How to finance multi-decade ideas

How to finance big ideas about the future? The trick is to do it in stages and reverse engineer the steps from the big vision. Elon Musk gave us his blueprint in 2006 when he published the Tesla Master Plan: 

Almost any new technology initially has high unit cost before it can be optimized and this is no less true for electric cars. The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model.

Without giving away too much, I can say that the second model will be a sporty four door family car at roughly half the $89k price point of the Tesla Roadster and the third model will be even more affordable. In keeping with a fast growing technology company, all free cash flow is plowed back into R&D to drive down the costs and bring the follow on products to market as fast as possible. When someone buys the Tesla Roadster sports car, they are actually helping pay for development of the low cost family car.

Looking back, that’s roughly what Tesla did. To build big ideas it’s not enough that you can break your roadmap into clear milestones that each make your company more valuable at each step, but you need to show how the short to medium-term milestones start generating revenue. According to Delian Asparouhov of Founders Fund, even if you’re working on a multi-decade idea you should plan to generate revenue in three to four years given how VC funds work. Venture capital funds need to pay their investors in ten years and if you don’t make any money by the third year it’s unlikely you will be able to return capital back to your investors before the end of the fund’s lifetime. 

For the really big ideas, you need to think of the products on your roadmap as standalone businesses that could by themselves be attractive for the venture investors.

Cradle: A pause button for biology

Cradle is an example of a big multi-decade idea. The company is building a human whole-body reversible cryopreservation to extend consciousness through time and space. A wild idea in a 2024 world. 

Cradle was founded by Laura Deming and Hunter Davis. Laura is a rare original thinker.  

Long before founding Cradle, Laura had an idea to give everyone agency over the number of healthy years they want to live. She has tirelessly worked on the idea since she was very young. Interestingly she never went to a school when she was a kid so she had less societal pressure on learning what’s acceptable or possible. Despite being a serious person, she has kept the sense of curiosity and wonder about the world. Laura had a father who taught her why science is interesting and why you might want to look into society’s blind spots and test your hypothesis instead of blindly take society’s word for it. To build the world she envisioned, she started The Longevity Fund, a VC fund focused on longevity when she was only 18 years old. At that time longevity was not considered something that venture capital could invest in. It’s telling about the society we live in when it requires a teenager to finance the biggest ideas of our time.

A roadmap that’s easy to invest in

Cradle is also a great example of how you can finance a really big idea. 

Laura and Hunter started by trying to disprove the central hypothesis and tackled the hardest question first to see if the problem is solvable to the extent their idea requires: Could they cryopreserve neuronal tissue and then reverse the process by warming it up again so it it comes back to life? This was a very concrete first step that they probably raised their first financing round for. It was a clear and valuable milestone that unlocked the next round of financing. To be clear, I don’t have any inside information on their financings so this is all my speculation, but it’s how I imagine it could’ve progressed.

In February of this year, they announced that Cradle had recovered electrical activity in a cryopreserved and rewarmed slice of rodent neural tissue.

Given the level of ambition of their idea, they needed to break down the problem clearly so an investor could understand what the risks were so she could decide whether to underwrite them. Cradle has laid out their roadmap in great clarity on its website so even a layperson can follow how Laura and Hunter tackle the challenge.

They start out by breaking down their long-term roadmap into discrete and valuable problems they will solve in a particular order. Each of these time-sensitvie areas of medicine comprise a distinct business opportunity and potential to generate revenue. With each milestone they derisk the long-term goal, while developing products that help patients in the near term. 

1. Preclinical Translatability - Due to difficulties in procuring human brain tissue samples, neuroscientists primarily use rodent neural tissue for both basic research and drug development. The short ischemic window after a surgeon resects the tissue is one of the main constraints blocking access to human brain tissue. Banking cryopreserved slices of resected brain tissue would allow neuroscientists to order a human neural tissue sample at any time, accelerating neuroscience research and improving translatability for drug development.

2. Organ Donation - Thousands of organs are rejected every year due to insufficient time for testing and matching during the viability window immediately following the organ’s excision from the donor. Pausing molecular motion in donor organs after excision would remove biologically-imposed time constraints upon testing and matching procedures, improving outcomes by reducing rejection rates amongst recipients. 

3. Medical Hibernation - Despite the ever-increasing frequency of medical breakthroughs, many patients won't live to see a cure to their disease. By reversibly pausing the biological function of a patient, we can extend the critical window of care for those without other treatment options. For example, in the decade between the onset of the AIDs epidemic/pandemic and the widespread availability of combination antiretroviral therapies, more than four million afflicted patients died (source UNAIDS (2023)). In 1950, a patient with cystic fibrosis would have died in infancy, while those born today with the condition have a life expectancy that often extends into middle age. Finally, patients today still regularly die of cancers that could have proven treatable were they afforded the innovations provided by a few more years of rigorous medical research. Medical hibernation technology could help these patients pause their biological time and access cures that are right around the corner.

I asked Perplexity’s Claude 3 Opus about the value of each market. Here’s what I got. The market for Preclinical Translatability in neuroscience research is estimated at $30 billion. The Organ Donation market is currently valued at $17 billion. The Medical Hibernation market does not exist yet. 

Whether those are exact right numbers is irrelevant. The first two solutions on Cradle’s roadmap are clearly very valuable on their way to the third, and Cradle is likely to not only to dominate the markets by bringing unique technology to market but also expand into new use cases. In fact, Cradle will not just expand the market but build a whole new world if it succeeds.  

If you go through the roadmap, you can also see that Cradle needs to build new technology at every part of the stack because they are building something so novel that there are few existing suppliers or tools. Vertically integrating like that is hard, but it’s also very valuable if you can pull it off. Such a company is likely to own the category they are building since anyone trying to follow would need to do be able to do all of it also across the stack. Vertical integration also means healthier margins, system level control and tighter feedback loops, but Cradle is much more than a vertically integrated technology company. Along with engineering and technology risk, they also push the science forward. Taking science is risk is unusual for venture capital to invest in, but since Cradle has so good visibility into their roadmap, they know exactly where they need to take science risk and which parts need to work. 

Right after laying out the high-level areas on their roadmap, Laura and Hunter write how it all ties together with their big idea: 

Each of these objectives presents its own unique challenges, but their solutions share the simple insight that the rate of molecular motion and chemical reactions can be controlled with a single knob — temperature. Cooling to deep hypothermic temperature (20°C ) is a common strategy for protection from ischemic damage during cardiac surgery. For in vitro fertilization (IVF), embryos can be stored for decades before implantation by cooling to cryogenic temperatures (below -130 °C) where the viscosity of water dramatically increases and all molecular motion stops. This phase transition from liquid to glass–in this case referring to any amorphous solid–is known as vitrification. Molecular motion is too slow in this state for water molecules to rearrange into ice crystals, which would otherwise damage tissue. Over one hundred thousand babies are born each year from cryopreserved embryos or eggs stored using this vitrification.

Once a company like Cradle gets going, the big idea gives the organization unifying focus and forward motion that won’t slow down in decades since the vision pulls everyone forward without the apathy that normally sets in when the organization grows older and larger. 

Laura and Hunter list the milestone they need to hit to build out their vision almost like a public todo-list.  

• Recovery of electrical activity from cryopreserved and rewarmed acutely resected rodent neural tissue. (Complete! See whitepaper.)

• Demonstration of maintained synaptic function in a cryopreserved and rewarmed slice.

• Demonstration of maintained long term potentiation (LTP) in a cryopreserved and rewarmed slice.

• Functional preservation of long-range neuronal projections in a small animal model (ex vivo).

• Functional preservation and rewarming of a whole organ isolated from a large animal model.

• Successful human organ cryopreservation clinical trial.

• Reversible whole-body cryopreservation of a small animal model. 

They go on to list the problem domains and their corresponding technical approaches for each milestone so the reader will understand the scientific and technical risks they will tackle.

Given how well Laura and Hunter understand and communicate what they need to do to build out the idea, it is no wonder Cradle was able to raise $48M to extend consciousness through time and space.  

Questions that lead to new big ideas

The most interesting thing about Cradle might be what happens when they succeed. 

• What else will it unlock?

• What is the next big idea that builds on top of Cradle’s technology that preserves continuous selves through time? 

• How differently do we all look at the life choices we are faced with during our life when Cradle is available?

My father died in 2011 because of heart problems, but my mother is thankfully still with us. She turned 80 this year. She is continuously frustrated how her mental abilities are declining and her body giving up. Now learning about Cradle I am thinking how I would look at the world if there would be an option to see my mother one day healthy and full of life again by using Cradle technology until we have figured out how to reverse aging. Just knowing technology like Cradle is within our reach and what it would mean for our loved ones makes me question why we’re not doing a lot more to combat deadly diseases and ultimately reverse aging. 

I notice my thinking moves quickly into what used to be the exclusive domain of science fiction authors, but Cradle shows that by seeing a concrete roadmap for a big idea like extending consciousness through time and space gives me whole new perspective on future. All of sudden a future where we have agency over the time we want to spend in this world with our loved ones does not sound so unachievable, or hard to invest in anymore.