Revised Proposal: Polkadot Sponsorship of traditional Family Office Investment Conference Series

This proposal aims to obtain a marketing budget of US$1 million to sponsor a series of ~20 major established global family office summits and traditional investment conferences, which is where we see the greatest opportunity for untapped capital. The Polkadot presence at these conference series will be organised by Harbour Industrial Capital, but will be open to all Polkadot-based projects, ambassadors, VC funds and other ecosystem players who are interested in raising capital as part of this initiative.

The full proposal can be found here.

Key changes compared to Ref 731

This proposal is a revised version of Ref 731, which was narrowly rejected during confirmation period on 2 June. We have received 31 comments for the proposal, most of which were extremely positive. However, there were also a few more critical points, primarily relating to the question whether this events series benefits Harbour Industrial Capital disproportionally. We took these suggestions to heart, made significant adjustments, and are pleased to present the revised proposal below.

More Inclusive: We will open up the conference series to all Polkadot ecosystem teams who are interested in fundraising alongside us. We will put them up on stage to present in front of an audience of wealthy investors who will be able to invest in their project directly. We commit to bringing on a diverse set of speakers, who we will invite via public Call for Speakers, well ahead of each event. This may include established Polkadot based-projects, early-stage Polkadot startups, members of Parity/W3F as well as other independent Polkadot ecosystem funds who are looking to raise capital.
Head Ambassadors: In early June the new Head Ambassador (HA) program was launched, and we are planning to involve the newly appointed ambassadors in all our events. HAs have been elected by the community to officially represent Polkadot, and speaking on stage at these investment conferences will be a great showcase for the HA program, as well as being a major driver for new capital inflows to Polkadot. Max and Mario of Harbour Industrial Capital are currently also running for HA, and – if successful – will use the ambassador designation (rather than Harbour Industrial) to speak at these conferences.
More budget efficient: If an external marketing agency organised the same events series, they would charge a salary for their employees, overhead, as well as a profit margin. We on the other hand are proposing to organise it at cost with no salary for ourselves.

Some people may still argue that despite the changes, the events series still benefits the Harbour Industrial Capital ecosystem fund disproportionally. This may well be the case, but keep in mind that having a new large ecosystem fund is clearly in the interest of Polkadot. In the end, the primary purpose of sponsoring these investor conferences is to drive fresh capital into our ecosystem. Whether this happens directly (for projects we bring to the events), or indirectly via our fund, should not be the primary concearn.

Proof of Work

Who we are and what we have done so far

As per Q1 2024, Harbour Industrial Capital has raised a Polkadot fund with AUM of US$10 million from around 40 LPs Exclusively deployed this in the Polkadot Ecosystems; Invested in over 20 parachains and other Polkadot-based projects Organisers of the Polkadot monthly meetup HK; speakers for Polkadot at many events including Sub0, ParisDOTcomm, Web3 Festival, WOW Summit, TeamZ and Polkadot PULSE TradFi background (Morgan Stanley, Deutsche Bank and Bank of China) and proven ability of bringing non-crypto native investors into Polkadot.

Why We Need a New Large Polkadot Fund

The unfortunate answer is: Because many traditional VCs still ignore projects building on Polkadot. Ask any team that recently tried to raise money from generic crypto VCs, a frequent reply is “You’ve got a good team and good idea, but why are you building on Polkadot?”. Sure, we believe this narrative will change over time as other capital allocators slowly begin to realise the potential of Polkadot. But in the meanwhile, we need a dedicated Polkadot-only VC, that helps all the exciting new projects building on Polkadot get off the ground.

It is a chicken-and-egg problem: If Polkadot based projects are starved of capital vis-a-vie those building in other ecosystems, Polkadot will never get the liquidity and “hype” that ultimately attracts more capital. Having worked in the ecosystem for many years, it’s sad to see quality Polkadot based projects migrate to other L1s/L2s, not because of the tech, but simply because they believe they have better opportunities to get VC funding there. We want to change that, and make Polkadot the place great builders go and access capital.

Family Offices as LPs

When looking to bring significant amounts of new capital into Polkadot ecosystems, we believe that Family Offices are the most promising investors. But why promote a Polkadot Ecosystem Development Fund, when people can just invest directly into Polkadot? There are at least three good reasons:

A familiar structure for FOs We will incorporate the fund in the Cayman Islands, as a standard GP/LP fund. This is the most common structure for VCs, and one that most FOs have probably used in the past for investment in VCs in different industries. They can wire cash to our bank account in the fund’s name, and get paid out the same way. No need to set up exchange accounts, or remember private keys. For crypto natives this may sound trivial, but for traditional FO who we target here this still constitutes a high barrier to entry.
Entire Ecosystem A simple investment into Polkadot may involve the purchase (and possibly subsequent staking) of DOT. However, to identify promising startups building on Polkadot requires in depth knowledge of the ecosystem and extensive due diligence. It is also exactly these startups to which we want to funnel the capital that they will require in their growth journey. It is unrealistic to expect FOs who come from different industry backgrounds to do this on their own.
Active follow-ups This may be the most subtle, but also the most important reason. Nobody “owns” Polkadot, hence nobody is incentivised to follow up with potential investors from the conference, arranging calls and continuing the conversation until the investment is made. Harbour Industrial Capital on the other hand has a great track record of converting leads into actual investors for Polkadot.

Why Harbour Industrial Capital?

Harbour Industrial Capital (HIC) is a private Polkadot VC fund, established by Max Rebol and Mario Altenburger in 2021. We are registered in the Cayman Islands and headquartered in HK. As of Q1 2024 we have an AUM of over US$10 million. We have raised this money from private investors such as Family Offices, and subsequently deployed it exclusively in the Polkadot ecosystem. Fund 1 held its final closing on 31 December 2023, and we are about three quarters deployed. The plan is to launch Fund 2 towards the end of 2024, with a target size of US$ 100 million.

Inclusive Representation of Polkadot

While Harbour Industrial Capital will take the lead in organising these events, we will actively bring a diverse set of people from within the Polkadot ecosystem to these events:

Head Ambassadors: In early June the new Head Ambassador (HA) program was launched, and we are planning to involve the newly appointed ambassadors in all our events. HAs have been elected by the community to officially represent Polkadot, and speaking on stage at these investment conferences will be a great showcase for the HA program, as well as being a major driver for new capital inflows to Polkadot. We will select HAs based on their public speaking track record and their location, preferring to work with those who are based nearby the conference location.
Polkadot-based Projects: We will publish a Call for Speakers, targeted at Polkadot-based teams, two months ahead of each conference. We will put them up on stage to speak about their projects, which at the same time will be a testimony to Polkadot capabilities. If investors in the audience subsequently get interested in this particular project they can exchange contacts and invest directly. At Harbour Industrial Capital we take pride in facilitating conversations between Polkadot-based projects and independent investors, and have a strong track record of doing so.
Parity and Web3 Foundation: We will extend invitations to speak at these events to Polkadot’s senior leadership team. Of course we would love to have Gavin at some of our events, but even if he can’t make it, there are many other people we would like to involve. This could include Parity’s Investor Relations team, or experts from the Web3 Foundation to speak on a particular topic relevant to the conference.
Other Polkadot Ecosystem Funds: As this event series will be a treasury funded initiative, we would like to extend the invitation to any other VC fund that is looking to raise capital for the Polkadot ecosystem. Their representatives will speak about Polkadot on stage, and will be able to promote their own fund to attending investors. From our perspective it does not make a difference which channel/fund is being used, so long as these conferences bring more capital into the Polkadot ecosystem.

Budget

Please find our proposed budget in the table below. Kindly note that this is still a draft, as the cost of many items are yet to be confirmed. Most importantly, the exact sponsorship fee will vary from event to event, and has to be negotiated with each event organiser. The numbers below are averages based on initial discussions we have had with different organisers. We have applied a discount of 50% for sponsoring an entire events series (rather than a one-off event), as all organisers prefer long-term partnerships and encourage them with such discounts. It is also the primary reason why we have decided to do this treasury proposal rather than go through the Events Bounty, which only supports one-off events.

Please also note that the amount between line items in this table may shift, depending on actual costs, so long as the total of $1m is not exceeded. A key variable in this budget is the number of events we will organise. We propose 20 events throughout the fundraising period of two years. However, it may end up being 15 or 25, depending on the actual costs of the initial events.

This means, we will continue organising the fundraising events, until this budget is used up. We believe that this approach is well aligned with the interests of the treasury: The more events we are able to organise, the more commitments into the fund we are likely to get, and the more capital we will have available to invest back into the Polkadot ecosystem.

Continue Reading

The above is just a short summary. To read the proposal in full, including graphics and additional links please click here.

Hi Lucy Friday team,

Thanks for the detailed feedback! I respect your NAY vote, but still hope to turn the result of this Ref around, as more people are coming in on the AYE side. I believe our initiative will be a clear net positive for the ecosystem. I would like to respond to your points one by one:

It is true that the cost of the event sponsorship would be borne by the treasury in its entirety, but this is similar to the treasury paying for Decoded or Token49, regardless of how successful these events end up being. Nonetheless, there will be plenty of risk left for us: a) we don't manage to raise as much as planned; or b) throughout the investment period, the entire Polkadot ecosystem is in a downtrend, resulting in flat or negative performance of our fund. In those cases we would have had 2-3 years of work on this fund, wile collecting zero dollar in carry. We will also have plenty of other (non-marketing) costs for this new fund, such as legal and compliance and general overhead. Keep in mind that this proposal includes zero salary for us, only sponsorship of the events at cost. Now, we are confident that we will be able to raise this fund, and to deliver great investment returns, that's why we are embarking on this this journey. But to say that the treasury is taking all the risk, and we only collect the potential upside, would be inaccurate.
The treasury has also been "endorsing" an official marketing manager or an official events agency, and for that matter, even an official football club. There is nothing unusual about that. Also, other fund managers have benefitted from the treasury or W3F multiple times in the past. As a side note, other ecosystems (Solana and Cardano for example) also have treasury funded asset managers.
I think our events are pretty cheap, when comparing them to Decoded, Token49 or Consensus, and will certainly do more in terms bringing new capital into Polkadot
This is a point that many people seem to misunderstand. Since we don't get any salary out of this, we are heavily incentivised to be as successful in the fundraising for Polkadot as we can, as this is the only way for us to make money. Having these incentives properly aligned is much more useful than some fussy KPIs that nobody can enforce.
We covered this in the "Commitment to Transparency" section. Our fund will only be accountable to its LPs. It will be a commercially driven fund, but that's also what benefits portfolio companies most. Subsidies to projects that have no clear path forward generally don't work. I don't see a conflict of interest here.
You are right that we could go to the events bounty, and probably will if this proposal fails. The reason why we prefer to do it this way, is because we get significant discounts from event organisers for entering into a long term partnership (around 50%). As you will be aware, the events bounty has a tendency to overpay for events, as proposers are not incentivised to bargain with event organisers.

Kind regards