Permanent capital is a word I have never liked. Capital is money, and money moves. It is spent, earned, lent, lost, put to work somewhere new. Only a lighthouse stands permanently while the ships go by.
The word kept turning up in drafts about BioFund, written by my very able assistant, until I lost my temper about it. Then I did what I should have done earlier and went to find out where it comes from, and what it actually describes.
Where it comes from.
It comes from law firms and fund managers. A well-known explainer from the lawyers at Troutman Pepper Locke, first published in 2017, describes it as money put to work with no end date, and names Berkshire Hathaway as the best-known example. The idea behind it is sensible: leave out the clock that forces a fund to sell in year ten, whether or not the work is finished.
Read further and the word loosens. Even in that world, people can usually take their money back out after a waiting period, only so much per year, and the whole arrangement often has a life of about 25 years. Permanent turns out to mean long, with doors. Money comes in and money goes out. Flowing, as I said.
What the word gets right.
What it points at works, and it works for us: a structure with no clock. For BioFund that is what no exit means. Seven families, a mission measured in decades (we wrote about that one in Two Clocks), and nobody waiting for a sale to get their money back. We built the family without an exit door, because nobody is waiting to leave.
Capital is the ship. The mission is the lighthouse.
Money moves through the work in a plain order. First it keeps the platforms running. Then it funds the research. Then it goes around again. That motion has a name in our own papers: The Flywheel.
Chairs instead of slices.
Here is the part that made me smile. The article says these arrangements count who owns how much in units instead of percentages, so the bookkeeping stays simple. For us the reason is a human one.
Picture a cake we start cutting into slices. Every new person at the table makes every other slice thinner, and from that moment the conversation is about who has how much. Finance builds whole offices around that counting: price tags, reports, rules for leaving.
At our table nobody counts slices. Friends pull up a chair.
A cake has its hundred slices and that is that. A table can grow. When someone new arrives we add a chair, and nobody else's place gets smaller. The chairs are all alike. When a friend steps back, the chair goes back to the table, ready for the next friend. Nothing is bought or sold, so nothing needs a price tag.
A circle, half-baked.
This is where a thought of mine has been taking shape, and I am writing it down early because that is what these pages are for. I wrote about why in Der Leuchtturm: the light goes on before the coastline is mapped.
When we closed the family at seven, friends told us they would have liked to take part. Some had lost someone to cancer, and some simply believe in the work. What they wanted was to back the mission first, and perhaps one day to invest alongside us. We have been calling the idea The BioFund Circle: one table below the lighthouse, with room for more chairs. It grows out of Friends of BioFund, one of our Foundations papers.
We will be creative about it, as always, and keep it as simple as friendship deserves. Our annual report is a dinner. Once a year one of our scientists tells us honestly where the work stands, and everyone can ask anything. The first question at that table is whether the work is working.
Ships, and where they sail.
BioFund is the lighthouse, and the Circle is the one table below it. Friends who sit there may decide to send out ships of their own: money put behind a voyage. A voyage is a specific company with its own life, its own captain and crew, its own plan and its own terms. Each voyage is its own story, decided one at a time, and the friends at the table are the ones we would think of first, to ask whether they want to look. The lighthouse shows the way. It does not own the ships, and ships can be lost.
For friends who simply want to keep the light burning, there are our nonprofits. Gifts there come back as nothing but light.
A chair at the table of curing cancer opens a door. What lies behind it is a separate choice, every time, for every person.
Capital flows, like the ships. What stays is the light, and a table where the same people keep showing up.
Thinking in progress, written for the Family and a small circle of friends. Nothing on this page is an offer.
The explainer: Permanent Capital: The Essentials, by Julia D. Corelli and Stephanie Pindyck Costantino, Troutman Pepper Locke (first published 2017).