Coven: A Retrospective

Coven was built to find a better way to democratize access to investing. Today we do a respective.

Coven: A Retrospective

Communities existed long before crypto. People have been pooling assets and expertise to share risk and co-invest since at least the Age of Exploration. It’s a model that has built relationships and fortunes over the centuries.

Coven, an incubated project within ConsenSys Mesh, was built to find a better way to democratize access to investing and harness the wisdom of crowds to facilitate improved capital allocation.

Today we are announcing the decision to sunset Coven. Despite much initial success in building a decentralized venture investing platform and the many great projects that were funded as a result, Coven was ultimately ahead of its time. The project was unable to scale as desired, and the team ultimately decided to apply their deep learnings on new projects that will help drive the adoption of web3 and accelerate the Age of Community.

What Coven set out to do

Dave and John, the Coven founding team, lived through the ICO boom of 2017 and witnessed the downsides of crowdfunding, rife with flawed incentives, like free rider problems and instant liquidity, that disincentivized thorough research and thoughtful capital allocation.

From this shared experience, they set out to build Coven.

The result was a more network native model for investing that leveraged new primitives of token staking to facilitate the collaborative sourcing, diligencing, and approval of investments while sharing the spoils of those investments according to the contributions made.

Coven was operating as a DAO and were it not for the legacy of The DAO would have called itself as such.

What went right

It is important to celebrate everything that went right with this experiment.

Coven built and engaged a strong community and is grateful to the entrepreneurs who took a bet on the platform and let Coven join them on their journey. Had Coven been out of its closed beta, it would have been one of the top 20 dApps by transaction volume in Q4 2018 and Q1 2019.

The community consistently built their skill set and leveled up as the quality of the deals and investment memos grew over time.

And the community came together to source and thoughtfully diligence incredible investments in companies like Bison Trails, Axie Infinity, and Relay Payments. Had Coven been a fund, the platform would have generated >4.5x TVPI, including >2.4x cash-on-cash returns, in ~3 years in aggregate, respectable by any standards.

What could have been better

It is also equally important to acknowledge that not all was perfect.

It took too long to close deals due to the high focus on diligence. While much good came of this and the returns benefitted as a result, it is not the right model for the money printer go brrr era.

And Coven stayed in closed beta for too long, which made it tough to scale. This in many respects was due to a lack of regulatory clarity and the high cost of compliance. Had the project been able to grow more organically, it is possible that the highly engaged community would have evolved with the times to find an investment model better suited to the current market.

Where do we go from here

Dave and John have joined ConsenSys Software to scale up MetaMask and the broader developer platform. They are making it easier for more and more people to access web3, and are active participants in several DAOs. Greg has joined Set Protocol to continue to contribute to the decentralization of asset management. Mark started a platform called Myco to help people build member-owned communities.

The team is leaving ConsenSys Mesh with a wealth of knowledge that will empower Mesh to continue to double down on DAOs. Coven channeled their community’s energy in exceptionally productive ways, ways that Mesh can now apply to DAO coordination, communication and incentive alignment mechanisms, all in our joint effort to build web3.

ConsenSys Mesh has incubated some of the leading DAO governance protocols (e.g. Gnosis, Gitcoin, Tribute Labs) and participates in top pooled capital DAOs (LAO, Neptune, Fingerprints, Flamingo and Neon).

But the coordination tools for operating DAOs are woefully inadequate to unlock the full promised value of defi, NFTs and metaverse communities. Mesh will continue its mission to invest, accelerate and incubate by focusing in 2022 on building and participating in the full stack of DAO tooling efforts being created. Mesh is meeting founders where they are and with what they need, by providing capital and operational excellence in the projects they participate in.

While we may be saying goodbye to Coven as we knew it, here at Mesh, we fully expect the next team building the next Coven to come out of this network and community of Meta Meshians.

If you’d like to find ways to collaborate on investment DAOs please reach out to Shawn Cheng.

If you’re a strong web2 operator looking to build something, please reach out to Gabriel Anderson who runs our Tachyon Accelerator.

Or if you’re looking for a more in depth partner for the Mesh incubator where many of our most ambitious projects started, please reach out to Mike Kriak.

Coven, in photos:

ETH SF 2018