really interested in 1517 now. if i could build a new bell labs i would use a hedge fund structure instead of vc. the lab would attract talent and some of it might get invovled in the fund, but the lab would stay afloat on fund profits. the idea is to just let smart people cook for a tryout year, with great incentives. (not too unlike 1517's program as it turns out)
the difference with this lab idea and a vc like YC is that vc portfolio companies need products and roadmaps to raise investment and for driving revenue. whereas an asset manager is just investing the money and using the profits to fund engineering research and spinoff product development.
firms like this must already exist, maybe i just never hear about their spinoffs or inventions? if not, maybe a small fund could be acquired to build a research division onto it
Assume the average FTE costs $250k all in, so the 100 scientist salary bill is ~$25M.
If the fund charges investors 2% of AUM and 20% of profits, factoring in the actual fund costs, hypothetically I'd estimate you'd need an AUM of 2.5B-5B to fund the scientists just on half the management fees.
Practically, you wouldn't do it on mgmt fees and you could do it much smaller, distributed differently, and grow/shrink the research division using fund profits instead of management fees. Using fund money to invest in a seed venture arm for the spinoff startups would just be another investment theme.
the main question would be, if you're making money on the investment side, what do you need the researchers for, and does that research mission (and their expenses) conflict with being a fiduciary. speculatively you'd need to have the fund as a separate entity owned by a partnership who took profits and invested in the research side separately.
at that point, you're back to the original basic problem, where instead of using the profits of a single private fund to support a research team, just make it a bluesky company of researchers who also generate investment strategies, and use venture funding.
the essential pattern is: make a large low-risk financial economic engine to fuel a small high risk one. if a VC firm put 80% of their LP's money in an index fund and just did a bunch of small seed investments, the effect could be similar. I'm not an expert in this, but nobody has invented another bell labs since, so the field seems open to new ideas and it's fun to think about.
the difference with this lab idea and a vc like YC is that vc portfolio companies need products and roadmaps to raise investment and for driving revenue. whereas an asset manager is just investing the money and using the profits to fund engineering research and spinoff product development.
firms like this must already exist, maybe i just never hear about their spinoffs or inventions? if not, maybe a small fund could be acquired to build a research division onto it