A key concern for founders is establishing clear rules amongst themselves (protecting upside), and limiting the downside risk of their ventures coming back to haunt them.
They therefore have routine tasks in setting up new ventures:
- Form limited liability entity
- Record membership agreement
- Start fundraising
- Open bank account
These checklist formation points can easily be automated using a hybrid approach of legal and smart contract deployments, or “LAOs”.
To illustrate, let’s consider how a group of founders could do the following in minutes using the KaliCo software.
Legal Structure
Founders can select curated forms for their legal setup that attach to their DAO. These include:
- Founder Accord in the event they are still contemplating their entity type but still want to establish basic rules amongst themselves.
- LLC membership agreement, drafted for the popular DAO LLC jurisdictions of Delaware and Wyoming, that includes language that defers the entity to the operation of their DAO to set rules and interests. Formation services will be included in the Kali beta launch from our network of providers.
- Similarly, an entirely code-based formation, under KaliCo Ricardian LLC, a Series LLC under Delaware law that can establish new series with their own rights and liabilities without the requirement of filing. This mints an NFT through Kali software that is registered to a new DAO deployment and identifies its separate rights as a Series LLC.
- For non-profit ventures, a form of UNA constitution, that recognizes a DAO as an unincorporated non-profit association with limited liability to conduct its business.
These legal documents are then stored on-chain in each Kali DAO contract, setting an immutable record of terms that apply to running a DAO as a business. They can be amended through proposals, allowing founders to revise their approach as their business evolves.
Fundraising
Founders can use Kali fundraising extensions as apps that attach to their core DAO contracts. For example, they might select to program a sale of 200 membership units per 1 ETH or 3000 USDC sent to this extension, automatically minting shares in their business for contributions. The timing of the raise is also automated, concluding after 1 month, unless the founders make a proposal to amend the sale. To establish legal terms and predictability, Kali provides fundraising templates, such as this membership unit sale agreement for LLCs.
Finances
The cap table of a Kali DAO formation represents both the legal and effective property interests in a business enforced by smart contracts. These interests can be redeemed for assets held in the DAO treasury through a redemption extension, payments can be made through proposals, and founders can decide to mint more shares or remove members from their cap table per the terms of their agreements.
In this fashion, founders don’t need to actually establish an off-chain bank account, but can run their finances entirely according to vote. They will, of course, have a legal entity to conduct off-chain business, but the promise of Kali and related DAO technology is to remove the need for financial middleman for founders to raise and spend their own money.
We are excited to build with and for fellow founders.
Get Involved
The KaliDAO contracts have completed audit and the KaliCo application is currently in alpha. We welcome feature requests and feedback on our vision for more affordable and efficient DAO-run businesses.