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Outstanding issues with impact certs

  1. Nobody wants to act as the final oracular funder

      2. Everyone thinks Givewell-style analysis is important. Nobody wants to do it. (Or more specifically, have their models/calculations be used to determine how much money to pay out final certificates)

    1. Some funders are insufficiently confident: “I don’t know if my personal judgement should be considered oracular”
    2. Some funders are concerned for their reputation: “I don’t want to commit myself to doing this weird risky thing”
    3. Some funders maybe want to get the credit for starting new things: “My evaluation system is set up for prospective analysis, not retrospective”
    4. Solution 1: Keep on hammering at persuading them
    5. Solution 2: Don’t position any funder as “final”, just one of the later stages
    6. Solution 3: Be a final buyer on a small scale first, with our own money
    7. Solution 4: Change norms/persuade funders with game theory somehow
  2. Nonprofit founders and investors have no idea how to value early stage nonprofits
    • Startup founders benefit from talking to other startups who have gone through this; investors have a baseline exit they can rely on
    • Solution 1: Make up some numbers and hope they stick.
      • (This was basically what Manifold did for our seed round; seemed okay)
    • Solution 2: Map it back to some known primitives, e.g. $5k per life saved or $100 per QALY
  3. Might not be enough money in the ecosystem
    • Startup seed ecosystem works because of the possibility of 1B/10B/100B exits. Who could credibly pay for $1B of impact certs in a given year?
    • H/t Ted Suzman, Ben Reinhardt
  4. Credit allocation is hard and awkward, especially in the grant-based world
    • Today, we kind of implicitly double-count credit. The founder gets to say “I did this thing”, while telling their funders “If you give us money, you get to say you did this thing” and everyone’s kinda happy.
      • If e.g. FEM already received $200k of grant funding from X, how much of their impact should they claim for themselves to be able to sell into the future? How much impact should they allocate to their funders after-the-fact?
        • Tentatively: FEM should give X $200k of impact as 10%, and claim another 90% for themselves, to be vested across the different founders and early employees working on FEM
    • Solution 1: Ask Nuno to figure it out
  5. The entire area is a regulatory gray zone
    • A bit easier if you think only about “accredited investors” as participating (aka individuals with >$1m net worth, or $200k annual salary)
      • But also… a lot of useful information lives in the heads of non-accredited investors
    • Chilling effects - if something is in the gray area of legality, then established funders are very wary about participating because they have a lot to lose.
    • Solution 1: Ignore the regulation
    • Solution 2: Ask lawyers on loan from super rich areas
  6. “Liquidity” - this thing is only valuable if other people are participating
    • Willing to be the counterparty if you’re betting for or against a particular startup
    • Willing to purchase your shares two years down the line
    • H/t Jueyan Zhang, Rohit Krishnan
  7. Longtermist interventions might take too long to pay out
    • One of the premises about impact certs is that
    • H/t Jueyan Zhang

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