This paper is about funding long shots, where long shots are defined as follows:
(1) low probabilities of success; (2) long gestation lags before any cash flows are realized; (3) large required up-front investments; and (4) very large payoffs (relative to initial investment) in the unlikely event of success.
They argue funding for these things is difficult because VCs are too small and institutional investors are not interested in long term high-risk, high-reward investments.
Their pitch is to create a new type of financial instrument, the Research Backed Obligation. These are securities which will be more appealing to regular investors, which they hope will expose long shot funding to a much bigger pool of capital. This matters to us because:
...society’s biggest challenges such as cancer, Alzheimer’s disease, global warming, and fossil-fuel depletion depend critically on the ability to undertake such investments.