Molecule Proposal: Contract for Dealflow and Development Services
This is a proposal to formalize Molecule’s services in developing VitaDAO’s IP-NFT portfolio, historically paid for in cash, for rights to the underlying IP. In order to promote long-term incentive alignment and protect VitaDAO’s cash treasury, Molecule proposes instead of cash, a co-investment right defined as an option to earn, through provision of services, equity in IP-NFTs.
Supporting VitaDAO’s deal flow and development is time-consuming, requiring the equivalent of several full-time employees to review and negotiate the terms of research agreements, support VitaDAO working groups, and execute project financing.
To date, Molecule’s fee for these services has been 10-15% of the cash amount of funding for the research sponsored via IP-NFT. This is unsustainable over the long term as it depletes VitaDAO’s treasury which is better spent funding longevity research. Recognizing that, starting from the time of the funding of the University of Washington IP-NFT, Molecule agreed with members of longevity-dealflow and VitaCORE leading the deals that it would be willing to accept a percentage of the IP-NFTs instead of cash, leaving the final percentage of IP-NFT assigned to Molecule to be determined via public VitaDAO governance.
This proposal is in furtherance of such public governance.
Our goals are the following:
- Promote the best IP-NFTs and work to make them successfully spun out assets;
- Identify the best economic opportunities for IP-NFTs and assist VitaDAO in out-licensing IP;
- Align incentives long term in promoting the best IP-NFTs to clinical trials and commercialization;
- Design and implement an efficient and robust IP-NFT distribution system through fractionalization; and,
- Ensure the longevity of VitaDAO’s treasury and long-term success of VitaDAO.
The outcome of this proposal will be formalized in a service agreement drafted by a Tier-1 US IP law firm and, when ready, smart contracts.
For the right to earn sweat equity in IP-NFTs, Molecule will continue to support a deal-flow and development team to work with VitaDAO on research funding and other projects with the core services specified below. For context, this offer of equity participation in lieu of cash is based on Molecule’s services which it currently offers as part of developing VitaDAO’s IP-NFT portfolio, namely:
- Molecule Services:
- TTO/Deal Negotiation
- We have 1-2 team members dedicated to negotiating with TTOs. This is a laborious process taking anywhere from 1-3 months. See below for a detailed breakdown of time and cost/deal.
- Deal Structuring
- We have created standard deals, licenses, and terms favorable to VitaDAO. We are working with Tier 1 law firms to review and improve them at our expense and to implement a harmonized dual IP-NFT/equity business model.
- Legal Risk
- We are the primary signer of all VitaDAO deals with universities. We incur legal risk on behalf of the DAO, taking agency in closing deals and assigning our rights to the DAO via IP-NFT.
- Research Administration and Research Management
- We will work with researchers to gather interim reports, advise on research direction, help structure incoming data, and ensure timely accounting and controlling.
- Funding and Co-Investment
- We will support and invest into IP-NFTs funded by VitaDAO, helping to de-risk the investments over the long term by sharing the cost/burden of funding additional research milestones with VitaDAO.
- IP-NFT product development
- We are working to develop the IP-NFT framework to VitaDAO’s custom specifications, including self-service minting and fractionalization infrastructure.
- Artwork creation for IP-NFTs
- We have funded and developed custom artwork for the IP-NFTs.
- We will help with fundraising for IP-NFTs from strategic partners and Molecule investors.
- Spin-out Creation
- We will assist in the creation and development of spin-out companies for the most promising projects among VitaDAO’s IP-NFTs and offer initial executive management services.
- TTO/Deal Negotiation
For existing IP-NFTs already minted where Molecule accepted a handshake agreement for sweat equity rather than a cash fee, the proposed amounts are 10% of the IP-NFT inclusive of the Jonathan An IP-NFT and for every IP-NFT since that time.
Looking forward, we propose that the percentage of IP-NFT earned by Molecule is decided on a case-by-case basis with the VitaDAO longevity-dealflow working group. Unless an exemption is otherwise voted on by VITA holders, our amount earned through sweat equity cannot exceed 15% of the IP-NFT.
Cost Breakdown per Deal
The total cost per funded deal for Molecule breaks down to $25,000-$30,000 USD across negotiation time, legal, artwork, and additional services. This does not include any costs once the deal is actually funded, such as time for research management, review, spin out and fundraising support, etc.
TTO and Deal Negotiations
|Time investment breakdown per deal for VitaDAO|
|Number of deals evaluated/negotiated/worked on for VitaDAO|
|Average time investment||7.9|
|Deals funded by VitaDAO and supported by Molecule||5|
|Activity breakdown in hours on average per deal|
|Average hours per activity and deal|
|General deal structuring||1.5|
|Negotiation of deal terms||1.1|
|IP-NFT minting and marketing||0.3|
|Activity breakdown in percentage on average per deal|
|Average workload distribution per activity and deal|
|General deal structuring||19.0|
|Negotiation of deal terms||13.4|
|IP-NFT minting and marketing||4.1|
|Total number of hours||441.0|
|Average number of hours per project||7.9|
|Calculated average costs per deal in USD with a consulting fee of USD 250 per hour||1975|
|Calculated average costs per funded deal in USD with a consulting fee of USD 250 per hour (1 out of every 11.2 deals funded)||22120|
|Internal Legal Review USD||1000 - 2000|
|Tier 1 Law Firm Legal Review||2500 - 5000|
|Professional Illustrator (External)||3000-4000|
Molecule’s Organization Structure
Our services to VitaDAO are organized into different teams:
Research & Development
This team monitors the scientific research landscape engaging with researchers, companies, and universities interested in funding from VitaDAO using IP-NFTs. After identifying interesting funding opportunities, the R&D team evaluates the scientific and market opportunity, negotiates deal terms, signs research agreements, and assigns them to VitaDAO.
This team develops the IP-NFT infrastructure used by VitaDAO to scale its portfolio.
Legal & Compliance
This team monitors regulations that apply to VitaDAO’s activities, ensuring compliance, and reviews terms for VitaDAO’s sponsored research agreements.
Molecule earns a co-investment right defined as an option to purchase with cash or earn using labor %s of IP-NFTs minted by VitaDAO throughout the term of the engagement under this agreement.
VitaDAO may terminate Molecule’s engagement under this agreement for any reason by way of VitaDAO community governance. Molecule may terminate this agreement upon four weeks’ notice posted as a new discussion thread in the VitaDAO governance forum.
- Agree with revisions (please comment)