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
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
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.
-
Stocks See First Back-to-Back Losses of 2026: Stock Market TodayRising geopolitical worries and a continued sell off in financial stocks kept pressure on the main indexes on Wednesday.
-
Countries That Will Pay You to Move: Cash Grants, Incentives and What to KnowExplore real relocation incentives — from cash grants and tax breaks to startup funding — that make moving abroad or to smaller towns more affordable and rewarding.
-
Mortgage Protection Insurance: What It Covers and When It Makes SenseHow mortgage protection insurance works, what it costs, and when it’s actually useful in a financial plan.
-
The Kiplinger Letter's 10 Forecasts for 2026The Kiplinger Letter Here are some of the biggest events and trends in economics, politics and tech that will shape the new year.
-
Disney’s Risky Acceptance of AI VideosThe Kiplinger Letter Disney will let fans run wild with AI-generated videos of its top characters. The move highlights the uneasy partnership between AI companies and Hollywood.
-
AI Appliances Aren’t Exciting Buyers…YetThe Kiplinger Letter Artificial intelligence is being embedded into all sorts of appliances. Now sellers need to get customers to care about AI-powered laundry.
-
What to Expect from the Global Economy in 2026The Kiplinger Letter Economic growth across the globe will be highly uneven, with some major economies accelerating while others hit the brakes.
-
The AI Boom Will Lift IT Spending Next YearThe Kiplinger Letter 2026 will be one of strongest years for the IT industry since the PC boom and early days of the Web in the mid-1990s.
-
Amid Mounting Uncertainty: Five Forecasts About AIThe Kiplinger Letter With the risk of overspending on AI data centers hotly debated, here are some forecasts about AI that we can make with some confidence.
-
Worried About an AI Bubble? Here’s What You Need to KnowThe Kiplinger Letter Though AI is a transformative technology, it’s worth paying attention to the rising economic and financial risks. Here’s some guidance to navigate AI’s future.
-
Will AI Videos Disrupt Social Media?The Kiplinger Letter With the introduction of OpenAI’s new AI social media app, Sora, the internet is about to be flooded with startling AI-generated videos.
