# How do projects get funded?
Once a funding proposal is submitted for your project, the proposal will be submitted to The LAO members to decide whether to nominate your project for funding.
If your funding proposal is nominated, The LAO members will then vote on whether the project will receive financing from The LAO. If approved by a majority quorum of The LAO Members, the project will then receive financing in the form of a convertible note. All project financing will be allocated to LAO projects in the form of the cryptocurrency ether. Convertible notes will be issued in the amount of $50,000 worth of ether at the time of the investment.
If The LAO members wish to invest a higher amount in LAO projects, the investment may be structured in the form of a series seed investment.
# How does my project receive funding from the LAO?
Potential LAO projects are asked to apply through an application process that includes the following materials:
Project name and contact information
Incorporation information (including Articles of Incorporation)
Project smart contract address
Once your application is submitted, The LAO members will have the option to nominate a project to receive financing from The LAO. If more than 50% of The LAO members approve a funding proposal, the project will receive financing.
# Do I need to have a blockchain-based product to submit an application?
For the first LAO, our ambition is to create a fund for projects in the Ethereum ecosystem. The LAO members will set forth an investment plan for the type of investments that they wish to finance in The LAO. Feel free to submit a proposal for anything in that realm, whether it be a protocol, dApp, or other project. All are welcome.
# What entity type should be created for my project in order to submit a funding proposal?
We ask that projects who wish to submit a proposal be an entity registered in a U.S. jurisdiction. OpenLaw has some basic incorporation documents (see here (opens new window)). The LAO members may, however, elect to invest in LAO projects organized outside the US.
Please seek legal counsel regarding any incorporation documents or questions on entity choice.
# How much of my project (in terms of equity) will be transferred to the members of the LAO?
The LAO members will have the opportunity to vote on the amount of financing that is provided to approved projects. However, the initial structure of investments in LAO projects will be in the form of a convertible note. Should The LAO members choose to invest a higher amount, a series seed investment in exchange for equity or project token rights may be provided to LAO projects. The amount of equity and total investment amount in seed stage financing will be decided by The LAO members. Series Seed investments may require potential LAO projects to provide information on the valuation of their company.
Convertible notes are debt securities that early-stage companies routinely use to obtain financing. Convertible notes often convert into equity of the issuer of the securities at a predetermined event such as a Series A financing round. More information on convertible notes can be found here (opens new window).
# What are the terms of the investment?
Investments will be structured using a standard convertible note template (opens new window) that was created by Latham & Watkins or series seed documents (opens new window) from seriesseed.com. Convertible note and seed investment terms are based on US market standards, minimizing the need for lengthy negotiation between The LAO members and projects.
Convertible note investments in LAO projects will include the following terms:
- An investment of $50,000 worth of ETH
- Standard terms from a convertible note template
Investments that are issued to LAO projects using Series Seed documents will include the following terms:
An investment of >$50,000 worth of ETH
Possibility of tokenized stock or project token rights
Standard Series Seed investment terms
# After a potential LAO project submits an application, can the project change the information that was submitted?
Yes! If a project wishes to change any information that was submitted during the application process, it can do so by contacting us at email@example.com.
# How does a project withdraw from The LAO?
During the voting period (prior to being sponsored by a LAO member) potential LAO projects will have the ability to withdraw their funding proposal from The LAO.
Through a smart contract cancelProposal function, potential LAO projects are able to remove their application from consideration for funding from The LAO.
# Who can view information included in project funding proposals?
The LAO project proposals are not publicly viewable. Project proposals including all materials that are submitted to The LAO are restricted to applicants who submitted a funding proposal and members of The LAO.
Should potential projects have additional questions regarding privacy concerns, please email us at firstname.lastname@example.org.