Getting scientific bang for the federal buck

As many Global University Venturing readers will attest to, investing in science generates results. And not just improvements to the bottom line: research impacts in all manner of ways. Through it, we broaden our understanding of the world, we extend the average human lifespan, and we enable greater fulfilment throughout those lifetimes. Unlike other sectors, it provides growth with prosperity. However, for those who have control over the purse strings on scientific funding, the broader picture is rarely of interest and it therefore comes down to the numbers.

Faced with the US sequestration, which will see $95bn wiped off the federal research and development (R&D) budget by 2021, the Science Coalition, an organisation representing more than 50 of America’s top universities, has put forward a case in support of economic impact of research through spin-outs. Called Sparking Economic Growth 2.0, the report demonstrates that putting the brakes on innovation to counter financial problems is on a par with attempting to win a football match by shooting the ball.

Throughout history, the winners have always been the innovators and the societies that use the inventions. From the Greeks and Romans of the Classical Era through to the dominance of the British Empire and the emergence of the US as a superpower in the 20^th century, it is the power of science that has given them the upper hand. Today, the most innovative countries, such as Sweden, Finland, and Switzerland, are also the most competitive and peaceful. Even the economy itself has been dominated and heavily influenced by innovative thinkers over the centuries, such as Adam Smith, John Maynard Keynes, Friedrich Hayek, and Karl Marx, all of which have played a role in forming the economy we have today and all of which would more than likely argue that cutting funding to innovation is an altogether bad idea.

And yet, the US funding for R&D in the federal budget in 2013 is at a historic low, a mere 3.8% of its total.  With the afore mentioned sequestration to add further squeeze to the divestment in science, the US is on a spiral which will undoubtedly cause negative effects upon the US economy and the country itself for the ensuing decades that follow it.

To illustrate how much can be gained from investment in innovation, the Science Coalition has selected 100 companies from various universities which are either spin-outs, or heavily reliant upon university research. The companies, which have originated from an estimated total of $330m of federal investment in research over the years and provide over 7,000 jobs, represent a key and impactful part of the innovation pipeline.

As Lita Nelsen, director of the Massachusetts Institute of Technology’s Technology Licensing Office puts it: “Start-up companies are a critical component in bringing inventions from federally funded basic research into public use. Often university-stage inventions are too early in development to be adopted by established companies; the start-ups can provide the bridge to commercial adoption. In many industries, larger established companies have become dependent on partnering with start-ups for new product flow.”

Aside from what they offer in terms of innovation, these companies are also more resilient than non-university affiliated start-ups in the US. Around 50% of American businesses fail in the first five years, whereas spin-outs have great potential to beat the odds. In the Science Coalition’s 2010 report by the same name, 89 of the 100 companies highlighted remain in business today. Furthermore, of the 20 young companies (under five years old) listed in 2010, 16 remain open.

The spin-outs also have the potential to become greater than a stepping stone between research and a product to be gobbled up, such as the Stanford spin-out Google, a search engine provider. From its early beginnings, Google is now a household brand and feeds back heavily into the innovation pipeline with both research conducted within the company and through investment by its corporate venturing unit, Google Ventures. Should the US wish to keep its edge on innovation and the world’s economy, it should arguable be doing it all it can to generate more Googles, a feat which becomes immensely more tricky as the funding to find them gets cut.

The Science Coalition also points out the extent of universities’ lead on research over other sectors. Universities are still where the majority of US research gets conducted (53.4% with non-profits, industry, and federal research accounting for 12.2%, 19.5%, and 15% respectively), and 60% of that research is still funded by the federal budget.

This research is fundamentally important to our way of life, and tackling major drains on the economy. From the $330m invested into the research behind the report’s 100 firms, it has gone on to impact upon some of today’s most expensive problems. As an annual bill, cancer costs the US $201.5bn, cybercrime $140bn, and Alzheimer’s $203bn. By comparison, $330m is a small sum, yet every cent goes on reducing these overwhelming sums and others issues which science is providing solutions to. It is evident that increasing investment in science, not shaving $95bn off, will have a greater economic impact in the long run.

Of all the equations in science, investment in research equals results is by far the most easy to grasp. Investment in research, allied to a receptive business, society and regulatory environment, gave us Google and numerous other prosperous companies. Investment in research helped win World War II and gave us a massive technological boost for decades after. Investment in research helped us put a man on the moon, expanded our knowledge of the universe, and helped us comprehend what it means to be a human being. Further investment guarantees cures for cancer, AIDs, and many other afflictions, will give us greater technology to enhance our lives, and will further add to our understanding of the world around us.

Looking forward to the rest of the century, humanity faces problems that some politicians must see them as insurmountable, including climate change, overpopulation, and debt so fat it’d make a sumo wrestler feel woefully inadequate. Yet, the solution lies in, as it always has, our ability to overcome difficulty by out-thinking it. However, for the US and the rest of the world to stand a chance, politicians need to listen, converse with, and invest in scientists, and not the budget hatchetmen looking to make a quick buck by skimming off our future prosperity and intellectual prowess.