AIP-438: ApeCoin Ventures

PROPOSAL DESCRIPTION

Team Formation

Animoca Ventures, an early stage venture capital arm of Animoca Brands, proposes the establishment of ApeCoin Ventures – combining Animoca Ventures historical expertise with the community’s strong reach to amplify awareness and scale adoption and utilities of ApeCoin.

In a 1:1 matching structure, we propose the deployment of USD$5 million worth of $APE from the ApeCoin DAO, to be matched by Animoca Ventures’ funding of USD$5 million in fiat to create a combined US$10 million fund. Funding from Animoca Ventures ensures that interests of both parties are fully aligned for joint success.

The fund management is currently provided by ASCENT Fund Services. ASCENT’s role is to be a custodian and disburse funds, they don’t make fund decisions. They are licensed for these types of operations and we would set up the legal entity for this, which would happen very quickly should the AIP be approved. The suggestion is to liquidate the $APE received into cash as soon as practical so that we can match the amount in dollars.

No multi-sig wallet would be utilized because ASCENT would basically be managing fiat, so we would manage an orderly sale process. Animoca Ventures would be receiving the ApeCoin and sell the $APE to then deposit it as fiat to ASCENT, which would be matched with $5m of Animoca Ventures funds.

Investment Ventures

By investing together into early web3 ventures, we will drive and encourage integrated utilities and adoption for ApeCoin – leveraging our venture expertise to the community’s energy, reach, as well as opportunities, to generate long-term value for ApeCoin DAO and its relevant ecosystem.

Our investment strategy targets seed and Series A stage start-ups, prioritizing those that can integrate ApeCoin into their ecosystem with the goal of increasing the value, utilities, use cases, synergies, network effect and influences of ApeCoin.

Scope of Operations

Animoca Ventures team will be responsible for the daily operations of ApeCoin Ventures, including but not limited to the following areas:

• Investment & Acceleration: Besides investments, ApeCoin Ventures will play a critical role in supporting Web3 ventures like the role of an accelerator such as providing funding, research, and operational support to help founders scale their projects from the early stages.
• Research and Due Diligence: ApeCoin Ventures has a deep understanding of blockchain technology, cryptography, security and protocols. It provides research and due diligence support to help founders navigate the complexities of various Web3 business models, programs and technologies.
• Tokenomics & Governance: Tokenomics advisory is one of the core pillars of Animoca Brands. It involves a great amount of industry expertise and trade secrets to excel to design token models that incentivize desired behavior, align with the goals of the project and ensure project sustainability. Governance models will also be examined for business performance uplift, risk mitigation and long-term success.
• Partnerships & Collaborations: ApeCoin Ventures will be able to leverage Animoca Brands network to help ventures connect to and collaborate with other projects, investors, and ecosystem partners to achieve their goals. These partnerships can provide access to new technologies, markets, communities, and expertise, helping them to scale and innovate more quickly.

Exit Strategies

Upon successful exits, 50% of the token proceeds will be sent back to ApeCoin DAO, with the plan (or an option) to convert profits back into ApeCoin. This approach aims to boost ApeCoin’s utility and adoption, leveraging our expertise in venture capital alongside the vibrant energy of the community.

Animoca Brands has had a history of successful web3 investments in the space some of them can be seen at https://www.animocabrands.com/investment-portfolio and https://animoca.ventures. Notable investments include The Sandbox, Axie Infinity (Sky Mavis), Pixels, Heroes of Mavia, xAI, TON, Immutable, Polygon, Berachain, YGGand many others including of course Yuga Labs.

The investment exit strategies are diverse and evolving. Besides traditional exit methods like M&A and IPOs (e.g. Coinbase went public in 2021), there are Web3 specific means like token launches and community-driven liquidity events.

In the event of a “web3 exit” (i.e. token launch) we would liquidate the proceeds/profits and use it to repurchase ApeCoin on market and return it as $APE to the DAO. It is 50% of all token proceeds because 50% is funded by the DAO.

The fund will receive returns in Tokens which it then proposed to swap into ApeCoin and return to the Foundation as per the proposal. It doesn’t receive gross revenues as it’s not your classical operating business.

In other words if the project were to receive 100 tokens worth $1 where it to sell them it would propose to use the $100 dollars to buy $APE and return the $APE.

If the Foundation desires to have us monetize the 100 tokens and then return it in fiat as $100 it could be possible but was not what was proposed.

BENEFIT TO APECOIN ECOSYSTEM

Here is a summary of the proposed investment details:

• Animoca Ventures matches the funding on a 1:1 basis with US$5 million in fiat, together with ApeCoin DAO funding of another US$5 million in the form of $APE.
• ApeCoin DAO will receive 50% of all token proceeds upon successful venture exits in the form of $APE for future ecosystem grants
• Two-year timeline of fund deployment. Any remaining or unused $APE will be returned to the ApeCoin DAO treaury should the fund not be deployed within the stipulated timeline.
• The targeting check sizes are between US$100,000 to $250,000 per startup which would facilitate backing potentially up to 80 ventures at seed/Series A stages – curated to the highest standards
• A low management fee of one percent (1%) will be charged for project vetting, due diligence, ecosystem support, partnership outreach, and other services rendered by Animoca Ventures to carry out the required operations. It is 1% of the total and would be charged out of the total amount i.e. $10m (half of which is contributed by us). This is an annual management fee and as the fund intends to operate for 2 years it would amount to 100k per year and effectively 50k a year for the funds from the DAO.
There are no performance fees charged for the $5 million contribution for the DAO, normally funds operate on a 2/20 structure i.e. 2% management fee and 20% share of profits but for the purposes of this proposal we will not be charging this.
• Exposure of APECOIN to a variety of promising startup and companies
• Growth of the APECOIN ecosystem as startups and companies who receive funding may choose to engage or support APECOIN initiatives such as adding utility and/or integrate APECHAIN for example
• The matching investment structure means we guide promising ventures closely through sizable joint ownership influence and incentive alignment. We focus this strategic guidance to:
• Align platform visions to grow $APE utilities and ApeCoin ecosystem benefits.
• Integrate token models driving measurable adoption.
• Forge partnerships that bring mutual value across investor-ventures.

With our investment matching, operating expertise and focus on early stage deals, we aim to increase $APE utility awareness and accelerate expansion of the ApeCoin ecosystem through promising, synergistic projects.

The following benefits are expected as a result of this proposed partnership from the perspective of ApeCoin DAO:

• More ApeCoin utilities will be attained with a wider adoption of ApeCoins within ApeCoin ecosystem and beyond.
• An expanded, more diverse and amplified ApeCoin ecosystem, in which more projects, partners, entities and use cases are expected.
• As a natural consequence of the scaled-up ApeCoin ecosystem, network expansion with strong impact will be further amplified as the investments and partnerships offer access to a broader network of potential users, customers, and collaborators.
• More credibility and trust will be built among potential users, investors, and the broader Web3 community.
• The investments and partnerships often involve resource sharing, whether it’s funding, technology or infrastructure. This can significantly reduce costs and accelerate growth for both ApeCoin DAO and the startups.
• Ventures and partnerships can increase global visibility for ApeCoin ecosystem, leading to an elevated global presence.
• The collaborations and ventures can contribute to innovation, ApeCoin adoption, as well as the uptake of Web3, in various regions and sectors by utilizing the assets and networks of partner companies.
• Web3 Enterprise Service Capabilities: Partnerships can help build Web3 enterprise service capabilities with global commercial applicability, which can be deployed to support technology advancements in various regions.
• ApeCoin Ventures can help build Web3 enterprise service capabilities with global commercial applicability, which can be deployed to support technology advancements in various areas.
• ApeCoin will become the hub for innovation to nurture the Web3 ecosystem and bring in extensive capabilities from partners, fostering a broad portfolio of investments.
• ApeCoin DAO will have the access to expertise in the blockchain and cryptocurrency space to navigate the complex and ever-evolving Web3 ecosystem. This will ultimately bring forth a more mature and healthier ApeCoin ecosystem.

OVERALL COST

Total amount requested from the ApeCoin Ecosystem Fund = $5,000,000 USD.

• Total amount requested from the ApeCoin Ecosystem Fund will be US$5 million dollars paid in $APE at the time of transfer (assuming the date was 5/20/2024 that would be 4,130,466 ApeCoin)
• US$5 million worth of $APE will be matched with US$5 million in fiat by Animoca Ventures, with a report of Animoca’s financial postion (indicating its ability to contribute matching funding) found here.
• We do not anticipate raising any third-party capital.
• The suggestion is to liquidate the $APE received into cash as soon as practical so that Animoca Ventures can match the amount in dollars.
• We could be open to receiving funding in tranches, but it would then mean we would only match our funding amounts in a similar fashion (i.e. if we receive 1M$ worth of APE we would match it with 1M$ of FIAT/USD/USDC at that time).
• No funds gained as a result of ApeCoin Ventures investment strategies would be used for voting, as they would be sold for the purposes of investment.

PROPOSAL

Link to the full proposal: https://forum.apecoin.com/t/aip-438-apecoin-ventures/23550

The AIP implementation is administered by the Ape Foundation. Implementation may be immaterially or materially altered to optimise for security, usability, to protect APE holders, and otherwise to effect the intent of the AIP. Any material deviations from an AIP, as initially approved, will be disclosed to the APE holder community.