The HBAR Foundation 2022 Operating Model

Introduction

The HBAR Foundation sees openness and transparency as a core value in our mission for supporting a thriving and decentralized Hedera ecosystem. Earlier in the year we published plans for how we will be allocating funds over the course of 2022. In this blog, we share how this translates into our operating model including management of our grant process and operating capital.

Team Structure

The HBAR Foundation’s key teams execute on our mission of providing financial, technical, and marketing support for projects building in the Hedera ecosystem to achieve the goals we set out:

• Grow awareness of the HBAR economy
• Accelerate access to the HBAR economy
• Increase commerce in the HBAR economy

These include:

• Strategy: This team sets the direction for the HBAR Foundation including identifying priority fund areas, outlining organizational vision, mission, goals, and initiatives, and measuring success against core KPIs.
• Business Development (BD): This team is the core engine for getting support to projects building on Hedera. Each fund area has a dedicated team of BD resources responsible for vetting opportunities in the fund. Team members are also focused on supporting partner managed grant funds and accelerator programs operating in the ecosystem.
• Marketing: The marketing team is responsible for community growth, developer enablement, events, PR and awareness of the Hedera ecosystem and HBAR economy. The team is focused on supporting brand awareness of the HBAR Foundation as a platform for acceleration for builders while also supporting promotion and awareness of individual projects.
• Investor Relations: This team supports education and awareness of retail, institutional, and venture investors in order to bring them into the Hedera ecosystem as a source of funding and support for projects looking to fundraise.
• Finance: The finance team manages the assets of the HBAR Foundation. This includes both management of our treasury, operating expenses as well as the servicing of grants to projects we are supporting in key markets.
• Legal: This team supports the drafting, negotiation, and execution of contracts with grant recipients and other business partners, and also provides cross-functional legal support to the HBAR Foundation and its management and employees.
• HR: This team manages the employee experience including recruitment, onboarding, and culture across the HBAR Foundation teams.

Across the board, each team identifies and tracks a specific set of goals, initiatives, and KPIs which map to the broader strategy of the HBAR Foundation. The team seeks to be agile and accountable in hiring to build a culture focused on supporting projects in the ecosystem.

Grant Process

One of the core operations of our organization is the sourcing, vetting, and distribution of grants to projects building in the Hedera ecosystem.

The diagram below outlines the grant process at a high level.

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We source grants from both inbound (through our website and reach out on social channels) and outbound (projects we proactively reach out to) channels. The first step for a project from either channel is to fill out our grant application.

Grant applications automatically trigger the creation of a lead with all provided information in our CRM. The leads are reviewed by a panel of team members who vote to determine whether or not the lead should be passed to one of the fund leads. The criteria used by the panel members are (i) completeness and (ii) likely alignment with our published objectives. 

The fund lead will then begin the process (along with their team) of diligence once a lead is approved to become an opportunity. This diligence is done in determining whether or not the opportunity is fit for a grant and aligns to our core growth areas and success KPIs.

KPIs that we target include TPS, accounts created, value created on the network, TVL, and more. 

The opportunities which are deemed by the fund leads to be suited for a grant are then presented to the Grant Committee, a group of senior execs, board members, and independent observers, to determine if a grant will be approved for the project. 

Grants that are approved then go into contracting to be finalized with the grant recipient. Grants generally will be a partial amount up front with the remainder based on specific milestones and success metrics. This helps to ensure that projects get early support in development while also receiving value as they scale.

More in-depth details about the applicant’s grant processing journey is outlined below.

Application 

Apply on the Website

The Grant Process starts with an online application from The HBAR Foundation website. 

The grant application should include clear and concise information on the proposed project and state how your project will contribute to the Hedera ecosystem. 

Note: this is not our final application, we use this application to support our BD team’s due diligence process. 

After the application is submitted, the Panel Review team will review all applications on a rolling basis, determine if more information is required, and notify the applicant via email on whether or not your application will proceed to the next stage of the grant process. 

Due Diligence

Discussion & Technical Scoping

A member from the team will conduct an in-depth due diligence process and provide recommendations on the project’s fit and usefulness to the Hedera ecosystem. They will schedule a meeting to learn about your project, review technical diagrams, how to best navigate the Hedera ecosystem and provide recommendations on next steps. 

Proposal

Draft Grant Proposal

Once we determine your project’s fit for funding, then we will share a document called the “Grant Request Form.” The BD representative who you are working with will work with you to obtain the required information in order to complete the form. This will be the document that is submitted to the Grant Committee requesting approval of the grant. The information will include basic background information as well as concise descriptions of the project you are working on, your team's experience, roadmap and the purpose of the funds. Once you and the BD representative mutually agree on the information outlined in the “Grant Request Form”, a final version will be shared with the Grant Committee. 

Submit Proposal 

Evaluation & Final Decision 

The Grant Committee will be notified to evaluate the proposal and make a decision on the submitted proposal. All applicants will be notified via email with any follow up questions or the decision to approve or deny your grant.

Award 

Grant Agreement & Follow up 

Approved applicants will work on the legal paperwork to finalize the Grant Agreement and Payment Instruction Form which will be executed via Docusign. The agreement will include all corresponding payments that are usually structured with milestones.

Once a milestone is completed, the grantee submits a report, which is reviewed and if approved, the payment for the milestone is issued.

Use of Funds

The HBAR Foundation exists to support builders and overall growth in the Hedera ecosystem with a platform for acceleration from a financial, technical, and marketing perspective.

All of the value managed by the HBAR Foundation is dedicated to this purpose. We aim to keep operating costs low so the maximum value can be directly applied to providing support and growth to the ecosystem.

We have several reasons to maintain an adequate balance of USD-denominated balances. ≈ These include our operating costs, payroll tax obligations and also the  portion of grants provided in USD or USDC that can be used to fund development by projects. We engage third parties to sell and leverage HBAR in order to generate enough cash reserves to cover these ongoing costs.

Any sale which may materially impact the market also directly impacts the ability of the HBAR Foundation to achieve its mission of delivering grants and incentives to the Hedera ecosystem over a long period of time. Therefore, it is in the Foundation’s interest to mitigate this impact.

We work with OTC desks who manage sales over long durations consistent with market liquidity to minimize any material impact on HBAR markets. These partners may receive an aggregate amount of HBAR up front in order to manage this process in smaller amounts over a long period. 

In addition to efficiently and judiciously managing our own funds, we leverage terms of any grant given in HBAR to minimize market impacts through our grant-giving efforts to partners. Grant recipients may have vesting schedules, lock-up periods, and other conditions in order to reduce market impact.

Conclusion

The HBAR Foundation will continue to provide insights into strategic focus, operations, and effectiveness over the course of its lifespan. We recognize this market can be highly volatile and move fast in the pace of innovation. Our goal is to remain lean and agile in order to adapt and continue to support the growth of the Hedera ecosystem in the best way possible.