors.
- Normal coorps have done a terrible job of representing shreholder interests too. Investors only care about a return, but often theyre's a lot that invest because they believe in it. Worker or consumer models can lead to more resilience long term. That framing / narrative should be told better. Not enough examples to point to. needs more experimentation like opencollective. How do you structure equity / governance so you can point to success or failure. Even startups a lot of them fail too. There's a lot of story telling that needs to be shifted along with how money and power get shifted.
- We need to frame DP as something others rely on. No fuzzy feeling, show it's something that's needed not just great to have and fun. Rewriting with more activitypub could be more appealing
- More ready to apply to nlnet with use cases
- We should focus more on hypha strategy in this call. Ben has a deck for DP. Defs need Andi for convos since it's related to her practice. Figuring out models for financial longevity.
- Most problems are product problems. Coops tend to focus on small niches that aren't good investment opps. Have non profit grants/endowments for that instead. Interest funds projects perpetually. Web3 opportunities for this, interest can sustain what would otherwise not be profitable. Need to map how it relates to DAOs and DisCOs. This is where Hypha could have expertise in.
- Unprofitable gets valued less, think valuation is broken and don't agree. It not being an immediate money maker doesn't mean it's not valuable to a community. What other vision could we have for sustaining these? Endowment model also has faults, doesn't work very well. Works as an ideal but ad hoc project based funding doesn't work.
- Once we have endowments and can aisng gov power to entities it could work.
- Right now what's chosen to be funded is shinyest and flashiest and low level infra doesn't. Also perpetuates constant burnout. Mission drift happens as you jump to get small grants here and there.
- Endowments better than startups cause startups can't change direction. Non profits end up switching too much and don't grow a revenue base. Saas listens to customers and grow one thing.
- Neither models address ownership or why people do it or the value to society as a whole. Most interesting part for Andi.
- Some stuff that isn't valuable that folks spend money on it. Sometimes it's valuable but there's a failure to engage those users.
- VC money shapes in way that might not serve users.
- A lot of times we ignore investor interests. Need to engage them and meet their expectations
- OC managed to get funding without undermining their values. Can work with groups that are less profitable. Could be good to care about what investors want but it might be in conflict with what people want.
- If we potentially have a thousand people interested in compost, why don't we have people subscribed? We haven't asked or done a push for it yet. Is there a way to make folks feel more urgency to donate? Maybe we can dedicate somebody part time to that role. We can feasibly get 1k subs for compost, need to execute.
- Useful doc for non profts and philanthropy: https://drive.google.com/file/d/11HQOpDF6lIb1xORgYkWU8wMdl2BW5Xd8/view
- What would people get for donating to COMPOST? Some sort of recognition? EFF and Signal do that. People feel good about donating in support. Wikipedia is constantly begging for money but they're doing great.
- Signal funding: https://fourweekmba.com/how-does-signal-make-money/
- Wikimedia: https://wikimediafoundation.org/news/2021/09/22/wikimedia-foundation-reaches-100-million-endowment-goal/
- Not saying we need VC, we need to be clear about what we do. If it's an endowment we should plan it and raise it. Longevity is the biggest risk for funders even non profit funders. Biggest risk for FFDW is that their funded projects would fail in ther absence

TODO:
Take dp funding stuff into dp channels
Keep this call, less dp focused. Mauve into joining, Mai into joining but maybe not every.
Andy will set up a "coop development" call