What if we could reimagine moonshot investing—making it low risk with infinite upside? This week, I had a thought-provoking conversation with John Ruffolo, whose take on underwriting high-stakes deals inspired me to rethink how we fund bold ideas. Building on John’s insights, I developed a framework I’m calling The 1x Safety Net. Here’s how it works: Instead of incrementally funding a moonshot business in stages (like a typical venture deal whose unit economics remain constant), provide enough capital upfront to take the company from zero to one. This ensures the company can actually reach the point of building significant intrinsic value, allowing you to underwrite the deal to a 1x return—with nearly unlimited upside. It transforms moonshot investing from a gamble to a calculated opportunity: protecting the downside while unlocking massive potential. From high risk, high reward to low risk, infinite upside. More in my latest post: https://lnkd.in/eq37veER
I would appreciate your definition of a moonshot. (I coach a couple of alternative new energy , new materials start-ups at the local accelerator here in Calgary. Just curious if they would fit your definition)
An even better approach would be investing in companies and opportunities that are already cash flowing and producing alpha returns.
Love this. It’s like a play on first loss programs which have been wildly successful with emerging manager hedge funds.
What is the rationale for NOT doing this? Do investors think by investing in tranches that it’s somehow reducing the risk? Has anyone done a study on risk on investing in series vs one big commitment (perhaps provided in steps but guaranteed)?
Katherine Homuth I’m very interested in hearing more like this.
Katherine Homuth, this is another great idea! Can we set up a time to talk?
It's remarkable that you're phrasing it as 'instead', isn't the whole point of moonshot investing supposed to be this "enough capital upfront to take the company from zero to one."