According to a proposal submitted to BitDAO, AfricaDAO is targeting initial funding of $125 million.

On 10 August, BitDAO announced that a proposal from AfricaDAO was approved to receive $20 million in funding. This article will walk through step-by-step why this announcement marks a major development for crypto in Africa.

What is a DAO?

Definitions are always a tricky affair in crypto, but our go-to simple explanation of a DAO goes like this:

“DAO” is an acronym that stands for Decentralized Autonomous Organization, a type of organisational structure where the organisation’s aims are coordinated and executed through the use of blockchain technology.

It should be noted that there is still ongoing debate about best approaches with regards to where DAOs stand as legal entities and how limited liability works in the DAO context.

What is BitDAO?

According to its website, BitDAO is one of the world’s largest DAOs and it is governed by holders of BIT tokens. As of writing, BitDAO has a market capitalisation of $820.5 million and is ranked #72 on Coingecko.

BitDAO describes its vision as “open finance and a decentralized tokenized economy”. In the pursuit of this vision, BitDAO partners with crypto projects and provides them with help in a variety of ways.

Once a project proposal to BitDAO is approved by BIT token holders, BitDAO may support the project by conducting a token swap with it, providing liquidity support, grant funding or other types of partnership.

When the BitDAO introduction was published in August 2021, its backers included Peter Thiel, Founders Fund, Pantera, Dragonfly Capital, Spartan and Bybit.

What is Jambo?

Jambo is a crypto project that first hit our radar at ACR in February 2022 when it was announced that the “super app” project had raised a $7.5 million seed round. Our interest was piqued again in May 2022 when it was announced that Jambo had raised an additional $30 million Series A round.

In the Series A funding announcement, Jambo was described as “building the Web3 super app that will educate, bank and entertain the continent”.

In the same announcement, Jambo co-founder James Zhang shared that the Jambo team intended to develop partnerships in order to launch the AfricaDAO investment fund. The purpose of AfricaDAO would be to “empower and invest in start-ups who share in our vision and mission to positively impact the lives of millions across Africa for decades to come”.

Jambo is listed as the first proposer in the AfricaDAO proposal to BitDAO, followed by Jambo’s co-founders Alice Zhang and James Zhang. In total, the proposal features 17 proposers as well as a list of 16 regional advisers covering north, east, west and southern Africa.

What is AfricaDAO?

At its core, AfricaDAO is an investment fund. According to its website, AfricaDAO will act as a hub for Web3 innovation in Africa by connecting entrepreneurs in Africa with “access to financial capital, global social capital, business-building acumen & best practices, and the educational resources needed to bootstrap successful Web3 start-ups”.

AfricaDAO will follow a three-pronged strategy that is summed up as investment, acceleration and education.

• Investment: 90% of AfricaDAO’s funds will go to its venture investment strategy.

• Acceleration: 5% of the funds will go to sourcing and empowering builders in the Web3 space through partnerships, grants and providing technical expertise.

• Education: 2.5% of the funds will go to education to help develop a sustainable pipeline of Web3 talent in Africa. Initiatives to this end will include working with colleges across Africa, funding Web3 development programs, hosting hackathons and building community through other events.

The remaining 2.5% will support the operations of AfricaDAO.

How important are these developments?

The developments around AfricaDAO give us much to think about with regards to crypto generally and more specifically about crypto’s future in Africa.

First, the DAO-2-DAO dynamic between BitDAO and AfricaDAO is fascinating. DAOs were mere concepts a few years ago, and now they are conducting transactions such as the one discussed here. Once again, we are reminded of how quickly ideas can move from concept to reality in crypto.

Secondly, according to a report published by CV VC in June 2022, crypto projects in Africa raised a total of $121 million in 2021 and $91 million in Q1 2022. The AfricaDAO proposal states that AfricaDAO is targeting an initial raise of $125 million, with $105 million coming from strategic partners and $20 million from BitDAO.

As such, AfricaDAO’s total initial funding represents a significant amount of new capital set aside to support African crypto projects. This suggests we will continue to see acceleration in the development of the African crypto space.

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