A group of tech entrepreneurs and cryptocurrency enthusiasts say they have raised more than $4 million selling tokens on cryptocurrency platform Ethereum for a Decentralized Autonomous Organization, or DAO, to fund a potential restaurant franchise company.
That sentence may be baffling to most, but it’s another example of how the language and ideas of cryptocurrency are creeping into the mainstream.
Dubbed FriesDAO, the project’s organizers admit it was an idea born of a conversation on the social-media site Discord, where it was almost jokingly suggested that a DAO could be created to govern a real-world operation, like a restaurant franchise, said Bill Lee, co-founder of investment fund Launch Code Capital and an early crypto player who is among those organizing the project.
Almost instantly, the idea began taking shape, fueled by those with experience in both the cryptocurrency and restaurant worlds, who had a collective interest in tackling what they describe as the way of the future for businesses, said Lee.
Among those joining the project is Brett Beller, co-founder of the alcohol delivery company Drizly, that was sold to Uber for $1.1 billion.
It's a social experiment of sorts, they say, but one that could serve as a fundraising model.
“It’s going to be a way, in one form or another, that companies are started, and we’re really interested in being here at the beginning of it,” said Beller.
Advisors include brothers Olivier and Jean-Claude Meyer, franchise operators of Domino’s and other brands in Africa with more than 170 restaurants. And more recently joining the group as an advisor is Kory Spiroff, a former Domino’s executive for international regions who served in Europe, the Middle East and Africa and who serves on the board of the Meyers’ company Eat N’ Go Africa, which holds master franchising rights to Domino’s and Cold Stone Creamery in Nigeria and Kenya.
“Fries” is actually an acronym that stands for “franchises and restaurants integrated efficiently and systematically.”
Lee describes it as a collective effort to buy a franchise restaurant — though the term “buy” is used loosely.
“Whether it will be buying directly or indirectly, through a proxy operator or even in the form of financing, the goal here is to actually establish some sort of link between this real-world operation with a well-known brand [to] this collective, experimental effort to ‘govern’ them, which is a term we use, in attempting to build out a network of these stores where a community can participate in dictating where these stores expand to, as well as possibly integrating benefits for community members, like free food, and ultimately dictating how store profits could be spent toward expansion,” said Lee.
When he was raising money to start Drizly in 2013, Beller said it took years to get the first $8 million. With the DAO, the group expects to top $5 million within a couple weeks.
“What you’re looking at is probably one of the most effective versions of one-off crowdsource funding and crowdsource information that we’ve ever seen,” said Beller.
FriesDAO first sold tokens on Ethereum with an invitation-only private fundraise. This month, the DAO offered 420 million tokens in a public sale. The tokens are being sold for USDC, which is a “stablecoin” pegged to the U.S. dollar. Each token is worth about 2 cents.
Lee said Tuesday the project has raised $4.4 million in a little more than a week.
Securities laws prohibit the group from calling the purchase of a token an investment, and the group emphasizes there should be no expectation of profit.
“The token is the symbolic recognition of a donation,” said Lee. The intrinsic value is more in “social currency,” or in the community that is created and the right to participate in the DAOs governance, he contends.
Fundamentally, FriesDAO aims to create a community where token holders can collectively direct the operation. Members are in talks with some large restaurant franchisors, including Subway, but fundamentally it will be the token holders who decide what brands to acquire and where. The DAO will likely serve as more of a backer, bringing in third-party operators to run the restaurants.
The next step will be acquiring the first franchise restaurant, which the group hopes to accomplish by mid June.
Spiroff, who retired about four years ago, said he’s seen so many changes and innovations driving the restaurant world, particularly after the pandemic. He was drawn in by the cutting-edge aspect of DAOs.
“I just find it absolutely fascinating,” said Spiroff. “I think this has every opportunity to be the next frontier in the restaurant space.”
Contact Lisa Jennings at [email protected]
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