We ideally want the whole Aragon community to refer good early stage deals to ScoutDAO and be incentivised to do so. Such that deal sourcing it’s not restricted to ScoutDAO members only. How might we do this?

Referral fees/bonuses? Maybe these could have a hurdle rate too? (starting at 0.5% and moving towards 3 or something)

Most people don't understand this, so we might want to explain this in more detail.

We need to know

• % of Nest grant applications funded
• % of Nest grant applications completed/shipped
• % of Nest shipped grant projects that are still in use

There are many people in the Aragon community who could potentially add a lot of value to ScoutDAO. An incentive aligned strategy to encourage participation and support would be a win for all parties involved.

I think we’ve got a decent incentive structure in place for deal sourcing. But also important is “post-investment support”. We want to make sure we don’t create an environment where ScoutDAO members are super incentivised to source deals, but then not support deals post-investment if that deal was sourced by another member. (Again, I’ve seen this happen in VC. And it’s not a good environment). Ideally, there should be at least some upside that is distributed to all members. So maybe the manager gets the lion’s share of performance fees, but other members should also be able to share in the upside. Thoughts?

Well, if someone can add value that increases the chance of success that should be a win for all parties involved.
One (not very sound) way to do it would be to let teams request help from anyone and (if they’re successful) they could state who helped them the most. Self reporting is weak, but at least this way managers are incentivized to really add value so that the team will vouch for them.

Another way would be to split fees, so if you’re leading a deal, but someone else can add value, you give up 1 or 2% of the upside for that help? This might need to be negotiated on a deal by deal basis, however, which might be a pain

A simpler approach might be to just have a shared performance pool. So the performance pot on an individual deal could be split 75% to the manager, and 25% to the community pool. The community pool is then split evenly between members.

• Incentivizes collaboration and team work. Also, then everyone has skin in the game to make the project as a whole work, but they're also incentivized to work hard themselves
• This also addresses another important point related to deal sourcing which is that Member A needs to be financially incentivised to properly diligence Member Bs deals (at least assuming we go down larger check sizes require a group vote).

On a related note, i also really love the model of shared equity between project founders. Ex: https://www.kindredcapital.vc/docs/Co-Owner_Briefing_Note.pdf

• specifically for ScoutDAO. So ex: of the 25% community pot for performance fees, 5% of this could be a community pot for Scout DAO Project Lead members. So if we did 30 deals, and each deal had a project lead, there would be 30 project leads that get this 5% community pot.

That way we have a much larger incentivised “support team”. The logic here is that in practice, founders are typically much better at providing support to other founders than VCs are to founders.

• this is kind of like the unspoken agreement of the Flock program, but here there's real incentives

We want links to ScoutDAO on https://aragon.org/ as well as on https://github.com/aragon/nest. Assuming we succeed in getting these promotional links and we we end up investing in some of the referred deals that came of these links, should the same remuneration structure apply?

In this case I would say that the manager who leads the deal should get the fees. In the case that it’s a team effort, fees could be split.

And then how to assign which managers are assigned to which projects? (this is a common issues in VC with partners often fighting with each other to decide who gets to sit on the board etc)

Good point! Eventually we might be able to have a setup where different managers have different expertise and thus first choice on some deals vs others, but I agree that it’s not easy to figure out. Well… for one thing if the team requests a specific manager then that would settle that. In the case where there’s no clear preference, however, then… flip a coin? lol

The nice thing about what we’re building is that we can have very transparent rankings of managers. One of the key success metrics that a project founder might look at when deciding which manager to request is the % rate of deals sourced by that manager that got invested in by Nest DAO.

Agreed! That would be a really really great feature to have, and would be a huge differentiator from the traditional VC model. How would new managers “break in to the industry” though? Seems like this would quickly create a power law distribution
Indeed. And related to that is how do you train up and coming managers to get better at what they do by being the lead.

• If a "senior" manager mentors a "junior" manager they could take a cut of the deal while only doing 10% of the work

Initially, this shouldn’t be a problem. But still fun to hypthesise and think about how it can scale :)

• I think this is going to be very popular once people in the Aragon community realize that their social capital and working knowledge of the ecosystem can be leveraged. Currently devs rule everything, and as we've seen, that really skews discussions. Once more skills and expertise are rewarded it'll really help to balance out the community and create way more synergy