Post Raise Milestone Mechanics V2

In an effort to provide transparency and insight, we’ve created this guide to help you understand the post-raise governance process – a distinctive feature that clearly sets us apart from our competitors.

The post-raise governance process is a system that allows our community of investors to have a say in the progress of the projects they support. This process involves voting on milestones, which are crucial points in a project's development.

During each AngelBlock fundraise, startups define a series of milestones. These milestones include clearly defined deliverables, target completion dates, the allocated budget to be unlocked, and the number of tokens to be released upon successful completion. All funds raised are held in a smart contract and released to the project only upon the successful fulfilment of each milestone.

These milestones serve as progress checkpoints and provide reassurance for investors. Upon reaching a milestone date, the startup submits a delivery report. As an investor, you then vote to approve or reject the progress based on this report. This system ensures the startup's progress and the release of funds become a shared responsibility between the startup and its investors.

After our first successful fundraises and reviewing the milestone process, we have decided to modify this process slightly. Specifically, to reduce the waiting time for the community between a project's raise and its launch, and to assist the project in acquiring the much-needed liquidity typically required at launch, this is why we implemented two hardcoded milestones: Milestone 0 and Milestone 1.

Milestone 0: This milestone involves unlocking liquidity immediately after the fundraise. This liquidity is crucial for the project to secure early liquidity necessary for processes such as CEX/DEX listings and protocol expansion. It enables the startup to progress more swiftly through subsequent milestones.

Milestone 1: This milestone is hardcoded for all fundraises and marks the Token Generation Event (TGE) — essentially, their token launch. Milestone 1 will be tied to each project's first unlock, allowing investors to claim their initial batch of tokens upon milestone approval. For example, if a project has a 3-month cliff period, then Milestone 1 will occur 3 months after their TGE . This milestone is designed to protect our investors by ensuring startups cannot delay their launch indefinitely or until they run out of funds, thereby aligning milestones with tangible project progress.

A specific framework has been implemented dictating how Milestone 0 and 1 will work on each start-up raising dependent on the total amount raised, investment round & start-ups development phase.

To partake in the voting process, investors must have participated in the fundraise, receiving their badge(s). The voting power is proportional to the amount invested in the raise.

Eligible investors participate in standard voting over a seven-day period, casting an 'Approve' or 'Reject' vote on a milestone's completion and providing a rationale for their choice. Every vote carries weight proportional to the voter's share in the project. At the conclusion of the voting period, the tally of 'Approve' and 'Reject' votes determines whether a milestone has been achieved.

We understand that the path to project completion is often not linear and may require adjustments. Therefore, we've incorporated provisions for startups to re-plan their milestones or overall roadmap.

Startups may need to adjust individual milestones before their due dates. They can redefine the milestone deliverables and set a new date, provided no other voting process is active within the upcoming week. Any such changes must be approved by the investors via standard voting rules.

Similarly, startups can apply for a complete roadmap re-planning. They can redefine deliverables, dates, budgets, and token allocation for all upcoming milestones. However, this requires a higher degree of investor involvement: at least 50% of investors must partake in the vote for a roadmap re-plan to pass.

Both the Single Milestone Re-planning and Roadmap Re-planning are currently taking place on Snapshot. Investors can vote to approve or reject the project’s suggested changes based on their voting power, which derives from the proportional amount they have committed in the startup’s raise.

When a milestone date is reached, the project must update the milestone status providing a delivery report. Then, the milestone voting starts.

A milestone is approved if 'Approve' votes outnumber 'Reject' votes. Even in a tie, the milestone is deemed approval. Upon approval, the designated budget and tokens are released, with investors able to claim tokens proportionate to their investment following token’s vesting schedule

If 'Reject' votes outnumber 'Approve', the milestone is rejected. In such a case, the startup has a week to submit a repair plan, detailing new deliverables and a revised date. Investors then vote on this repair plan.

If a repair plan is approved, it sets a new timeline for the project. If a repair plan is rejected or not proposed, the invested assets assigned to the failed and remaining milestones are returned to the investors, and the utility tokens assigned to these milestones are returned to the startup.

In cases like the one above, where a repair plan vote is rejected, resulting in the termination of future milestones, the startup receives the rest of their tokens (assigned to future milestones), while investors gain the right to claim a proportional amount of the startup's tokens based on the approved milestones. The remaining funds are returned to investors. Token claiming will occur as announced during the fundraising process, following the respective cliff and vesting schedule. Our system is designed with both investors and projects in mind, ensuring that investors can retrieve their remaining funds, while startups receive the rest of their tokens. By design, only the remaining amount of funds and tokens assigned to approved milestones are returned to investors. It’s then up to the startup to decide if they want to pursue a different approach, such as offering a full refund.

Whenever a milestone is approved, investors gain the right to claim a proportional amount of the startup's tokens. Token claiming will occur as announced during the fundraising process, following the respective cliff and vesting schedule. Let’s explore some edge cases to clarify this further. If Milestones 0 and 1 are each allocated 50% of the tokens and funds raised, this means that once the raise is complete, 50% of the funds will be released to the startup based on Milestone 0, and 50% of the tokens will be available for investors, subject to the cliff and vesting schedule after the project's TGE (Token Generation Event). However, if Milestone 1, which also has a 50% allocation, is rejected, investors will receive tokens from the first 50% (Milestone 0), while the second 50% (Milestone 1) will not be distributed. This also means investors will receive an equivalent portion of their invested capital back (in this case, 50%).

We are always seeking feedback and suggestions from our investors to improve our milestone voting process in a way that makes sense, helps investors participate in decision-making, and allows them to stay informed about everything related to the protocol.