[cordite]

With regard to your last point, that sounds like poor due diligence.

But they’re not expecting monetary reward with risk for issuing a grant like a VC.

[edwardwatson]

But there are significant sums invested to fund research. In many ways it's a similar transaction to the VC. An investment into 'bad' research does not help the university or funding council reach their goals e.g. to raise their own funding or contribute impactful research to science. Hopefully, they are diversified enough for the bad eggs not to matter