Accelerating Innovation From Lab to Market

American universities are dynamic engines of deep technological innovation (deep tech), responding to a growing demand for STEM research innovations that can reach the market quickly and at scale. In order to remain competitive in a fast-moving global scientific landscape and strengthen national research dominance, universities need to accelerate their innovation outputs by shortening the time it takes for research products from graduate students and postdoctoral researchers in STEM fields to reach the market, while providing these early-career researchers with the necessary mentorship and resources needed to translate their academic research projects into high-impact startup companies. By targeting these highly qualified scientists at the juncture of innovative university research and entrepreneurial ambition, we can more effectively advance academic research discoveries from early-career STEM talent into commercially viable new companies (NewCos) at scale.

To fully capitalize on this immense potential, America must transcend the current national innovation paradigms. We argue that our nation’s global leadership in science and technology could be maintained through strategically scaled and nationally coordinated approaches to innovation, including cross-cutting and cross-sectoral approaches. Additionally, to retain American scientific and technological leadership on the global stage, we must confront the inherent risks of deep tech ventures head-on and decisively maximize our national “shots on goal,” which can lead to developing a truly robust and self-sustaining innovation ecosystem.

A Scalable Model for National STEM Innovation

The foundation of a new American innovation model lies in the urgent creation of new and effective cross-sectoral partnerships involving universities, industry, government and philanthropic players. Existing models supporting American innovation rely heavily on public seed funding, which, while valuable, often falls short in meeting the needs for the capital-intensive process of commercializing deep tech ventures from university lab research. Historically, the federal government has borne much of the early risk for deep tech company formation such as through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, administered by agencies including the Department of Defense, the National Institutes of Health and the National Science Foundation.

These programs have served as important launchpads for many academic entrepreneurs, including early-career scientists. However, early-phase SBIR/STTR grants typically range around $150,000 for durations of six months to one year. While this funding provides critical seed capital, it represents only a fraction of the substantial investment required for R&D, prototyping and market validation for deep tech ventures. Compounding this challenge, the acceptance rate for SBIR grants has declined sharply, from approximately 30 percent in 2001 to just 10 percent in 2024 in some sectors, further straining the pipeline necessary for deep tech innovation.

Current federally focused financial support systems are falling short. Start-up success rates remain low, and private venture capital is unlikely to close the funding gap, especially for university-based early-career scientists. As competition for SBIR funding intensifies and global venture capital investment drops by 30 percent, America’s scientific and technological competitiveness is at risk without stronger shared-risk models and expanded backing for academic innovation.

In today’s highly commercialized and globally competitive research landscape, the quality and quantity of start-ups emerging from academic labs are critical parameters for developing the next generation of entrepreneurs. A strong pipeline of NewCos enables more innovations to be tested in real-world markets, increasing the chances that transformative companies will succeed and attract external investment from industry. To meet this challenge, America needs a bold vision focused on maximizing national shots on goal through strategic scaling, proactive risk management and innovative risk-sharing models. This framework must not only rely on investment from the federal government but also from a strategically blended funding model that includes state and local governments, industry, philanthropy, venture capital, mission-driven investors, and other nontraditional funding sources.

A nationally coordinated cross-sector pooled NewCo fund, supported by federal agencies, universities, industry, philanthropy, private equity and venture capital, partnering together, is essential for rapidly advancing national innovation at scale.

This idea is not unique to us; it has been proposed in Europe and Australia and has been part of the science policy conversation for some time. However, the current historical moment in American science offers a unique opportunity to move from conversation to action.

Impacts of Research Funding Cuts

This year, significant reductions in federal funding for R&D at multiple federal agencies have posed substantial challenges to universities striving to remain global-leading STEM innovation hubs. Reductions in staff at the NSF have implications for SBIR programs, which rely on robust institutional support and agency capacity to guide early-stage innovation effectively. In addition, proposed reductions in indirect cost reimbursements for grantees at multiple agencies including NIH, DOD, NSF and the Department of Energy may also pose a challenge to research institutions and resulting start-ups in covering essential overhead expenses, impacting the transition of federally-funded research from labs to market-ready applications.

An Updated Framework

The national shots on goal framework is a potential remedy to the currently changing landscape imposed by federal science funding cuts. By emphasizing public-private-philanthropic partnerships, scaled seed investments and improved use of existing infrastructure within universities, this framework can help mitigate the impact of research funding cuts at federal agencies on early-career researchers.

This framework can be especially impactful for graduate students and postdoctoral researchers in STEM fields whose scientific projects, entrepreneurial endeavors and research careers require robust and sustained federal support from multiple funding sources over a longer period of time. It also allows universities to maintain and expand deep tech innovation without relying solely on federal agency funding.

For example, targeted one-year investments of $200,000 per NewCo can provide an essential and low-risk commercialization runway, similar in scale to the NIH R21 program. This fund would be sustained through contributions from a broad coalition of federal agencies, philanthropies, state governments, regional industries, universities and venture and private equity partners. By distributing risk across the ecosystem and focusing on returns from a growing pipeline of NewCos, this coordinated effort could partially counteract the losses sustained by the research enterprise as a result of federal agency funding cuts and accelerate university-driven scientific innovation nationwide.

To support the long-term sustainability of these start-up companies, a portion of national NewCo funds could be reinvested in traditional and emerging markets, including crypto. This would help grow the NewCo funds over time and de-risk a pipeline of start-ups led by early-career scientists pursuing high-risk research.

A Pilot Program

To validate the national shots on goal vision, we propose a targeted pilot program initially focused on graduate students and postdoctoral researchers in STEM fields pursuing NewCo formation at select U.S. land-grant universities. Land-grant universities, which are vital hubs for STEM research innovation, workforce development and regional workforce growth, are uniquely positioned to lead this effort. Below, we suggest a few elements of effective pilot programs, bringing together ideas for outreach, partnerships, funding and relevant STEM expertise.

• Dedicated, national risk-mitigating funding pool: To minimize capital risk, provide one-year seed grants of $200,000, along with subsidized or free access to core facilities. By the end of the year, each venture must secure external funding from the commercial sector, such as venture capital, or it will be discontinued, given that follow-on support cannot come from additional federal grants or the seed fund itself.
• Targeted, risk-aware STEM outreach and recruitment: Implement a national outreach campaign explicitly targeting STEM graduate students and postdoctoral researchers at land-grant universities, highlighting risk-managed opportunities and participation pathways. Industry and philanthropic partners should be included in outreach and recruitment steps, and promote projects that meet high-priority industrial and/or philanthropic R&D strategic interests.
• Specialized, STEM-oriented risk management–focused support network: Develop a tailored mentorship network leveraging STEM expertise within land-grant universities. The network should include alumni with entrepreneurial talent and economic development partners. It should also include training for academic scientists on risk modeling and corporate strategy, and actively incorporate industry experts and philanthropists.
• Earmarked funding for STEM-based graduate and postdoctoral programs: In addition to the above, new funding streams should be specifically allocated to graduate students and postdoctoral researchers in STEM fields. This framework would grant them an intensive year of subsidized financial support and access to the university’s core facilities, along with support from business experts and technology transfer professionals to help them launch a company ready for external venture funding within one year. Critically, during this process, the university where academic research was conducted should take no equity or intellectual property stake in a newly formed company based on this research.
• Rigorous, risk-adjusted evaluation and iteration framework: Establish a robust national evaluation framework to track venture progress, measure performance and iteratively refine the framework based on data-driven insights and feedback loops to optimize risk mitigation.
• Leverage existing programs to maximize efficiency and avoid duplication: Entrepreneurial talent and research excellence are nationally distributed, but opportunity is not. Select federal programs and initiatives can help level the playing field and dramatically expand STEM opportunities nationwide. For example, the NSF I-Corps National Innovation Network provides a valuable collaborative framework for expanding lab-to-market opportunities nationwide through the power of industry engagement.
• Prioritize rapid deep tech commercialization through de-risking models that attract early-stage venture and private equity: Transformative multisector funding models can unlock NewCo formation nationwide by combining public investment with private and philanthropic capital. The Deshpande Center at MIT demonstrates this approach, offering one-year seed grants of $100,000, with renewal opportunities based on progress. These early investments can help deep tech entrepreneurs tackle complex challenges, manage early risk and attract commercial funding. ARPA-E’s tech-to-market model similarly integrates commercialization support early on. Additionally, the mechanism of shared user facilities at DOE national labs reduces R&D costs by providing subsidized access to advanced infrastructure for academic researchers in universities, thereby supporting the formation of NewCos through strong public-private partnerships.
• Bridge the academic-industry gap: Given the central role of universities in national innovation, building commercially viable deep tech ventures requires bridging the science-business gap through integrated, campus-based STEM ecosystems. This requires strengthening internal university connections by connecting science departments with business schools, embedding training in risk modeling and corporate strategy and fostering cross-disciplinary collaboration. These efforts will support the creation of successful start-ups and equip the next generation of scientists with skills in disruptive and inclusive innovation.

Conclusion

As American scientific innovation continues to advance, this moment presents an opportunity to rethink how we can best support and scale deep tech ventures resulting in start-up companies emerging from university research labs. In the face of federal funding cuts and ongoing barriers to rapid commercialization at scale within universities, these institutions must adopt bold thinking, forge innovative partnerships and exhibit a greater willingness to experiment with new models of innovation.

By harnessing the strengths of land-grant universities, deploying innovative funding strategies and driving cross-disciplinary collaboration, we can build a more resilient and globally competitive national research and innovation ecosystem.