R-1 Funding Sources
for Innovative R&D
Companies typically focus
their own research and development (R&D) dollars on product development
efforts where outcomes are more certain and need to depend on external
sources of support in order to pursue high-risk research. Through its
cost-shared funding, the Advanced Technology Program (ATP) helps companies
pursue early-stage high-risk R&D with the potential for broad-based
economic benefit.
Evidence from the Survey
of ATP Applicants 2002 indicates that applicants obtain funding for innovative
R&D from a number of external sources. Federal government programs,
such as the ATP, are an important source of funding for high-risk R&D
and play an important role relative to other sources of funding. 1
Survey
respondents were asked to indicate whether their company
had received funding (for research in the area represented
by the proposed ATP project) from the following external
sources:
a)
Federal government programs (other than ATP)
b) State or local government programs
c) Other companies
d) Venture capital or other private investment
Respondents
were asked to report their funding sources for the 3
years leading up to their proposal submission and also
to indicate how critical each reported source was for
their company’s research effort. |
Almost
half of all ATP applicants report receiving prior funding
from external sources for the research area of their
proposed project
- Almost
half of all applicants report receiving funding for
their research area from at least one external source
in the 3 years prior to the ATP proposal. This is
very similar to what was found for the year 2000
applicants.
- 20%
received funding from federal government programs,
and 7% received funding from state or local government
programs; 16% received funds from other companies,
and 27% from venture capital or other private investment.
The figures reported for funding from the federal
government and other companies are both
lower (to a statistically significant degree) than was found
for the year 2000 applicants (see Figure 1).
|
Figure 1 - Funding
Sources Reported by ATP Applicants: Three Years Prior to Proposal
Many ATP applicants
report that prior funding from an external source was “very
critical” to their research in the area of their proposed project
- 38% of applicants
report that funding from an external source in the 3 years prior
to the ATP proposal was “very critical” to their research
effort.
- 14% of applicants
received funding from federal government programs that was “very
critical” to their research efforts; only 4% received such
funding from state or local government programs.
- 8% of applicants
received funding they characterized as “very critical” from
other companies, and 22% received such funding from venture capital
or other private investment.
Small companies
are more likely than larger companies to have received prior funding
from external sources for the research area of their proposed project
- In the 3 years leading
up to the ATP proposal, 52% of small company applicants received
funding from an external source for the research area, compared to
19% for larger companies. (See Figure 2.)
- Small companies are
almost twice as likely as larger companies to have received prior
funding from federal government programs and other companies.
- Venture capital or
other private investment represents a significant source of external
funding for small companies but not for larger companies. Small companies
also receive funding from state and local government sources to
a greater extent than do larger companies.
Figure 2 - Sources
of Funding Prior to ATP Proposal: Small Companies versus Large/Medium
Companies
Applicant companies
varied across technology areas in the extent to which they received
prior external funding for the research area of their ATP proposal
- In the 3 years leading
up to the ATP proposal, companies in the Biotechnology and Electronics
areas are more likely to have received funding for the research area
from external sources, relative to companies in the remaining two
ATP technology areas. (See Figure 3.) Information technology companies
were least likely to have
received external funding.
- Biotechnology companies
are more likely to have received funding from venture capital or
other private investment. Companies in the Electronics area are more
likely to have received funding from federal government sources.
Figure 3 - Sources
of Funding Prior to ATP Proposal, by ATP Technology Area
Companies seeking to partner
with the Advanced Technology Program (ATP) submit proposals to the ATP.
Proposals must be for the development of innovative technologies that
could not obtain private funding due to the high technical risk and that
have the potential to produce widespread benefits to the economy and
society. Proposals are evaluated for technical and economic merit in
a rigorous competitive review process.
____________________
1. See Branscomb, L., and Auerswald, P. (2002). Between
Invention and Innovation: An Analysis of Funding for Early Stage Technology
Development, U.S. Department of Commerce, National Institute of
Standards and Technology. NIST GCR 02-841.
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Portfolio.
Date created: July 22,
2005
Last updated:
August 11, 2005
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