I wrote this as a comment within a fascinating discussion on funding in the film and software industries, which can be found here.
Is it possible to invest in something that does not have a comparable,
that may be breaking new ground in terms of creating new markets? In
biotech this might fit into the category of experimental research which
addresses small populations, is badly needed by the culture, but may
not be easily sold to investors. Do [venture capital] funds, set aside a percentage of
proceeds for this kind of funding? I don't mean just taking on "riskier
investments".
It could involve merging what may have been
non-profit interests within the framework of a hybrid funding strategy
using Limited Partnerships. A couple of good resources for these
include the article, "A How-to for Joint Ventures" by Marion R. Fremont-Smith, from
the Hauser Center for Nonprofit Organizations at Harvard, and
the book, "Program-Related Investments", by Christie I. Baxter, at MIT.
I
guess my interest here is in finding ways to support development and
research that may not have a defined precedent. As it seems like what
is considered a risky investment, is often just something that
does not have all the components of a known "home run" for those
covering the industry, (i.e. the film industry, or software industry
represented in posts here).
But what I am referring to, is investing in areas where there may be no components of a known.
The non-profit sector used to
fund these areas, but this really has not worked well in our economy
over the past 15-20 years. Non-profits become overly politicized and
with the chronic underfunding, there is no room for energy; the good
ones fail quickly. The bad ones become havens for cronyism and
eventually just crank out support for work that fits their defined
template of "acceptable", leaving out any room for creativity or real
risk taking.
We need a new type of funding mechanism to
support blurry areas; those ideas that we don't have categories for,
but that will create new markets.
There has to be some
solution, where a funding mechanism could support innovation outside of
established precedents. There needs to be some kind of incubator for innovation
_across disciplines_…that allows the best ideas to rise to the top
and establish new markets.
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