How We Approach Investing in For-Profits

A growing number of promising organizations that work on biosecurity and navigating transformative AI are structured as for-profits. Some of these entities do important safety work that we want to support. We have two main options for supporting for-profit organizations, but each has downsides. 

The first is making non-dilutive grants, in which we don’t take any equity. The problem with such grants is that they are hard to make at scale and set poor incentives — giving non-dilutive grants to for-profits could attract founders who are less concerned about philanthropic impact relative to profit.

Then there’s the second option: investments. Investments into for-profit organizations are easier to make at scale and allow us to support a wider range of organizations while reducing the incentive effects of non-dilutive grants. They also help to ensure that the value our funding creates continues to serve charitable goals. With a grant, we can restrict the funding to a specific charitable purpose, but if the company becomes more valuable, that upside accrues to its other investors. Taking equity lets us capture some of that value and return it to philanthropy.

But holding equity in these organizations raises its own problems. Coefficient Giving also funds AI policy work, and having a financial stake in companies that stand to be affected by policy changes might pose a conflict of interest. And while we’ve reinvested proceeds from past investments into philanthropy, we want that commitment to be explicit from the start so that our AI policy work remains credibly independent.

Going forward, our standard practice will be that any resulting equity (or future equity) from investments in for-profit AI and biosecurity companies made by Coefficient Giving or Good Ventures entities will immediately be donated directly to the Against Malaria Foundation (AMF). Neither Coefficient Giving nor Good Ventures, our founding and most significant partner, will retain any financial interest in the companies we fund, and profits generated by our funding will still serve charitable ends via AMF’s cost-effective global health work. By committing the equity to a specific charity up front, we make clear from the start of an investment that we have no financial stake in the outcome.

“We’re delighted to expand our relationship with Coefficient Giving,” says Rob Mather, CEO of AMF. “With this new policy, Coefficient has landed on a productive way to ensure that some benefits of AI reach people in low- and middle-income countries.” 

We expect to make several investments in the coming years across our AI and biosecurity fund areas. By default, we will take non-voting shares and donate them to AMF. This policy update allows us to support such work more wholeheartedly. 

Grants will remain our primary vehicle for supporting organizations, and this doesn’t change how we evaluate them; it just gives us another option when a for-profit structure is a better fit.