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awards and was actively cooperating with the NASA Ames Laboratory. It also had a single-company ATP grant about one and one-half years earlier, and was about halfway through the grant.

Start-ups like hers, she explained, have a hard time finding funds to develop their technologies, because of the high risks. This is true even of so-called enabling technologies, which have the potential for widespread application upon further development, but which carry high technical and financial risks. As a result, private investors generally are not willing to support them adequately.

Enabling technologies are technologies that have significant advantage because they

  • show the potential to make radical improvements in some aspect of society;

  • tend to be disruptive, by displacing entrenched industries;

  • have the potential to create whole new industries; but

  • are too immature and risky to interest private investors because of the long time horizon (even successful technologies may require years or decades to become commercially viable and generate profits).

Why should government fund the development of enabling technologies? Because they have the potential for enormous benefits to society as a whole in terms of wealth and other aspects of the quality of life. Yet private investors will not adequately support their development, because profts are too uncertain or too distant or both. The uncertainties may arise from poor scientific understanding, the need for major improvements in materials, or severe manufacturing challenges.

Traditional sources of equity financing, Dr. Downing said, are not always sufficient at this “seed” stage of development. Venture capital, for example, is an excellent source of funding for companies whose technologies are well enough established to be predictable and scalable in the near term. But for companies built on technology that is more speculative, this source of financing has dangers. Venture capitalists, if they are denied a predictable return on their investments after a few years, will often sell the company for the value of the patents and move on to other investments. Many venture capitalists have neither the time nor the background to be ideal partners.

So-called angel capital (from family, friends, or wealthy investors) may have a longer time horizon. But it is extremely scarce.

Corporate investments in technology-based start-ups are often attractive, when there is a genuine mutuality of interest. But large companies may have many motives for investing. They may, for example, take control of the entire company for the sake of only one part of its technology portfolio, and abandon the rest.

Government funding, through programs such as the ATP, helps mitigate these problems for small companies. In particular, it helps the founders of small firms keep control of their technologies and pursue their development.



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