The Valley of Death

Page 3 of 14

To be sure, past federal efforts to coordinate the complex mix of policies and federal funding have resulted in significant new programs and much-needed investments that have clearly helped to grow technology companies in the United States. The passage of the Bayh-Dole Act in 1980—which allowed universities to patent innovations that grew out of government-funded basic research—is responsible for the continuing flood of new companies with new ideas (backed by private investment capital) into our economy. And the Small Business Innovation Development Act in 1982—which established the rule for federal agencies to commit 2.5 percent of their extramural research budgets to the Small Business Innovation Research program, or SBIR—continues to serve as key bridge financing for start-up companies working in areas to address unmet needs in public health, defense, energy, telecommunications, and aerospace—all science arenas that boast intensive research-and-development requirements.[7] The findings from the recent assessment of the SBIR program by the National Academies indicated that the program leads to significant new knowledge formation and intellectual property disclosure, and affects commercial outcomes.[8]

(There is currently an ongoing debate about the future of the SBIR program in Congress. The SBIR program is one of the most innovative public funding programs in the world, and it must be reauthorized on a longer-term basis of at least six to eight years with many of the suggested enhancements by the National Academies’ Assessment.)

Other government programs since then have also helped to boost our nation’s innovation-led economy. One is the Technology Innovation Program of the National Institute of Standards and Technology to accelerate innovations in areas of critical national need, which has produced significant results. Other efforts, however, were more scattershot and certainly less coordinated. We will detail these efforts in this paper before turning to our own set of recommendations to weld the successful innovation programs and funding mechanisms into a far more effective national innovation framework.

And what are those recommendations?

We argue in the pages that follow for a national effort to support innovation, entrepreneurship, and the advancement of both technologies and early-stage businesses. Specifically, we propose a new National Innovation Framework to structure and strengthen an integrated system for the strategic acceleration of the nation’s innovation economy. Most importantly, we propose through this framework to formulate widespread participation of multiple interests including federal and state government, the private sector, universities, foundations, and the investment community. Our National Innovation Framework contains three new structural elements for a widespread national innovation strategy:

The Federal Innovation Partnership and a National Innovation Advisor - This new partnership program and new office would coordinate federal technology innovation programs through a Federal Innovation Partnership with a new high-level National Innovation Advisor who has access to the president.

The National Innovation Seed Fund and Technical Assistance Grant Fund - This funding program would create a $2 billion National Innovation Seed Fund, or NISF, to invest in experienced early-stage capital providers, including venture capital and angel funds as well as other public and/or private funding authorities. The purpose of the NISF is to jumpstart new knowledge economy jobs that will shape America’s future alongside a Technical Assistance Grant Fund that would provide entrepreneurial support resources and services to portfolio companies and NISF fund managers.

The National Private-Public Partnership Innovation Program - This new nonprofit program, modeled on the already up-and-running Innovation America public-private partnership program, would accelerate the growth of the entrepreneurial innovation economy in America and oversee the National Innovation Seed Fund by coordinating government, university and private-sector players in early-stage investment capital, commercialization, technical and entrepreneurial mentoring, and workforce development related to innovation development.

As we will demonstrate in this paper, the time is now to implement these three elements of a national innovation framework. Together, we believe these programs will again set our nation on the road to innovation-led economic prosperity in the 21st century that could well trump 20th-century successes.

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