Retro funder profile & Manifund team recs (ACX Grants 2024: Impact Market)

By Saul Munn, Austin, Lily Jordan @ 2024-03-26T03:29 (+12)

The Astral Codex Ten (ACX) Grants impact market is live on Manifund — invest in 50+ proposals across projects in biotech, AI alignment, education, climate, economics, social activism, chicken law, etc. You can now invest in projects that you think will produce great results, and win charitable dollars if you are right! (Additional info about the funding round here.)

For this round, the retroactive prize funders include:

Combined, these funders disburse roughly $5-33 million per year. A year from now, they’ll award prize funding to successful projects, and the investors who bet on those projects will receive their share in charitable dollars. This post profiles each of the funders and highlights a few grants that the Manifund team are particularly excited about.

Click here to browse open projects and start investing.

ACX Grants 2024 Impact Markets

Astral Codex Ten (ACX) is a blog by Scott Alexander on topics like reasoning, science, psychiatry, medicine, ethics, genetics, AI, economics, and politics. ACX Grants is a program in which Scott helps fund charitable and scientific projects — see the 2022 round here and his retrospective on ACX Grants 2022 here.

In this round (ACX Grants 2024), some of the applications were given direct grants; the rest were given the option to participate in an impact market, an alternative to grants or donations as a way to fund charitable projects. You can read more about how impact markets generally work here, a canonical explanation of impact certificates on the EA Forum here, and an explanation thread from the Manifund twitter here.

If you invest in projects that end up being really impactful, then you’ll get a share of the charitable prize funding that projects win proportional to your original investment. All funding remains as charitable funding, so you’ll be able to donate it to whatever cause you think is most impactful (but not withdraw it for yourself). For example, if you invest $100 into a project that wins a prize worth twice its original valuation, you can then choose to donate $200 to any charity or project of your choice.

Meet the retro funders

Four philanthropic funders have so far expressed interest in giving retroactive prize funding (“retro funding”) to successful projects in this round. They’ll be assessing projects retrospectively using the same criteria they would use to assess a project prospectively. Scott Alexander explains:

[Retro] funders will operate on a model where they treat retrospective awards the same as prospective awards, multiplied by a probability of success. For example, suppose [the Long Term Future Fund] would give a $20,000 grant to a proposal for an AI safety conference, which they think has a 50% chance of going well. Instead, an investor buys the impact certificate for that proposal, waits until it goes well, and then sells it back to LTFF. They will pay $40,000 for the certificate, since it’s twice as valuable as it was back when it was just a proposal with a 50% success chance.

Obviously this involves trusting the people at these charities to make good estimates and give you their true values. I do trust everyone involved; if you don’t, impact certificate investing might not be for you.

As a (very) rough approximation, the four philanthropic retro funders usually disburse about $5-33 million per year. They are:

1. ACX Grants 2025

Next year’s ACX Grants round (2025) will be interested in spending some of the money they normally give out as prizes for the projects that succeeded in this year’s (2024) round. ACX Grants 2025 will be giving out prizes to people who pursue novel ways to change complex systems, either through technological breakthroughs, new social institutions, or targeted political change.

Previous rounds of ACX Grants have disbursed about $1-2 million per round, and you can find the lists of grants that those rounds gave money to here (1, 2).

2. The Survival and Flourishing Fund (SFF)

From their website:

[SFF] is a website for organizing the collection and evaluation of applications for donations to organizations concerned with the long-term survival and flourishing of sentient life.

Since 2019, SFF has recommended about $2-33 million per year in philanthropic disbursements ($75 million in total):

To find out more about the philanthropic priorities of the SFF’s largest grant-maker, Jaan Tallinn, see here. To see past grants SFF has made, see here.

3. The Long Term Future Fund (LTFF)

From their website:

The Long-Term Future Fund aims to positively influence the long-term trajectory of civilization by making grants that address global catastrophic risks, especially potential risks from advanced artificial intelligence and pandemics. In addition, we [the LTFF] seek to promote, implement, and advocate for longtermist ideas, and to otherwise increase the likelihood that future generations will flourish.

The LTFF usually disburses around $1-5 million per year, and sometimes disburses much more. You can view their yearly payout data here.

You can read more about the LTFF’s scope and expected recipients here, and find their public grants database here.

4. The Animal Welfare Fund (AWF)

From their website:

The Animal Welfare Fund aims to effectively improve the well-being of nonhuman animals, by making grants that focus on one or more of the following:

The AWF usually disburses around $0.5-3 million per year, and sometimes disburses much more. You can view their yearly payout data here.

You can read more about the AWF's scope and expected recipients here, and find their public grants database here.

5. The Effective Altruism Infrastructure Fund (EAIF)

From their website:

The Effective Altruism Infrastructure Fund (EA Infrastructure Fund) recommends grants that aim to improve the work of projects using principles of effective altruism, by increasing their access to talent, capital, and knowledge.

The EA Infrastructure Fund has historically attempted to make strategic grants to incubate and grow projects that attempt to use reason and evidence to do as much good as possible. These include meta-charities that fundraise for highly effective charities doing direct work on important problems, research organizations that improve our understanding of how to do good more effectively, and projects that promote principles of effective altruism in contexts like academia.

The EAIF usually disburses around $1-3 million per year, and sometimes disburses much more. You can view their yearly payout data here.

You can read more about the EAIF’s scope and expected recipients here, and find their public grants database here.

…and (possibly) more.

If you want to join these four institutions as a potential final oracular funder of impact certificates, see this document and email rachel@manifund.org.

Some projects we like

Many of the projects are really great! We don’t have enough time or space to talk about all of the ones we’re excited about, but here are a few of our faves, from each of:

Austin

“Run a public online Turing Test with a variety of models and prompts, by camrobjones.”

Cam created a Turing Test game with GPT-4. I really like that Cam has already built & shipped this project, and it appears to have gotten viral traction and had to be shut down due to costs; rare qualities for a grant proposal! The project takes a very simple premise and executes well on it; playing with the demo makes me want to poke at the boundaries of AI, and made me a bit sad that it was just an AI demo (no chance to test my discernment skills); I feel like I would have shared this with my friends, had this been live.

Research on AI deception capabilities will be increasingly important, but also like that Cam created a fun game that interactively helps players think a bit about how for the state of the art has come, esp with the proposal to let user generate prompts too!

“Quantifying the costs of the Jones Act, by Balsa Research.”

Balsa Research is funding an individual economist or a team to conduct a counterfactual analysis assessing the economic impact if the Jones Act was repealed, to be published in a top economics journal.

I like this project because the folks involved are great. Zvi is famous enough to almost not need introduction, but in case you do: he's a widely read blogger whose coverage of AI is the best in the field; also a former Magic: the Gathering pro and Manifund regrantor. Meanwhile, Jenn has authored a blog post about non-EA charities that has significantly shaped how I think about nonprofit work, runs an awesome meetup in Waterloo, and on the side maintains this great database of ACX book reviews. (seriously, that alone is worth the price of admission)

I only have a layman's understanding of policy, economics or academia (and am slightly bearish on the theory of change behind "publish in top journals") but I robustly trust Zvi and Jenn to figure out what the right way to move forward with this.

“Publish a book on Egan education for parents, by Brandon Hendrickson.”

Brandon wants to publish a book on education for parents based on Kieran Egan's educational theory. He walks the walk when it comes to education; his ACX Book Review contest entry on the subject was not only well written, but also well structured with helpful illustrations and different text formats to drill home a point. (And the fact that he won is extremely high praise, given the quality of the competition!) I'm not normally a fan of educational interventions as their path to impact feels very long and uncertain, but I'd be excited to see what Brandon specifically can cook up.

(Disclamer: I, too, have some skin in the game, with a daughter coming out in ~July)

Lily

“Start an online editorial journal focusing on paradigm development in psychiatry and psychology, by Jessica Ocean.”

Jessica’s project takes up the mantle of a favorite crusade of mine, which is “actually it was a total mistake to apply the scientific method to psychology, can we please do something better.” She’s written extensively on psychiatric crises and the mental health system, and I would personally be excited to read the work of people thinking seriously about an alternative paradigm. I’m not sure whether the journal structure will add anything on top of just blogging, but I’d be interested to see the results of even an informal collaboration in this direction.

(Note that I probably wouldn’t expect the SFF or LTFF to fund this; ACX Grants 2025 maybe, and the EAIF I’m not sure. But I’d be happy to see something like it exist.)

“An online science platform, by Praveen Selvaraj”

I think generating explanatory technical visuals is both an underrated use of image models, compared to generating images of mysteriously alluring women roaming the streets of psychedelic solarpunk utopias, and an underrated use of genAI for education, compared to chatbots that read your textbook over your shoulder. I’d like to see more 3Blue1Brown in the world, and in general I’m optimistic about people building tools they already want for their personal use, as Praveen does.

Saul

“Educate the public about high impact causes, by Alex Khurgin.”

Alex wants to build a high-quality YouTube show, and seeks funding to make three episodes of the show on AI risk, antimicrobial resistance, and farmed animal welfare. This is something that I could pretty easily imagine the LTFF, EAIF, and possibly SFF retrofunding, and I'd additionally be excited about more people knowing about them & reducing their expected negative impact on the world.

Alex’s (and his team’s) track record is also pretty great: they’re clearly experienced & know what they’re talking about. I’d be interested in getting a better path to impact — what do they plan to do after they click publish on the videos? — but I’m sufficiently excited that I’ve invested a token $50 in Alex’s project to credibly signal my interest.

“Distribute HPMOR copies in Bangalore, India, by Aditya Arpitha Prasad.”

Anecdotally, the answer “I got into HPMOR” has been quite a common response to the question “how did you become interested in alignment research?” Mikhail Samin has had (from what I’ve seen) a lot of success doing something like this in Russia, and I’m excited about starting a similar initiative in India. This grant seems to fall pretty clearly within the range of retrofunding from the LTFF and/or EAIF. I’ve invested a token $50 in Aditya’s project to credibly signal my interest.

Links & contact

 

Click here to browse open projects and start investing; click here to apply to our micro-regranting program.

If you’re interested in learning more about investing on an impact market, donating to projects directly, or even just chatting about this sort of thing, you can email saul@manifund.org or book a call here.

Note: this is a slightly edited linkpost of "ACX Grants 2024: Impact market is live!" In particular, that writeup included details about our micro-regranting program, applications for which are now closed. We posted a separate announcement about it, which you can find here.

Zach Stein-Perlman @ 2024-03-26T04:10 (+3)

Designing an impact market well is an open problem, I think. I don't think your market works well, and I think the funders were mistaken to express interest. 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, whichever investor reads and understands her project first funds it and later gets $10.

More generally, in your market, all surplus goes to the investors. (This is less problematic since the investors have to donate their profits, but still, I'd rather have LTFF/EAIF/etc. decide how to allocate funds. Or if you believe it's good for successful investors to allocate funds rather than the funders, and your value proposition depends on this, fine, but make that clear.)

Maybe this market is overwhelmingly supposed to be an experiment, rather than actually be positive-value? If so, fine, but then make sure you don't scale it or cause others to do similar things without fixing this central problem.

I'm surprised I haven't seen anyone else discuss your market mechanism. Have there been substantive public comments on your market anywhere? I haven't seen any but haven't been following closely.

Possibly I'm misunderstanding how your market works. [Edit: yep, see my comment, but I'm still concerned.] [Edit #2: the basic criticism stands: funders pay $10 for Alice's project and this shows something is broken.] [Edit #3: actually maybe everything is fine and retroactive funders would correctly give Alice $1. See this comment, but the Manifund site is inconsistent.]

Linch @ 2024-03-26T23:00 (+4)

(speaking for myself)
I had an extended discussion with Scott (and to a lesser extent Rachel and Austin) about the original proposed market mechanism, which iiuc hasn't been changed much since. 

I'm not particularly worried about final funders losing out here, if anything I remember being paternalistically worried that the impact "investors" don't know what they're getting into, in that they appeared to be taking on more risks without getting a risk premium.

But if the investors, project founders, Manifold, etc, are happy to come to this arrangement with their eyes wide open, I'm not going to be too paternalistic about their system. 

I do broadly agree with something like "done is better than perfect," and that it seemed better to get this particular impact market out the gate than to continue to debate the specific mechanism design.

That said, theoretically unsound mechanisms imo have much lower value-of-information, since if they fail it'd be rather unclear whether impact markets overall don't work vs this specific setup won't. 

Zach Stein-Perlman @ 2024-03-26T23:06 (+4)

My current impression is that there is no mechanism and funders will do whatever they feel like and some investors will feel misled...

I now agree funders won't really lose out, at least.

Jason @ 2024-03-26T19:52 (+2)

I think this is a valid concern, but one that can probably be corrected by proper design.

The potential problem occurs if the investors get a shot at the projects before the retrofunders do. Some projects are pretty clearly above the funder's bar in expectancy. If investors get the first crack at those projects, the resultant surplus should in theory be consumed by the investors. If you'd rather have the retrofunders picking winners, that's not a good thing.

Here, at least as far as ACX grant program ("ACX") is concerned (unsure about other participants), the funder has already had a chance to fund the proposals (= a chance to pick out the proposals with surplus). It passed on that, which generally implies a belief that there was no surplus. If Investor Ivan does a better job predicting the ACX-assigned future impact than ACX itself, then that is at least some evidence that Investor Ivan is a better grantmaker than ACX itself. Even evaluated from a very ACX-favorable criterion standard (i.e., ACX's own judgment at time2), Ivan outperformed ACX in picking good grants.

Now, I tend to be skeptical that investors be able to better predict the retrofunders' views at time2 than the retrofunders themselves. Thus, as long as retrofunders are given the chance to pick off clear winners ahead of time, it seems unlikely investors will break even.

The third possibility is that investors and retrofunders can buy impact certificates at the same time, bidding against each other.  in that scenario, I believe the surplus might go to the best grantee candidates, which could cause problems of its own. But investors shouldn't be in an advantaged position if that possibility either; they can only "win" to the extent they can outpredict the retrofunder.

(COI note: am micrograntor with $500 budget)

Zach Stein-Perlman @ 2024-03-26T20:20 (+2)

I agree this would be better — then the funders would be able to fund Alice's project for $1 rather than $10. But still, for projects that are retroactively funded, there's no surplus-according-to-the-funder's-values, right?

Rachel Weinberg @ 2024-03-26T20:52 (+5)

I think there is still surplus-according-to-the-funders-values in this impact market specifically, just as much as there is with regular grants. Retro funders were not asked to assign valuations based on their "true values" where maybe 1 year of good AI safety research is worth in the 7 figures (though what this "true value" thing would even mean I do not quite understand). Instead, they were asked to "operate on a model where they treat retrospective awards the same as prospective awards, multiplied by a probability of success." So they get the same surplus as usual, just with more complete information when deciding how much to pay.

Jason @ 2024-03-26T22:04 (+2)

I can't speak for Zach, but that's not the meaning of "surplus" I had in mind above.

Suppose Funder's bar is 10 utils per dollar. In standard operation, it will buy some work at 10 util/$, but will also have the chance to buy at 11 util/$, 12 util/$, and maybe even a little at 20 util/$. By surplus, I meant the extra 1 . . .2 . . . 10 util/$ that were above the funding bar. Because Funder was able to acquire utils on the cheap in these transactions, it can afford to acquire more utils within its budget.

If Funder bought impact certificates on a 10 util/$ basis, it wouldn't have any surplus of this type. The fix may be that Funder should buy at its average weighted util/$ basis, which is higher than its funding bar. Of course, this requires the funder to figure out its average weighted util/$ in the relevant cause area, which might or might not be easy.

Zach Stein-Perlman @ 2024-03-26T20:59 (+2)

Ah, hooray! This resolves my concerns, I think, if true. It's in tension with other things you say. For example, in the example here, "The Good Foundation values the project at $18,000 of impact" and funds the project for $18K. This uses the true-value method rather than the divide-by-P(success) method.

In this context "project's true value (to a funder) = $X" means "the funder is indifferent between the status quo and spending $X to make the project happen." True value depends on available funding and other available opportunities; it's a marginal analysis question.

Zach Stein-Perlman @ 2024-03-26T21:13 (+2)

Actually I'm confused again. Suppose:

Bob has a project idea. The project would cost $10. A funder thinks it has a 99% chance of producing $0 value and a 1% chance of producing $100 value, so its EV is $1, and that's less than its cost, so it's not funded in advance. A super savvy investor thinks the project has EV > $10 and funds it. It successfully produces $100 value.

How much is the funder supposed to give retroactively?

I feel like ex-ante-funder-beliefs are irrelevant and the right question has to be "how much would you pay for the project if you knew it would succeed." But this question is necessarily about "true value" rather than covering the actual costs to the project-doer and giving them a reasonable wage. (And funders have to use the actual-costs-and-reasonable-wage stuff to fund projects for less than their "true value" and generate surplus.)

Rachel Weinberg @ 2024-03-26T21:37 (+3)

(This is ultimately up to retro funders, and they each might handle cases like this differently.)

In my opinion, by that definition of true value which is accounting for other opportunities and limited resources, they should just pay $100 for it. If LTFF is well-calibrated, they do not pay any more (in expectation) in the impact market than they do with regular grantmaking, because 99% of project like this will fail, and LTFF will pay nothing for those. So there is still the same amount of total surplus, but LTFF is only paying for the projects that actually succeeded.

I think irl, the “true value” thing you’re talking about is still dependent on real wages, because it’s sensitive to the other opportunities that LTFF has which are funding people’s real wages.

There's a different type of "true value", which is like how much would the free market pay for AI safety researchers if it could correctly account for existential risk reduction which is an intergenerational public good. If they tried to base valuations on that, they'd pay more in the impact market than they would with grants.

Zach Stein-Perlman @ 2024-03-26T21:48 (+2)

This is ultimately up to retro funders, and they each might handle cases like this differently.

Oh man, having the central mechanism unclear makes me really uncomfortable for the investors. They might invest reasonably, thinking that the funders would use a particular process, and then the funders use a less generous process...

In my opinion, by that definition of true value which is accounting for other opportunities and limited resources, they should just pay $100 for it. If LTFF is well-calibrated, they do not pay any more (in expectation) in the impact market than they do with regular grantmaking, because 99% of project like this will fail, and LTFF will pay nothing for those. So there is still the same amount of total surplus, but LTFF is only paying for the projects that actually succeeded.

What happened to "operate on a model where they treat retrospective awards the same as prospective awards, multiplied by a probability of success." Can you apply that idea to this case? I think the idea is incoherent and if not I want to know how it works. [This is the most important paragraph in this comment.] [Edit: actually the first paragraph is important too: if funders aren't supposed to make decisions in a particular way, but just assign funding according to no prespecified mechanism, that's a big deal.]

(Also, if the funder just pays $100, there's zero surplus, and if the funder always pays their true value then there's always zero surplus and this is my original concern...)

There's a different type of "true value", which is like how much would the free market pay for AI safety researchers if it could correctly account for existential risk reduction which is an intergenerational public good.

Sure. I claim this is ~never decision-relevant and not a useful concept.

Jason @ 2024-03-26T21:55 (+4)

That's a valid concern. The traditional form of surplus I had in mind [edit: might not be; see my response to Rachel about the proper util-to-$ conversion factor] there any more. However, the funder probably recognizes some value in (1) the projects the investors funded that weren't selected for retrofunding, and (2) aligned investors likely devoting their "profits" on other good projects (if the market is set up to allow charitable reinvestment only, rather than withdrawal of profits -- I suspect this will likely be the case for tax reasons).

If those gains aren't enough for the retrofunder, it could promise 100% payment up to investment price, but only partial payment of impact over the investment price -- thus splitting the surplus between itself and the investor in whatever fraction seems advisable.

Zach Stein-Perlman @ 2024-03-26T22:14 (+4)

Hmm. I am really trying to fill in holes, not be adversarial, but I mostly just don't think this works.

the funder probably recognizes some value in [] the projects the investors funded that weren't selected for retrofunding

No. If the project produces zero value, then no value for funder. If the project produces positive value, then it's retrofunded. (At least in the simple theoretical case. Maybe in practice small-value projects don't get funded. Then profit-seeking investors raise their bar: they don't just fund everything that's positive-EV, only stuff that's still positive-EV when you treat small positive outcomes as zero. Not sure how that works out.)

the funder probably recognizes some value in . . . aligned investors likely devoting their "profits" on other good projects

Yes.

If those gains aren't enough for the retrofunder, it could promise 100% payment up to investment price, but only partial payment of impact over the investment price -- thus splitting the surplus between itself and the investor in whatever fraction seems advisible.

Surely this isn't optimal, there's deadweight loss. And it's still exploitable and this suggests that something is broken. E.g. Alice can do something like: write a bad proposal for her project to ensure it isn't funded in advance, self-fund at an investment of $10, and thereby extract $10 from the funders.

Jason @ 2024-03-29T15:40 (+2)

At least in the simple theoretical case. Maybe in practice small-value projects don't get funded. 

Scott Alexander has stated that: "Since most people won’t create literally zero value, and I don’t want to be overwhelmed with requests to buy certificates for tiny amounts, I’m going to set a limit that I won’t buy certificates that I value at less than half their starting price." I'm not sure exactly what "starting price" means here, but one could envision a rule like this causing a lot of grants which the retrofunder would assign some non-trivial value to nevertheless resolving to $0 value.

Surely this isn't optimal, there's deadweight loss. 

It's impossible to optimize for all potential virtues at once, though. I'm actually a bit of a self-professed skeptic of impact markets, but I am highly uncertain about how much to value the error-correction possibility of impact markets in mitigating the effects of initial misjudgments of large grantmakers.

One can imagine a market with conditions that are might be more favorable to the impact-market idea than longtermism. Suppose we had a market in upstart global health charities that resolves in five years. By default, the major funders will give to GiveWell-recommended charities. If a startup proves more effective than that baseline after five years, its backers win extra charitable dollars to "spend" on future projects (possibly capped?) -- but the major funders get to enjoy increased returns going forward because they now have an even better place to put some of their funds. 

And this scheme would address a real problem -- it is tough to get funding for an upstart in global health because the sure-thing charities are already so good, yet failure to adequately form new charities in response to changing global conditions will eventually mean a lot of missed opportunities. In contrast, it is somewhat more likely that a market in longtermist interventions is a solution in search of a problem severe enough to deal with the complications and overhead costs.

And it's still exploitable and this suggests that something is broken.

I do agree that collusion / manipulation is a real concern here. By analogy, if you've looked at the history of Manifund's sister site (Manifold Markets), you'll see a lot of people concocting very clever ways to manipulate the system. I am pretty skeptical of majority self-funding for this reason. This whole idea needs to be empirically tested in play-money models and low-stakes real money environments before it is potentially ready for prime time. It is too underspecified for an investor to make big moves in reliance on (unless the project is something they almost would have funded absent the impact cert) or for retrofunders to strongly bind themselves to.

I also think that as a practical matter there has to be some quality pre-screen before projects go on the market. Otherwise, the coordination problems with too many projects for the funding available will get severe. If offers are too spread out as a result, then few projects will get enough to launch. And as a current micrograntor, I can already see that dumping too many lightly screened on a marketplace is going to disincentivize people making the effort to screen and then evaluate projects. Going back to manipulation, you'd have to manipulate your project enough to not get funded, but not so much as to fail the pre-screen.

I guess one final defense to manipulation is that retrofunders are on the honor system. If there is reason to believe that someone manipulated the system, they are not actually bound to buy those certificates. That option would need to be exercised rarely or the system would crumble . . . but it is there.

Zach Stein-Perlman @ 2024-03-26T04:15 (+2)

Oh wait I forgot about the details at https://manifund.org/about/impact-certificates. Specific criticism retracted until learning more; skepticism remains. What happens if a project is funded at a valuation higher than its funding-need? If Alice's project is funded for $5, where does $4 go?

Lily Jordan @ 2024-03-26T18:38 (+3)

If the project is funded at a valuation of $5, it wouldn’t necessarily receive $5 – it would receive whatever percentage of $5 the investor bought equity in. So if the investor bought 80%, the project would receive $4; if the investor bought 20%, the project would receive $1. If Alice didn’t think she could put the extra dollar on top of the first four to use, then she presumably wouldn’t sell more than $4 worth of equity, or 80%, because the purpose of selling equity is to receive cash upfront to cover your immediate costs.

(Almost everything about impact markets has a venture-capital equivalent – for example, if an investor valued your company at $10 million, you might sell them 10% equity for $1 million – you wouldn't actually sell them all $10 million worth if $1 million gave you enough runway.)

On Manifund itself, the UI doesn't actually provide an option to overfund a project beyond its maximum goal, but theoretically this isn't impossible. But there's not much of an incentive for a project founder to take that funding, unless they're more pessimistic about their project's valuation than investors are; otherwise, it's better for them to hold onto the equity. (And if the founder is signaling pessimism in their own valuation, then an investor might be unwise to offer to overfund in the first place.)

Does that answer your question?

Zach Stein-Perlman @ 2024-03-26T18:59 (+2)

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.

Lily Jordan @ 2024-03-26T19:54 (+1)

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?

Zach Stein-Perlman @ 2024-03-26T20:14 (+2)

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.)

Zach Stein-Perlman @ 2024-03-26T20:17 (+2)

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.

DC @ 2024-03-26T19:52 (+1)

I recommend asking clarifying questions to reduce confusion before confidently expressing what turn out to be at least in part, spurious criticisms. I guarantee you it's not fun for the people announcing their cool new project to receive.

Lily Jordan @ 2024-03-26T19:57 (+5)

it is actually more fun for us than you might expect

(also helps us understand which questions need clarification)

but the sentiment is appreciated!