TEMP CHECK - Allo.Capital as a Venture Firm

General
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TEMP CHECK - Allo.Capital as a Venture Firm

Preamble

Our original plan was to build software. We failed. The aperture was too wide, we didn’t ship anything with clear venture scale upside, and there is no credible path to product-market fit for Allo Protocol. Rather than continue to force a software business, we can pivot to leverage what we already have: a position in the capital allocation conversation, existing cash on our cap table, and network credibility. In doing so, we can support other software businesses in the space.

How

We reposition allo.capital as a venture fund.

  • Take the remaining cash on the balance sheet and formally roll it into Fund I.

  • Create and own the category of “capital allocation” — an investment thesis explicitly focused on funding projects, infrastructure, and experiments that define how capital allocation evolves in the AI + on-chain era.

  • Market allo.capital as the brand that names and shapes this category, selling that narrative into traditional VCs and crypto-native investors.

Program Design

  • Scouts (Intent, Not Promise): We may launch a scouts program where aligned operators can act as deal scouts. Scouts would earn upside on referred deals that the fund invests in, turning allo.capital into a distributed intelligence network for deal flow. I think that this might be a good next direction for the Allominati/protoDAO.

  • Venture Studio: Alongside the fund, allo.capital can function as a studio for spinning up and incubating new ventures. The studio would originate ideas in the capital allocation space, pair them with founding teams, and provide pre-seed capital plus brand/network leverage to accelerate them.

  • Category Creation: Positioning is not just “another crypto VC.” It’s specifically a VC whose mandate is capital allocation as a sector. That means investing in protocols, infra, and applications that rewire how capital moves. And investing in making this narrative legible to family offices and investors across the world.

  • Ecosystem Role: By doing this, we continue our mission of building the capital allocation layer for the tokenized internet — but through investing, not software shipping.

Next Steps

  • Feedback; do we even want to do this?

  • Formalize fund structure and governance.

  • Continue category-defining content and outreach (essays, books, events).

  • Engage potential LPs in October/November (for Devconnect).

  • Explore scouts program design for 2026.

2 Likes
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I think Pivoting Allo.Capital from a software-focused entity to a venture firm is a promising strategic move, as it can help us to carve out a unique niche that’s different from generic crypto VCs. The proposed scouts program and venture studio could amplify deal flow and innovation, while category-defining content and outreach will strengthen its brand and attract LPs. This shift aligns with market trends and Allo.Capital’s mission, offering a scalable path to impact and returns through investment rather than struggling to achieve product-market fit in software

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I think it makes for a very strong investment thesis, especially since LPs put weight on the pedigree and background of the VC relative to their chosen market.

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TL;DR if you’re bullish on an industry but not sure who the specific winners will be, pick & shovel investing is a great strategy. Given the primary usage for crypto/blockchain is financial, investing in capital allocation feels like a strong play.

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This makes sense to me (I had proposed a similar approach in Gitcoin). The question I have is what is the current treasury in Allo?
Generally, a fund with a solo GP needs a bare minimum of $5m, With $10m+ you get max 2 people and an assistant (at low-ish salaries) but often still just a solo GP (AI makes this easier). It should be possible to raise 10m+ with the right team. Finding the right GP is easier said than done, though.

For the venture studio side, I would be cautious as that’s going back to developing software. Allo can definitely use its network and resources to do a lot, but venture studios are very complex to operate (it’s taken us 3 years with RnDAO to get our model to a functional place). There’s always the possibility of partnering with an aligned venture studio. Such a partnership can work in that the venture studio provides dealflow to the fund, so the Studio does the super early stage work (validating ideas and building MVPs to get customer traction). After, for the most attractive startups, it’s possible to double down by having the fund invest. And the fund can also invest outside the Studio pipeline.

For a partnership, with about $1.5m from Allo capital (RnDAO would also invest), we could run the venture studio side for 18 months and create a portfolio of startups.

18 months can seem long, but the value of studios compounds with iteration and learning from one venture to the next, and although we already have the processes set up and our area of expertise is very aligned (Collaboration Tech, AI, Blockchain), having to renegotiate contracts sooner adds a lot of complications. Best to have break clauses with a notice period.

Happy to unpack these ideas more

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$2m

agree with less than $10m youre really on a shoestring.

would love to expore.

funnily enough i feel less aligned to “running a venture studio” than i do to pursue individual 1000x upside projects that come across my netework. i did about 5-6 side projects bootstrapped before i landed on gitcoin. all part of the idea maze i guess.

id also love your feedback on this idea for network catalysts which are more of a network venture studio and may have a different cost basis.

it is worth exploring if we can create a portfolio of startups with +EV! the more +EV the better

btw have you read venture studios demystified? one of my favorite books on thte subject.

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Nah.

There is so much regular old investing going on.

Instead, let’s fund things that don’t have a business model–or fund things that do have a business model, but in a way that doesn’t create a claim on their future revenue.

A couple of ideas

  1. Create a campaign on Updraft called “Solve Ethereum’s Biggest Problems” (or whatever else strikes our fancy)
    2. Buy hypercerts.
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why does the world need another website?

ok, im only trolling a little bit. bc if you dismiss an allo.capital fund as "just another regular old investment fund” then i think its a fun troll to dismiss updraft as just another website :slight_smile:

of course the level of abstraction of talking about a fund/website is the wrong one. the real quesxtion is whats the differentiator of both, whats the special niche that is being served by each.

for me, allo.capital is about creating a rising tide that lifts all boats within the onchain capital allocation design space. funding/distribution for builders who are building defi crowdfunding or infofi apps. giving them the resources/lessons i wished i had when starting gitcoin.

i am super fatigued by this worldview of purity. what i’ve learned in the 8 years of pursuing a strategy that looks like this at gitcoin is that money is like energy in nature; the further you are from the flows of it, the harder it is to survive. its possible, but its a tough grueling life.

i think the ideal setup is like ethereum - public good in many ways, but its also a private good in others (public good to read from the shared state, private good to write to it). and also gave a 10000x upside to its early adopters and has funded lots of good stuff in the world.

my 002 wei.

appreciate the dialogue as always!

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Likewise!

Good example of how a hybrid public/private good can be a solution to funding public goods.

My view is that, yes, it made some people rich, but that wealth isn’t being deployed fast enough. I’d like it to go a lot faster.

That’s what Updraft is supposed to be some day–a way to get more money flowing faster by engaging more people.

The main thing I have against huge profits for investors is a huge pile of money becomes a bottleneck because they don’t redeploy their earnings fast enough. It puts an unreasonable burden on the rich, which is why we need to crowdsource funding things and make it super easy for them to follow the crowd.

The second thing is: some worthy ideas have business models, some don’t. Either is fine, but we both know public goods still don’t get enough love, so investing shouldn’t be contingent on a business model. I think there’s money to be made investing in things without business models, if we do it prediction market style (like Updraft). It won’t earn as much as investing in a unicorn, but see “the main thing” about that. I would love it if people realized that making giant returns actually slows down progress (as do the monopolies required to generate those returns).

I’d love it if people got hyped about funding a bunch of little things instead of funding the next monopoly.

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Hello all, I will lay down my thoughts here in an attempt to show a possible future and a path to get there.

I will assume that since we are Alluminati, we have several things in common. Please don’t hesitate to correct me or share your thoughts.

Assumptions:

  • Belief in ReFi
  • Belief in Regen Coordi-nations
  • Belief that the world is about to enter a new era
    • We are in this transition already
      • Are we in the end of the last era or the beginning of the new one?
        • Where do we draw the line?
          • Does it matter?
    • An era where we will have 1000x the progress of the 20th century in the 21st.

If we are entering a new era and want to create a better world, then we need better mechanisms.

I agree with you @owocki that we can frame the fund as the capital allocators and create and own that category. But where we aim it and how we do it is key. Like you said it has to be through mechanisms that create a rising tide that lifts all boats. Like @csj said, this strategy could definitely start by investing in infrastructure plays that make this possible. Additionally, it should go further and invest in projects that use this infrastructure to create shared prosperity. Whether they be pure public goods, pure private goods or a mix.

I disagree with you Adam (I can’t mention you since I’m a new user) in that this wouldn’t be regular old investing. This is exactly the point. That we wouldn’t be creating a fund that invests in extractive hierarchies but one that invests in abundance networks.

I have been thinking about this for a while now and workshopped two artifacts with Claude a while back. ( I had planned this to be my research quest but I was late to the party)

We can create a fund that promotes the following:

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Instead of:

See my own reply. Since I’m a new user I can only upload one embedded media per post.

Of course I present two extremes to get the point across but I believe this will become even more important as time goes by.

It is possible to add other stakeholders (community/society, clients/users) to the equation and promote truly equitable growth.

I don’t have all the answers but I know it’s possible.

Thank you for reading and please share your thoughts.

PS. We could be a venture firm that allocates capital to equitably create, appropriate and distribute value. We don’t necessarily have to own the category, but we can be the ones to emulate in that category. At least it seems like the relationships and knowledge are there to be the first movers.

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Instead of:

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Sounds like a VERY different model from venture studios. I know of things like what you’re talking about in Africa where you get access to a coworking and basic food and give 1-3% of your project (solving for key local issues). There are multiple iterations of this emerging in Web3 and generally, I think there could be value in this “accelerator light” sort of programs where you get the benefits of community for little equity/tokens given.
The issue with most new models is whether you can attract enough quality talent/dealflow:
“what does the [accelerator/studio/VC/network] give me to justify parting with my (precious) ownership?”.

Providing a convincing answer is not trivial. It took us 3 years with RnDAO, where the first 2 years were mostly losses because the talent and our network effects weren’t strong enough. Now we’re getting to a point of escape velocity, but it’s a long game unless you have a lot of very tangible value to provide upfront (i.e. can you make the story of the value you provide super appealing).

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I want to start by commending you for recognizing early that something wasn’t working and being willing to pause and explore alternatives.

Rather than focusing immediately on should we do this or how do we do this, it may be more useful to first zoom out and ask why, is this the best option, and how would this generate return and market impact. I’ve been spending a lot of time on funding design and strategy, so my feedback comes from a strategic lens and with the understanding that this is still in a pre-design phase. Below is my feedback and some questions.

Feedback

On Suggested Program Design

  • **Scouts / distributed sourcing:**This could help with signal, but without clear intent and decision boundaries it risks adding coordination overhead rather than improving capital allocation quality. I’d also look at how others have approached scout models and whether they’ve been successful (for example, Mantle previously ran a scouts program).

  • Venture studio / incubation: This feels like a heavier lift and would only work if Allo intends to be deeply involved in shaping teams and outcomes, not just deploying capital. There would need to be a clear lifecycle, strong product and market support systems, and an intentional expansion of the talent pool across product, strategy, research ,business, and mentorship. Especially if your looking at getting roi or making money.

  • **Category creation (capital allocation as a sector):**This will be hard, especially since capital allocation is currently a very broad concept. I’d first focus on a clear definition and a concrete model or approach that others can actually adopt. This would require significant education and onboarding, and while you have a strong distribution channel - effective conversion and execution are key. It’s also worth clarifying how this would ultimately translate into ROI and real market application.

Next Steps If This Were to Happen, Things to Consider

Additional considerations before formalizing the fund:

  • It may be useful to do targeted research on comparable early-stage venture funds to understand how they structured themselves initially, how decision-making evolved, and what they would change in hindsight.

  • Researching how similar funds attract and retain talent (partners, operators, scouts, platform roles) could help clarify what level of involvement, incentives, and support are realistically required to run this well.

  • Clarifying what non-capital support is actually needed for founders to succeed under this model, such as product guidance, market access, partnerships, distribution, or operational support, can help determine whether Allo has or wants to build that capacity.

  • A short research or validation phase upfront can help ensure the fund is designed intentionally, rather than discovering structural gaps after capital is already committed.

Questions to Answer If or Should Allo Be a Venture Fund

  • I would ask these questions to determine whether it should be, or if that decision is made, what to keep in mind:

  • What are the one or two core capital allocation problems Allo wants to prioritize solving going forward? (Organizational intent)

  • In what ways would operating as a venture firm enable impact or scale more effectively than continuing to build software, tooling, or programs directly? (Why this mechanism)

  • What ecosystem needs would a venture firm meaningfully address that alternative mechanisms may not, for example strategic incubation, ecosystem education and enablement, or coordination across builders, capital, and institutions? (Why this mechanism)

  • If Allo were to be a venture firm, what would define success at the organizational level?