| Understanding
early-stage tech development
State Science and Technology Institute
February 28, 2003
The
federal role in early-stage technology development
(ESTD) is much more important than may be suggested
by collective R&D statistics, suggests “Between
Invention and Innovation: An Analysis of Funding for
Early-Stage Technology Development,” a report
by the National Institute of Standards and Technology
(NIST). Prepared to support informed public policies
concerning the transition from invention to innovation,
the study finds that federal technology development
funds complement, rather than substitute for, private
funds.
The report states that economic growth will continue
only with the constant pioneering of technological
innovations that upset markets and generate new industries.
Understanding the transition from invention-to-innovation
is crucial in the creation of both public policies
and private business strategies. Unfortunately, the
report finds the practice in which an idea of potential
commercial value is transformed into a successful product
is complex, inadequately documented, and barely studied.
The report attempts to fill that gap in this critical
transition.
Two
main questions are addressed. First, how do government
programs compare with private sources in terms of scale
and what is the allocation of funding for ESTD across
diverse organizational categories? Second, what kinds
of obstacles do firms face when attempting to locate
funding for ESTD R&D projects and to what are these
difficulties attributable?
Findings include:
- Most
funding in the phase between invention and innovation
comes from individual private equity investors,
corporations and the federal government, not venture
capitalists.
- Markets
for allocating risk capital to early-stage
technology ventures are not efficient.
- Despite
market shortcomings, many arrangements have arisen
for funding ESTD. Funding mechanisms
evolve
to match the motivations of entrepreneur and
investors.
- Conditions
for success in science-based, high-tech innovation
are concentrated in a few geographical
regions.
- The
portion of R&D spending that
is dedicated to ESTD within companies varies
both among firms and within
industries.
Between
Invention and Innovation can be downloaded at the
NIST Web site. |
