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US Government Funded R&D: The Innovation ‘Valley of Death’

US Government Funded R&D: The Innovation ‘Valley of Death’

US Government Funded R&D: The Innovation ‘Valley of Death’

Dylan Terry
Dylan Terry
Jan 4, 2024
Jan 4, 2024

In 2023, the US government allocated $192 billion (1) to federal laboratories and Federally Funded Research and Development Centers (FFRDCs). Moving into 2024 (1), the total expenditure on Research and Development (R&D) is expected to exceed $200 billion.

This research focuses on an array of end use applications including forestry, healthcare, department of defense, transportation/infrastructure, space and cybersecurity. From this research, federally funded labs produce tens of thousands of patents and intellectual property disclosures in any given year.

However, herein lies the challenge: federal laboratories cannot commercialize, monetize, or sustain technology internally. For the technology to reach its full potential, it must be transferred out of the lab.

During this phase of technology transfer and scaling, a significant gap exists in capital and support systems, often referred to as the 'valley of death.' This gap leads to taxpayer-funded innovations being left unused and gathering dust on lab shelves.

For technology that successfully makes it out of the lab, the impact is substantial. A study, conducted by TechLink, on the national economic impacts of the Department of Defense's license agreements with US industry found that from 2001 to 2022 technology from labs produced:

  • $32b in total sales of new products

  • $5b in sales of products to US military

  • 205 new companies created

  • 28 companies acquired

So, on average, only about 10 companies are formed each year from the hundreds of billions of dollars in annual federal funding. However, the companies that do emerge generate substantial revenue.

In this problem space is where Highway Ventures was born, a startup studio that will work with federal research labs to help them commercialize the research and technology that they have developed.

Our startup studio model will provide researchers with a platform to excel. In this model, we supply the capital, talent, and commercial expertise necessary to transform research into successful business ventures

To bridge the 'valley of death,' there is a need for active company builders who can unlock use cases in the private sector and identify dual-use applications. Our vision is to establish a repeatable and sustainable pathway for the commercialization of technology developed within America's leading federal laboratories

If any of this resonates with you, please reach out to 2TWELVE90 at hello@highwayventures.com to discuss or learn more!


(1) CRS analysis of data from the Office of Management and Budget, Analytical Perspectives, Budget of the United States Government, Fiscal Year 2024, 2023, 2022, 2021.

Author

Dylan Terry

Dylan is a founding partner of Highway Ventures.

Author

Dylan Terry

Dylan is a founding partner of Highway Ventures.

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