In order to ensure that venture-funded firms among firms winning the most NIH awards are not missed as a result of incomplete data, we conducted telephone interviews with the top 25 recipients of Phase II awards from NIH identified as not having received venture funding. These companies do not appear in the three databases used in the initial assessment of the top 200 Phase II award winners.

The analysis did identify additional firms with some links to venture funding that were not previous identified as such:

  • Two companies were identified as having received venture funding in the past—in one case more than ten years ago, the other at some indeterminate point before going public. Both are now publicly traded.

  • Two companies were in some indirect way connected to venture capital (respondents did not wish to be clear on this point).

  • Four companies would not respond.

This suggests that of the top 200 recipients of Phase II funding at NIH, 53 can now be identified as receiving venture capital. It does not seem likely that this analysis missed a significant number of venture-funded firms. And the two additional firms identified as receiving funding cannot be determined to breach the de minimis conditions used for identifying venture-funded companies in this report.


Analysis of the top 200 winners can also help to answer another question about the role of venture funding is its relationship to SBIR funding. One conceptualization of this relationship suggests that SBIR awards can often serve as a bridge toward venture funding. On this view, SBIR awards not only fund the very-early-stage funding needed to get to proof of technical concept, they may also provide a “halo effect”: Funding by the NIH SBIR program, with its attendant well-respected peer review program, provides additional support for the proposed investment and in particular validation of the technical approach.

An alternative view is that resources available to venture-funded firms are likely to result in greater success in garnering SBIR awards—a point argued by some supporters of the SBA ruling. This view would seem to be prima facie supported by the data in Table 4-1, which shows that two-thirds of SBIR award recipients received their first Phase II funding after their first venture round.

This linear conceptualization of innovation—distinguishing a sequence of successive stages from very-early-stage to proof-of-concept to commercialization—has its merits. However, our analysis of top 200 firms at NIH indicates

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