Young technology companies may soon find it easier to raise capital -- not from private investors but from the federal government. After years of watching Washington dole out grants for basic science research mostly to academic scientists and engineers, the Obama administration wants to shift the focus and give a bigger boost to early stage technology firms. Officials see it as a way to spur job creation and push policy goals, such as advancing clean technology. The government is “looking at what they can fund that’s already off the ground but needs an additional push,” says Mark Heesen, president of the National Venture Capital Association (NVCA). “Many of these technologies will never see the light of day without that additional stimulus.”
The administration’s goal is to nearly double science budgets, from $10.7 billion in fiscal 2008 to $19.5 billion in 2016, for the National Science Foundation, the Department of Energy’s Office of Science and the National Institute of Standards and Technology.
There is plenty of opposition from those who don’t want the government involved with picking winners and losers in private industry. “I would be shocked if the government could find the next great semiconductor investment that people in the field missed,” says Adam Grosser, a partner at Foundation Capital in Menlo Park, Calif. “It’s sort of like trying to hit a mosquito with a sledgehammer.” Administration officials say that government backing would help protect new firms from sudden market swings. They point to successes at NASA and other government agencies that yielded industry benefits.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The government is also trying to fill a void as private money slows. Venture capitalists invested $12.2 billion in 1,910 deals in the first three quarters of this year, according to the NVCA. That’s well below the pace set in 2008, when the annual total came to $28 billion invested in 3,980 ventures, and is unrelated to the need for cash by start-ups with innovative ideas. “There is no reason why the macroeconomic climate affects new ideas,” says David Kirsch, associate professor of management and entrepreneurship at the University of Maryland.
Leading the push within the administration are several former venture capitalists. Sean Greene, associate administrator for investment and innovation at the Small Business Administration, and Julius Genachowski, chairman of the Federal Communications Commission, were both founders of technology incubator LaunchBox Digital. And for the first time, the administration has a chief technology officer, Aneesh Chopra, whose role is to find new ways to invest in technology to spur economic development.
-
S&P 500 Hits New High on Jobs Friday Eve: Stock Market TodayThe S&P 500 hit a new all-time closing high and most of the stocks in the Dow Jones Industrial Average were up the day before a critical jobs report.
-
New $6,000 'Senior Bonus' Deduction: What It Means for Taxpayers Over Age 65Tax Changes If you’re an older adult, a new bonus tax deduction could provide a valuable tax benefit. Here's how it works.
-
AI Start-ups Are Rolling in CashThe Kiplinger Letter Investors are plowing record sums of money into artificial intelligence start-ups. Even as sales grow swiftly, losses are piling up for AI firms.
-
What is AI Worth to the Economy?The Letter Spending on AI is already boosting GDP, but will the massive outlays being poured into the technology deliver faster economic growth in the long run?
-
Kiplinger Special Report: Business Costs for 2026Economic Forecasts Fresh forecasts for 2026, to help you plan ahead and prepare a budget on a range of business costs, from Kiplinger's Letters team.
-
Trump-Era Regulations Will Broaden Access to CryptoThe Kiplinger Letter The president wants to make the U.S. the leader in digital assets.
-
How to Adopt AI and Keep Employees Happy
The Kiplinger Letter As business adoption of AI picks up, employee morale could take a hit. But there are ways to avoid an AI backlash.
-
The Rise of AI: A Kiplinger Special ReportThe Kiplinger Letter Our special report looks at the opportunities and challenges of generative AI and how its rapid move into the mainstream is impacting every aspect of our lives.
-
Big Changes Are Ahead for Higher EdThe Kiplinger Letter A major reform of higher ed is underway. Colleges are bracing for abrupt change, financial headwinds and uncertainty.
-
AI-Powered Smart Glasses Set to Make a Bigger SplashThe Kiplinger Letter Meta leads the way with its sleek, fashionable smart glasses, but Apple reportedly plans to join the fray by late 2026. Improved AI will lure more customers.
