Hello.
First off, I agree with the sentiment expressed by @HoneyBarrel and the rationale behind this proposal. However, I’m going to come at this from a different (more traditional VC) perspective. I will also be voting NO pending below info:
- Confirm if the proposed refund is permitted by the terms of the seed financing, and
- this proposal be revised to authorize the DAO to negotiate a buy out of YGG’s interests at a mutually agreed value
I don’t know how applicable traditional laws and investor protections work in the DAO world, but I do know that being compensated for taking risk and protecting this is vital to build long-term trust.
Like it or not, Merit Circle raised a seed round before they had a massively successful BLBP which broke all records raising $105M. There was no treasury before this and that treasury + the core team is what is creating the durable value. The seed investors contributed $4.5M in return for 141M MC tokens, at the time 14.1% of the max supply, or effectively a $31.9M valuation ($4.5 / 0.141 = 31.91).
You can not just look back 6 months later and be angry with someone who took an early bet on you and say “here is a refund”. We must uphold trust in compensating those who take early risks. Breaking this trust will destroy value, lead to early investors everywhere not take risks on great teams with good ideas. I deal with crappy co-founders and angels/VCs all the time. I’ve even personally bought these types of groups out as well at various startups. However, if I can’t trust the legal protections and/or governance around my investments, then I can’t make investments. This could very well be an unintended consequence of this decision.
Further, setting a precedent like that for other DAOs can come back to hurt MC with its own investments in the future. Maybe we invest in something and add value, but there is a governance vote where the majority say they want to refund MC 100x return investment at cost “just because”. This is a dangerous precedent full stop.
Maybe YGG has failed to live up to its promises, commitments, and expectations, but they still were there and wrote a check before Merit Circle fully became what it is. You can’t change this.
If you don’t want YGG in this DAO, I fully support it, but it must be done within the terms of the seed financing agreement or at a mutually agreed price with their consent.