Are Grant Programs Becoming In-House VCs?

This is a re-post from my medium


I think that the bear market is going to lead many grant programs to transition to in-house venture capital firms. That worries me because a) it might lead to less giving that doesn’t have clearly defined return on investment (RoI) and metrics, which may limit giving to non-growth-optimized oriented efforts (arts, community, education, research, etc.), and b) that model would limit the ability of organizations taking such money to eventually shift to more of a cooperative structure (legally speaking).

In this post, I want to provide some thoughts on some things to think through as grant programs get a more keen eye place on reviewing them:

  1. Refine your mission
  2. Split your giving by impact type
  3. Increase coordination amongst grant programs

These things alone won’t ‘solve’ the collective challenges being faced but could be a good first step.

Where’d All The Impact Go?

One very reasonable outcome of the bear market is that more people running grant programs / communities around DAO-based grant programs are trying to understand what impact they’re past giving led to and in turn what potential impact they want to support going forward. That’s bringing up the question of how to measure impact for grants, which itself is a question getting more attention thanks to the need for impact metrics for things such as retroactive funding (e.g. Optimism) and impact certificates (e.g. Hypercerts from Protocol Labs).

It’s also important to call out another element that’s playing into the current aversion to no-strings attached grants. Namely, the fact that many VC-funded projects tapped grant programs alongside VC funding or that grant-funded orgs led on to become massive projects themselves is leading to FOMO amongst people. ‘Why didn’t our program get any of that money back?!?!’ That’s a reasonable feeling, especially when overall treasuries are relatively dwindling due to macro conditions. But it also bumps against a thorny point around the initial intention of the grant program in the first place. If looking at grant issuance from a VC/RoI lens, I totally get it. Looking at it from a bootstrapping activity/no-strings-attached business growth lens, was it actually a problem? So what are folks running grant programs to do?

What To Do?


That comes back to the importance of having a very clear purpose and mission for your grants program. There’s nothing wrong with pre-VC or early stage VC style funding. Well, that’s assuming you want the projects you’re funding to NOT have the chance to exit to community / become a coop eventually. That’s an important element that I personally didn’t understand fully until chatting with some coop folks such as Jessica Mason and Jacqueline Radebaugh at DAO Harvard. Having traditional VC style investment in a project can limit that projects ability to legally exit to community, so if you want your grant program to support literal coops, keep that in mind (and talk to a lawyer with coop experience!).

Anyway, If you’re involved in web3 grant programs and are wondering where to start in terms of improving, start by ironing out the mission. Why do you really want to give out money? ‘Growing the ecosystem’ is too broad of an answer. Grow it how?

Ideally, grant programs would get to the point of having actual theories of change on how to grow their ecosystem between the suite of activities that can support the growth you want to see. What actually leads to healthy ecosystem growth is an open question so having more rigorous approaches towards approaching fund distribution, community health, and ecosystem growth would be great. We need more research exploring that question in web3, but that’s a topic for another day.

Divide Funds By Desired Impact

Once you have a sense of your mission and the size of your treasury, then think about how much you want to allocate across topics such as investment oriented giving, community or creative oriented giving, and science/research oriented giving. That’s not an exhaustive list by any means, more of a way to start thinking about how to bucket your desired impact.

Also, quick side note, we need to differentiate bounties (very specific tasks/activities with very clear cut desired outputs and outcomes) from grants (more open-ended activities that inherently have more uncertainty and less clear outputs and outcomes). I’m ignoring bounty styled grants because, well, those are bounties disguised as grants. Just call them bounties.


I also think that despite being more resource constrained overall, now is a great time to build coordination amongst grant programs to both a) increase coordination on funding opportunities as appropriate and to b) limit unnecessary application/reporting overhead on grantees.

There’s nothing wrong with wanting more info on a project before you give them money or to get updates from projects once they have received money from your program. But as of now, the lack of coordination between grant programs just places more of a burden on the applicant vs the program when the former is immensely more under-resourced than the latter. A little coordinate between programs can go a far way in terms of both making the lives of applicants easier while also providing more consistent data for everyone to work with.

Shameless plug: There’s a working group with DAOstar focused on grants management, specifically on creating a metadata standard for easier assessment of grant programs (more to come soon!).

Why Am I Writing This?

State of Web3 Grants Report

To be totally transparent, I want to start a research project at Metagov (where I’m leading ops and partnerships) focused on producing a report on the State of Web3 Grant programs. There currently is no comprehensive history or review of grant programs across the space and I think the web3 space would benefit from having more insights on the nature of how the programs came together, how they’ve measured impact, what the experience has been like for applicants/recipients, and what are some potential improvements for programs.

Grant Operator Community

Related to that, I want to build a community across grant programs. I’m thinking something as simple as a telegram group for those currently leading or supporting grant programs at various protocols and projects. This could both increase coordination in terms of applications and reporting as mentioned, and could also provide the opportunity for more co-granting opportunities.

Excited For More Tools

Finally, I’m excited to see projects such as Proposal Inverter and Lateral come up in terms of supporting funding mechanisms and sensemaking on complex problems, respectively. We actually just hosted a co-founder of each of these projects as part of the weekly discussions from the Public Goods Student Association (you can read the summary here). These tools can also make coordination on the level of problem identification and funding much easier for grant programs.


The macro conditions we’re operating in are bringing up a variety of questions in terms of the future of web3 grant programs. Many such programs may transition to becoming defacto in-house VCs, which might present issues in terms of the kinds of projects that get funding and what limitations might exist for companies taking such funding in terms of eventually exiting to community.

I believe there’s going to be a lot of change around grant programs in general, regardless of whether or not that specific prediction comes true. Regardless of where we’re exactly headed, programs would benefit from using this challenging time to a) reassess their mission, b) split resources across types of desired impact, and c) increase coordination between programs despite being more resource constrained.