So if project-doers don’t sell all of their equity, do they get retroactive funding for the rest, or just moral credit for altruistic surplus? The former seems very bad to me. To illustrate:
Alice has an idea for a project that would predictably [produce $10 worth of impact / retrospectively be worth $10 to funders]. She needs $1 to fund it. Under normal funding, she’d be funded and there’d be a surplus worth $9 of funder money. In the impact market, she can decline to sell equity (e.g. by setting the price above $10 and supplying the $1 costs herself) and get $10 retroactive funding later, capturing all of the surplus.
They’d get retroactive funding for the rest, yes. When you say it seems very bad, do you mean because then LTFF (for example) has less money to spend on other things, compared to the case where they just gave the founder a (normal, non-retroactive) grant for the estimated cost of the project?
Yes. Rather than spending $1 on a project worth $10, the funder is spending $10 on the project — so the funder’s goals aren’t advanced. (Modulo that the retroactive-funding-recipients might donate their money in ways that advance the funder’s goals.)
Related, not sure: maybe it’s OK if the funder retroactively gives something like cost ÷ ex-ante-P(success). What eliminates the surplus is if the funder retroactively gives ex-post-value.
Edit: no, this mechanism doesn’t work. See this comment.
Thanks.
So if project-doers don’t sell all of their equity, do they get retroactive funding for the rest, or just moral credit for altruistic surplus? The former seems very bad to me. To illustrate:
Alice has an idea for a project that would predictably [produce $10 worth of impact / retrospectively be worth $10 to funders]. She needs $1 to fund it. Under normal funding, she’d be funded and there’d be a surplus worth $9 of funder money. In the impact market, she can decline to sell equity (e.g. by setting the price above $10 and supplying the $1 costs herself) and get $10 retroactive funding later, capturing all of the surplus.
The latter… might work, I’ll think about it.
They’d get retroactive funding for the rest, yes. When you say it seems very bad, do you mean because then LTFF (for example) has less money to spend on other things, compared to the case where they just gave the founder a (normal, non-retroactive) grant for the estimated cost of the project?
Yes. Rather than spending $1 on a project worth $10, the funder is spending $10 on the project — so the funder’s goals aren’t advanced. (Modulo that the retroactive-funding-recipients might donate their money in ways that advance the funder’s goals.)
Related, not sure: maybe it’s OK if the funder retroactively gives something like cost ÷ ex-ante-P(success). What eliminates the surplus is if the funder retroactively gives ex-post-value.
Edit: no, this mechanism doesn’t work. See this comment.