Derisk Your Sustainability Investments with Tax Dollars?

New Challenges Require New Solutions:

That doesn’t mean we have to reinvent the wheel.

The Covid pandemic revealed the fragility of a global right-on-time economy and the logistics required to power it. Significant demographic issues are coming down the pipeline of today’s developed economies; core commodity processing and manufacturing processes have been shuttering in America since the 90s.

Fortunately, in the face of these challenges, the US Federal Government is pouring billions of research and development dollars into municipalities, non-profits, and academic institutions.

But Where’s The Profit Motive?

R&D is great, but profit motives aligns incentives to bring innovations to market for exponential, societal impact. Any founder who’s innovative product is a new corporate structure is a lawsuit or corporate coupe attempt waiting to happen; ask Sam Altman.

There is another way to partner with nonprofits and academic institutions though, with clear legal precedent and no funny business.

The Charitable Lead Trust:

A CLT is an irrevocable trust that provides a stream of income to a designated charity for a specified period. At the end of the term, the remaining assets are distributed to non-charitable beneficiaries, such as the venture capital studio or its investors.

By partnering with established, even semi-governmental non-profits, (like the $2.2B annually funded National Network of Public Health Institutes,) venture studios can use CLTs to fund R&D program staffs to generate investable IP and business models.

Once the CLT is funded, the work of the program can be funded on a per-project basis using grant funds, without the VC needing to reinvest, possibly ever.

A $5 million CLT generating a 5% annual yield after management fees allocates a $250k annual budget for the program’s staffing.

The Non-Profit Research and Development Program:

The non-profit R&D program focuses on developing innovative solutions to pressing global challenges, such as climate change, public health, and sustainable development.

By leveraging the CLT funding, the program can attract top talent and conduct cutting-edge research without the constraints of short-term financial pressures. This approach allows the program to pursue high-risk, high-reward projects that may not be feasible in a traditional for-profit setting.

Once the non-profit R&D program generates IP with significant commercial potential, the venture capital studio can use the IP to create and launch for-profit businesses.

These businesses can then be sold or taken public, generating returns for the venture capital studio and its investors. The government evens gives 6+ figure grants to turn get the for-profit started!

Let’s Make It Happen.

Collaboration between VCs and CLT-funded non-profit R&D programs presents a unique opportunity to drive innovation and address global challenges.

By aligning the expertise of VCs with mission oriented non-profits and the sustainable funding provided by the CLT, this approach has the potential to create a pipeline of groundbreaking for-profit businesses grounded in social impact. As we look to the future, this model may serve as a blueprint for a more sustainable and inclusive approach to innovation.