For your startup business, crowdfunding campaigns can be a great way to both raise funds and validate your product market. Bridging the gap between crowdfunding and venture financing, the Decentralized Autonomous Organization, or the DAO, has emerged as a potential new source of funding for projects and startups. The human-less organization has raised over $165 million worth of Ether, a cryptocurrency, and plans to make venture capital-style investments.
So what exactly is the DAO and how does it work? The DAO is an organization managed on the Ethereum blockchain via smart contracts. Its bylaws are written entirely in code, and it is managed by its investors–no separate management team is involved. Individuals who invest in the DAO receive tokens in exchange for their investments, and these tokens are then used to vote on governance issues. As a result, token-holders dictate the DAO’s actions through an online polling mechanism.
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