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A top leader at the University City Science Center spoke on Capitol Hill this week to send federal legislators a message: The “Valley of Death” startups face is real, but lawmakers can help them find a way out by directing more government funding to “innovation intermediaries,” like the Science Center.
Dr. John Younger, the Science Center’s vice president for science and technology, testified before members of the U.S. House of Representatives’ Subcommittee on Innovation and Workforce Development, part of the Committee on Small Business. His remarks came during a panel discussion on the innovation pipeline between universities and small businesses and focused on the Valley of Death, a term used to describe the pit startups fall in after they’ve received initial funding but before they’ve started generating real revenue.
The Valley of Death is crucial part of a startups’ life cycle, Younger said, as it plays a key role in determining if an idea is commercially viable and sustainable.
“Startups entering the Valley can die on the vine – nobody buys, the intellectual property is not defensible, a capable founding team can’t be recruited,” he said. “This is normal, and a key tenet of startup thinking is that invalid ideas should be identified and abandoned as quickly and efficiently as possible.”
There are world-changing medical treatments and technological advancements that have made it out of the Valley, he said, and supporting companies as they find a way out is important to further future innovations.
Younger knows the Valley well. While he spent 20 years as a physician scientist, he’s been knee-deep in the entrepreneurial world for the past six, first founding a biotech startup in Michigan and now through his work at the Science Center. There, he leads efforts to help startups make it through the Valley, such as its proof-of-concept QED program and its early-stage investment fund Phase 1 Ventures.
“innovation intermediaries” like the Science Center are best suited to help companies work through their growth efforts, he said, and can provide a key role in fixing a gap in federal funding efforts. Existing mechanisms, like grants from the National Institutes of Health or National Science Foundation are valuable, but are focused on novel ideas, not practical ones pursued by startups. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer programs (SBTT) often take too long to receive, up to a year or more, and by that time startups get the funds, they may have pivoted in a new direction.
From his perspective, organizations like the Science Center that run programs to help startups through the process are well-equipped to handle federal funding.
“These enterprises have boots-on-the-ground familiarity with the core ingredients – talent, track record, the availability of local business advisors, and preferences of active early investors – that startups require to move forward,” he said. “The companies we help launch and grow benefit from our decades of experience and international network.”
Recent changes to federal programs that allow recipients to use those funds to partner with innovation intermediaries is a start, he said, but more needs to be done. Policymakers need to consider “novel mechanisms,” such as allowing research parks and organizations like the Science Center to apply for federal programs currently reserved for universities.
“The federal government must have a renewed focus on innovation and entrepreneurship, and a clear-eyed understanding of, and approach to, the particular needs of startups traversing and moving beyond the Valley of Death,” he said of competing in the global economy.