A Foundational Technology Development and Deployment Office to Create Jobs

How the incoming administration can spark nascent strategic industries and cement the United States as the global Tough Tech leader.

By Katie Rae, CEO & Managing Partner; Michael Kearney, Senior Associate & Orin Hoffman, Venture Partner

  • Capital gaps exist in multiple locations along the company development timeline.
  • Regulatory constraints increase hurdles for startup firms.
  • Commodity markets generally have weak appropriability regimes, limiting the set of strategic choices for firms.
  • Funding first-of-a-kind commercial projects. Traditional investors in infrastructure projects, for example, are unwilling to accept technical risk of any kind. For first of kind commercial projects, firms have two dimensions of technical risk: (a) will the product function at scale in the same way it functioned as a prototype, and (b) will the product lifespan predictions come to fruition.
  • Intransigent commercial markets. Commercial markets for foundational technology are often hamstrung by two factors. First, competing with conventional industrial players that have the benefits of scale manufacturing reduces the market opportunities for startups in the sector, with associated downstream effects on the investment community that reduce incentives for investment across the innovation pipeline. Second, many of these technologies are regulated themselves or compete in regulatory environments that remain particularly intransigent to new technologies.
  • Build out a Foundational Technology Loan Guarantee Program, with authorization to back-stop first-of-a-kind commercial projects across a broadly defined set of technology areas and readiness levels.
  • Create an infrastructure bank that enables the government to quickly support large-scale infrastructure projects utilizing foundational technology. Importantly, the infrastructure bank needs to be structured to leverage private sector capital to cover the majority of project costs, and only public capital to support the difference between the market value of the project and the ultimate project costs. This is a critical intervention because it is rare for novel technologies to be competitive for early projects — often components/products are not yet being manufactured at scale and the corresponding projects have to compete in commodity markets.
  1. Financing opportunities to support pilot and demonstration-at-scale manufacturing lines.
  2. Development and deployment of workforce training programs associated with the technological trajectories prioritized by the Office.

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