Cardashift’s Project Selection Criteria
Cardashift aims to provide a platform for high-quality projects tackling major environmental and social issues, and its selection process and analysis frameworks are optimized for achieving this. In the spirit of transparency, we want to share how they work.
We’ll first outline what we are looking for in potential projects (§1), before introducing our 4-step selection process (§2).
1️⃣ Our investment thesis | What we’re looking for
👉 Projects in their early-stage development phase
Initially, we have decided to focus on early-stage projects with funding requirements in the range of $0.5M to $2M, for three reasons:
- A community of investor-citizens — like the crypto community — is more likely to be attracted to riskier seed investments where good gains are expected (please check our article Crypto holders: try impact investing)
- At this early stage, it is not just funding that impact project leaders lack, but also the right support to increase their success rate and maximize impact (please check our article Boosting early-stage impact investments: the role of a decentralized ecosystem)
- The Cardashift team’s skills and expertise can help at this early stage of project development
👉 Impact assessment
We want our approach to environmental and social impact investing to be science-based, but also simple and easy to understand. In our article Boosting early-stage impact investments: the role of a decentralized ecosystem, we explain some ways that we are trying to improve impact assessment tools.
We have been particularly struck by the complexity and opacity of most evaluation grids. That’s why we have created a simpler impact assessment process, separated into two parts:
- Firstly, screening impact intentions during the selection process
- Secondly, co-constructing the impact roadmap with the project leaders during the pre-funding phase, to maximize their chances of achieving concrete impact goals
Let’s focus on the impact screening.
For both clarity’s and simplicity’s sake, we have pruned the well-known impact taxonomies (such as the GIIN’s) down to basic human needs.
We have also taken into consideration our own core competencies and the blockchain’s potential for helping to address basic needs. This last filter allowed us to better define our scope, focusing on 7 key goals.
Targeting 7 goals linked to basic human needs
These are the 7 themes, 7 goals, and 7 emergencies that Cardashift wants to address.
Our approach to problem-solving is both multi-dimensional and inclusive. To ensure we get a diversified portfolio of projects, we used the CK method. This allowed us to map the different action areas/approaches exhaustively, which will enable progress to be made on each goal
A comprehensive overview of all possible action areas/ approaches with respect to each goal is provided as in the diagram below; however, these action areas and approaches are not set in stone and can be changed down the line. We are excited by the prospect of factoring in newer futuristic solutions, as and when they arise.
A simple reading grid to fast-check impact
Besides defining clear impact goals, we aim to design simple and efficient analysis tools to accelerate the decentralization process. Currently, impact-oriented funds use criteria that complicate the analysis. This is why we spent time developing simple reading grids grounded in science.
We began with the framework designed by the GIIN and chose to focus on 3 of its aspects:
- Assess the potential positive impact of the product or service.
- Identify the possible negative externalities of the project (in consultation with project leaders).
- Calculate the scalability of the impact generated by the project
From these 3 aspects we derived a clear and pragmatic model “+ — x”, which can be applied easily within the blockchain community. This model incorporates the estimated positive impact footprint (+), negative externalities (-), and scope for scaling (x), enabling Cardashift to apply a simple formula for estimating impact: positive impact minus negative externalities multiplied by scope for scaling.
Impact = (Positive Impact — Negative Externalities)* Scope
👉 High business potential
Reconciling profit with positive impact is one of our objectives. We need to guarantee an attractive return on investment for our community. To do so, we have to choose projects with a high business potential.
As we are dealing with early-stage projects, we will take an in-depth look at the founding team’s capabilities.
We will only target ready-to-go teams, based on the following criteria:
- Entrepreneurial maturity
- Alignment with Cardashift’s values
- Team spirit
- Unfair competitive advantages
- Soft skills
- Capacity to execute
Unlike traditional funds, we do not wish to discriminate against project leaders on the basis of their academic background. The blockchain ecosystem has shown us that entrepreneurial potential is present among a diverse range of actors. Therefore, our main target will be founders who have demonstrated an entrepreneurial mindset in the course of their careers.
Our analysis is not limited to team potential only, but also assesses the business potential of the project itself:
- State of the market
- Barriers to entry
- Target customer
- Pain point (‘nice to have’ vs. ‘must-have’ solution)
- A simple and clear value proposition
Please note that we are completely aware that at the early stage of project development, most of these points will not yet be fully defined.
2️⃣ Checking projects’ ambitions | A four-step process
⓵ Application form
This form will be released soon and will be the subject of one of our next articles!
This questionnaire aims to help project leaders develop a concrete link between their initiative and the achievement of at least one of the 7 key goals.
It will serve as a basis for the following phases of the process.
⓶ Screening
This is a swift assessment to check that projects match our basic requirements:
- Not a scam
- Aligned with one or more of our impact goals, measured using our “+ — x” model
- Viable project with strong team
The few projects that successfully make it past this screening stage will be released to our community.
⓷ Community voting system
This stage is about getting the community to help us identify projects for the pre-funding stage. It’s a first step towards a fully decentralized selection process. The more community members participate in it, the better our model works.
Please read about the Cardashift Voting System to find out more about how it works.
⓸ Due diligence
Once the project is selected by the community, the goal of due diligence is to dive into the project’s assumptions to ensure it has real potential. This is an important requirement for developing a tangible roadmap and a prerequisite for funding. Conducting this final check helps to minimize the risks.
In the long term, we plan to carry out due diligence with the support of a committed community.
Disclaimer: Cardashift reserves the right to reject projects at this stage. If a proposal is rejected, the Cardashift team will provide an explanation to the community.
Evaluation grids
To assess each project’s impact potential with objectivity, we created two grids (one for environmental and one for social impact projects) with 7 fixed criteria and a few potential customized criteria according to the field or impact goal. Our purpose is to dive deep into six key dimensions:
• Category(ies) of impact
• Significance of intended impact (“+ — x”)
• Likelihood of impact
• Awareness of the appropriate level of urgency
• Team & Strategy efficiency
• Transparency
We score each criterion with the following rating system in mind:
• 0–2: The project does not meet expectations in terms of social and/or environmental impact.
• 3–5: The project has a promising vision (in terms of impact and development) but the strategy/team/operation seem unstable.
• 6–8: The project has a promising vision and strategy/team for achieving it, but growth and impact ambitions could be higher.
• 9–10: The project has a significant development potential, responds to real environmental and/ or social issues and its strategy is adaptable.
In addition to these grids, we have also designed one that focuses on the project’s business potential and viability.
Stakeholders involved in the due diligence process
We engage with the project leaders throughout the due diligence process, starting with the application form, then asking for additional documents (data room, potential market studies) and setting up regular meetings, whilst making sure our knowledge is enriched by reading academic papers.
Other stakeholders are also needed to conduct due diligence:
- Community members (we take into account the level of staking received by each project during the voting process)
- Experts in the project’s field
- Local advisors for projects based in another country
- In the mid-term, project leaders who have formerly received funding on Cardashift
The idea is to create a valuable ecosystem focused on a common goal: maximizing the impact generated by the Cardashift community.
Written by Yannis Baala & Anaïs Bouchet — Impact Project Managers
