NISTIR-6098
Development, Commercialization, and Diffusion of Enabling Technologies
Progress Report for Projects
Funded 1993-1995
5. IMPACT ON INDUSTRY R&D
Stimulation of Private Sector Investment
and Leveraging of Other Investment
More than one-third of
the organizations reporting believe there would have been no project
at all without ATP; i.e., their combined cost-share commitment of $100
million reflects an investment that they say would not have occurred
at all without the ATP award. An additional 38 percent report they increased
their investment in the ATP-funded technology area as a result of ATP
funding, beyond what it otherwise would have been, by more than $100
million in the aggregate. (See Figure 18.)
Figure 18. Stimulation
of Industry R&D Investment
According to the responses
from the two groups of organizations combined, ATP has stimulated industry
to invest more than $200 million in internal company funds beyond what
industry would have invested without the ATP awards. The increased industry
investment represents an estimated 59 percent increase over what industry
would have invested without ATP funding. The increased level of funding
from industry and ATP sources has helped to accelerate the R&D for
ATP-funded projects and thereby helped the companies enter the market
within the critical windows of opportunity. (See
Chapter 2.)
As shown in Figure
19, 70 percent of the organizations indicated that they had increased
the R&D scope, and 70 percent that they were more willing to
accept technical risk as a result of ATP funding. Scope expansion
and technical risk are usually highly correlated, as scope expansion
gives rise to increased challenge. Fifty-seven percent reported that
ATP funding had increased their interest in long-term research. From
the combination of these two sets of data, it appears that ATP funding
has stimulated pursuit of higher risk, longer-term, more ambitious
R&D projects than would have been undertaken without ATP funding.
Figure 19. Change
in the Nature of Industry R&D
Increased Credibility
Ninety-two percent of organizations
that have completed one-to-two years of funding cite increased credibility
as a result of the ATP award, documenting that the ATP award has a "halo
effect" on organizations and technologies receiving awards, apart from
the award's monetary value. The most frequently cited "halo effect" was
by researchers with "upper" management in their own organizations. As
shown in Figure 20, respondents from 83 percent
of all the organizations reported increased credibility with management;
73 percent indicated improved credibility with customers; 58 percent
with suppliers; and 43 percent believed the ATP award had a "halo effect" with
investors.
Figure 20. Increased
Credibility
The "halo effect" may
be expected to be of particular benefit to ATP-funded small businesses,
particularly start-ups, which have little if any market presence and
very limited financial resources at the time of the ATP award. A comparison
of results for the small business group of companies alone with the entire
group shows that the "halo effect" with outside firms and investors was
indeed stronger for small businesses than for the group as a whole. As
shown in Figure 21, 82 percent of small businesses
experienced increased credibility with customers (compared with 73 percent
for the group as a whole); sixty-eight percent with suppliers (compared
with 58 percent for the group as a whole); and 75 percent with investors
(compared with 43 percent for the group as a whole). Some anecdotal
examples of "halo effects" related to joint venture and other ATP-stimulated
collaborations are included in Chapter 4.
Figure 21. Increased
Credibility -- Small Businesses
A significant number of
organizations have attracted new sources of capital following announcement
of their ATP award. The new funding has gone to support the ATP-funded
research area or related commercialization efforts. Of the 285 organizations
reporting after one-to-two years of ATP funding, 65 (23 percent) had
received new funding from external sources, amounting to more than $150
million, to pursue their technology development and commercialization
activities.
As shown in Figure
22, more than 60 percent of the additional capital attracted
was from owner/angel/friends capital contributions or from other/corporate
partners. Although by far the preponderance of funding came from
private sources, a significant number of organizations reported receiving
additional federal (non-ATP) or state/local funding.
In general, the new federal
funding appears to support R&D in technology areas related to the
ATP-funded technology but outside the scope of the ATP project; state
funding appears directly to support ATP-funded research by companies,
thereby leveraging ATP and private cost-share funds.
Figure 22. Attraction
of Capital
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Date created: December
1997
Last updated:
August 3, 2005
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