Technical Risk25 identifies a list of institutional failures that may deter such investments even if they may be in the private interest of a firm. These institutional failures include difficulties in communicating between technical and financial people, lack of trust, and the risk-taking inhibitions of large firms. Together these failures provide even greater support for the need for public investments like those made by the ATP.
In response, Rosalie Ruegg explained that the ATP's purpose goes beyond merely compensating for the “funding gap.” In focusing on “enabling technologies,” ATP funds technologies that are expected to have broader than average spillovers. To document this point, she commended to the group several recent studies of the economic basis of the ATP. 26
The ATP, said David Ayares of PPL Therapeutics, allowed his company to advance its xenograft technology to “proof of concept,” at which point it was able to file for patents. Private investors regard a strong patent portfolio as important evidence of a small company's ability to go forward toward profitability. PPL has filed for two patents, and expects to file for one or two more. PPL has received no other public funding for this technology.
Todd Watkins picked up Rosalie Ruegg's point that the ATP seeks to fund “high-spillover” projects. The ATP should, he suggested, try to identify the factors that are related to high spillover. The ATP's Economic Assessment Office has commissioned a series of studies of sectors to identify such technologies. 27 He asked if spillovers are built into the selection process as explicitly as they should be.
25 Branscomb, Morse, and Roberts, Managing Technical Risk, op. cit.
26 These included Austin and Macauley, Estimating Future Consumer Benefits for ATP-Funded Innovation, op. cit.; Branscomb, Morse, and Roberts, Managing Technical Risk, op. cit.; and Schachtel and Feldman, Reinforcing Interactions Between the Advanced Technology Program and State Technology Programs, op. cit.
27 For example, Austin and Macauley, Estimating Future Consumer Benefits for ATP-Funded Innovation, op. cit.; and Martin et al., A Framework for Estimating the National Economic Benefits of ATP Funding of Medical Technologies, op. cit.