This piece is an addition to our Research Leader’s Playbook. We realized that (to our knowledge) nobody had unpacked where the money for “misfit research” — work that is a poor fit for academia, startups, or large companies — was coming from. If you are already deep in this world, you probably know all of this already, but it may still be worth a skim in for something that might surprise you.
Funding preferences and situations can change quickly, so if any of this is incorrect or incomplete, please leave a note in the comments!
Unsurprisingly, there is no default way to fund misfit research: support can range from a group of philanthropists starting a new institute, to DARPA running robot competitions, to DAOs funding longevity projects, to VCs funding research projects gussied up as a company.
To get our brains around the funding landscape, it’s useful to divide this funding into non-dilutive (funding that comes without ownership or expectation of financial return) and dilutive (funding that comes with an expectation of financial return and often involves some ownership of an organization). This division is useful because, in broad strokes, non-dilutive and dilutive funding come with very different expectations, evaluation criteria, and “sales” processes.
Be aware that these categories have a lot of fuzziness (like many things in non-traditional research). Several entities, like family offices, do both dilutive and non-dilutive funding; they have their own section. Furthermore, non-dilutive and dilutive funding are not always mutually exclusive: some technology projects get off the ground with a mix of non-dilutive grants from foundations or governments and investments from angel or impact investors. (There are still a lot of gaps in this “messy middle” between pure-public-goods work and profit-maximizing company.)
Below are the major groups in each category and what they're actually funding. The end of this section touches on what to actually do with this information when you’re trying to fund research.
Non-Dilutive Funders
Non-dilutive funding doesn’t come with any expectations of repayment or organizational ownership. This sort of funding is important for research that is a poor financial investment, whether because it will never create capturable value, or has long timescales and high uncertainty. However, non-dilutive funding isn’t just “free” money. Raising non-dilutive funding usually takes significantly more time and effort than the equivalent amount of investment dollars; most funders impose much more process up front and restrictions on how money can be spent.
Foundations: Foundations are organizations with full-time professional staff deploying money that has been set aside explicitly for philanthropic purposes. Foundations can range in size from a tiny org with one or two staff to hundreds or thousands of employees at the largest foundations like the Rockefeller or Gates Foundations.
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