Tech Entrepreneurs, Lawmakers Champion Business Value of Federal Research Funding
Posted October 31, 2017
Entrepreneurs from eight technology (six healthcare technology) companies and members of the Senate Competitiveness Caucus shared stories of gritty success and called for more federal funding for basic research during a Capitol Hill briefing with other lawmakers. According to speakers at the Oct. 25 event, such funding is not just essential for fueling innovation but also for strengthening the U.S. economy.
“Federal investment in R&D is a lynchpin piece of our competitiveness going forward,” said Sen. Chris Coons (D-DE), co-chair of the Senate Competitiveness Caucus. “Funding fundamental science and having it translate into the marketplace and create jobs is [essential].”
About half of basic research in the United States is conducted by academic institutions, and 12% by the federal government, according to The Science Coalition’s third Sparking Economic Growth report, and the results of that research are crucial for the development of new technology companies. The coalition, a nonprofit organization representing more than 50 leading American research universities, organized the briefings in conjunction with the Senate Competitiveness Caucus in the face of decreasing investment in basic research.
Research funding from the National Institutes of Health (NIH) has been receding since the early 2000s as a result of budget cuts, sequestration, and losses due to inflation. Coons cited an Information Technology & Innovation Foundation report showing that the United States now ranks 22nd in R&D funding as a share of gross domestic product compared with the rest of the world.
“That’s almost hard to believe,” said Coons, who himself faced a tough investment environment as a chemistry major, which steered him and others in the field into alternative career paths. “It sends important signals. If there is not long-term, predictable investment in university-based research, it makes it difficult to attract, train, and motivate, and then to launch businesses in the future.”
These concerns seem to be borne out in the data—American entrepreneurship has been declining over the long term. The number of new companies created in the United States peaked in 2006 at nearly 610,000, after averaging about 540,000 since 1977. By 2014, the most recent year for which data are available, just 452,835 new companies were formed, according to U.S. Census data. In addition, data from the Bureau of Labor Statistics indicate that the number of jobs created from new companies (those less than one year old) peaked in the late 1990s at more than 4.5 million. By 2015, those nascent companies employed just over 3 million people.
Federal budgets since 2016 and bipartisan bills such as the 21st Century Cures Act have begun to restore some of the losses in NIH funding, but those on the briefing panel are concerned this is not enough.
“We can invest money in science and medical research, and we can reduce the cost of healthcare,” said Senate Competiveness Caucus co-chair Jerry Moran (R-KS). “We understand the value of science in keeping America at a competitive place in the global economy.”
Moran also underscored a partnership between the University of Kansas and its spinoff company HylaPharm that is developing new chemotherapy treatments thanks to NIH and Department of Defense funding.
The companies represented at the panel were more than the sum of innovative ideas that sprouted into successful businesses—they represented the United States’ willingness to support those life-improving ideas and entrepreneurial spirit with public funds. Panelists identified with that interplay between the American dream and funding in a deeply personal way.
“I am an immigrant—you can hear it from my accent,” said Michael Abramoff, founder and president of IDx, an Iowa City–based company that developed a camera that can automatically detect retinal disease. “I see it as my civic duty to make healthcare more affordable in this country,”
Abramoff’s company, which employs 20 people, is a University of Iowa spinoff kick started with funding from the Department of Agriculture, the NIH, and Department of Veterans Affairs. IDx anticipates its device will receive Food and Drug Administration clearance in 2018.