When the Cystic Fibrosis Foundation started giving money to a small biotech firm back in 2000, its moonshot of a best-case scenario was that the company would discover a new treatment for the debilitating disease. It worked, and it came with an extra benefit: In November the foundation sold its royalty rights to Vertex Pharmaceuticals’ [fortune-stock symbol=”VRTX”] cystic fibrosis drugs, including breakthrough Kalydeco, for a whopping $3.3 billion.
It’s that kind of jackpot—the largest ever investment windfall for a foundation, returning 22 times what CFF gave to Vertex—that’s spurring more nonprofits to adopt the controversial tactic of investing like venture capitalists. Rather than simply giving money away through traditional grants, foundations are increasingly funding for-profit startups and even publicly traded companies, hoping to not only get a planet-altering product to market faster, but also to share in the spoils.
“We felt like we really need to pull that incredible game-changing…
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