Innovation America and the National Association of Seed and Venture Funds and Science Progress. Release New Report on Building a Public-Private Support System to Encourage Innovation
April 23, 2009 Philadelphia, PA - Innovation America, the National Association of Seed and Venture Funds and Science Progress released a new report, “Creating a National Innovation Framework,” which recommends the creation of key initiatives to encourage innovation through new private-public partnerships.
The report was authored by Richard Bendis, president and CEO of Innovation America and Ethan Byler, the Keystone Innovation Zone Coordinator at the Pennsylvania Biotechnology Center in Doylestown, Pennsylvania with input from the American Society of Mechanical Engineers, National Association of Seed and Venture Funds, Science Progress and the National Academies of Science.
The author’s proposed National Innovation Framework encourages the participation of agencies and state governments, the private sector, academic institutions, foundations and the investment community to develop new products and services out of the $150 billion the U.S. government spends on basic research and development every year. The result of this initiative would be the creation of innovative products that can be spun-off into new companies that would preserve our nations cutting edge in innovation And creating many new, well-paying jobs in the process. The three structural elements of the National Innovation Network include:
- The Federal Innovation Partnership and National Innovation Advisor
- The National Innovation Seed Fund and Technical Assistance Grant Fund
- The National Private-Public Partnership Innovation Program
“Establishing a National Innovation Framework to support innovation, entrepreneurship, and the advancement of both technologies and early-stage enterprises will contribute to the overall economic growth of the United States during these challenging economic times,” said Bendis. “The time to structure and strengthen an integrated system for the strategic acceleration of the nation’s economy is now.”
The mission of the Federal Innovation Partnership Program and National Innovation Advisor is to evaluate the effectiveness and return on investment of the U.S. “innovation budget,” and to eliminate redundancy and unnecessary overhead in state and federal programs to boost U.S. innovation and maximize the amounts of funding invested in outcome-driven research and commercialization. The National Innovation Seed Fund would provide $2 billion in new money to help commercialize the best products and services in development.
"Richard and Ethan have assembled a powerful set of policy proposals to help the Obama administration and Congress act swiftly on the need to boost regional centers of innovation around the country," explained Ed Paisley, the editorial director of Science Progress, the science policy website at the Center for American Progress which published the paper yesterday. "In the weeks and months to come, I'm confident the 'national innovation framework' outlined in the paper will frame the debate in Washington as public funds are appropriated and then invested on this critical national goal.
Science Progress is gathering the best-detailed policy proposals to build thriving regional innovation clusters, Paisley explained. "Creating a National Innovation Framework" opens this series of papers and columns with a comprehensive and cogent presentation of the consequences of inaction, the profound capabilities of public and private sector to work together in this endeavor, and the promise of more and better jobs and a more competitive U.S. economy for the effort."
The timing couldn’t be more critical. Venture capital firms invested only $3 billion in 549 young companies in the first quarter of this year, the lowest investment level since 1997, according to a recent National Venture Capital Association and PricewaterhouseCoopers report. The amount invested was down 47 percent from the fourth quarter of 2008 and 61 percent from the first quarter last year. Similarly, angel investors deployed 26 percent less capital last year in promising young startups, according to theCenter for Venture Research at the University of New Hampshire.
“We are very concerned that we could lose a generation of technology companies because venture funds can’t raise additional capital,” said Jim Jaffe, president/CEO of the National Association of Seed and Ventures Funds. NASVF recently surveyed over 5,0000 early and seed-stage venture funds as well as service providers and found that the vast majority of young innovative companies across the United States are unable to find the early-stage financing needed to develop their products and services and bring them to the market.
The venture capital companies that used to provide this critical phase of funding aren't making new, early stage investments. Even worse, those venture capital funds that are still making these early-stage investments are having a difficult time themselves raising money, leaving young entrepreneurial companies more and more reliant on individual "angel" investors for financial support—all this during a sharp economic downturn and rolling financial crisis.
The National Innovation Framework developed by Bendis and Byler provides policy answers to the current venture capital and angel investment crisis in our country. It offers ways to bridge the innovation capital “Valley of Death”—the early-stage funding gap for young entrepreneurial enterprises—with a public-private partnership program. The report presents alternative ways to fill this critical funding gap with an innovative approach to incorporating national and local support to strengthen innovation through the collaboration of public private partnerships.
About Innovation America (IA)
Innovation America is a national, not-for-profit, private/public partnership that functions as an innovation intermediary to accelerate the growth of the innovation economy in America. IA partners with other federal, state and regional innovation organizations and associations as a catalyst for increasing knowledge economy jobs and wealth creation in America.
The National Association of Seed and Venture Funds’ mission is to foster investment in seed- and early-stage companies to educate accredited investors on how to successfully invest in companies and encourage the creation of public and private venture funds. NASVF brings together professional investors, angels, state and regional economic development organizations and university technology transfer professionals to build their local economies.
About Science Progress
Science Progress, a project of the Center for American Progress, is a magazine specifically designed to improve public understanding of science and technology and to showcase exciting, progressive ideas about the many ways in which government and citizens can leverage innovation for the common good. Since its inception in the fall of 2007, Science Progress has helped shape the conversation about our country’s investment in science.
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