Level of Progress in Completing R&D Phase

Data available for this report reflect commercialization planning and progress during early phases of R&D for most of the projects covered. Of the 210 projects reporting, 31 were in their first year of ATP funding and/or had submitted only their baseline commercialization plan; 179 had completed one-to-two years of ATP funding and submitted one or two anniversary reports of actual commercialization progress and other effects of ATP funding. ATP funding had been completed for only three projects. Projects funded in FY 1995 represent about half the projects covered, none of which had completed more than one year of ATP funding by the end of the period covered by this study. (See Chapter 1, Table 1.) The study looks at the overall progress of the entire group of projects in the BRS as a whole, at their varying levels of R&D completion.

Reports for the projects which had completed at least one year of funding by December 31, 1996, indicate in Figure 11 that 31 percent were less than 25 percent complete; only six percent were 75-100 percent complete with their R&D, which corresponds with the small number of organizations that had completed their projects. The median level of completion of the ATP project is estimated for the group in the database to be 35 percent. Considering the total R&D (including that beyond the ATP project) needed for significant commercialization to occur, the median level of R&D completion is estimated to be 23 percent. These two median values mean that 50 percent of the organizations have completed at least 35 percent of their ATP-funded projects but only 23 percent of the total R&D needed for full-scale commercialization. The fact that considerable additional R&D will be required for many organizations after the ATP funding period ends is not surprising given that ATP is funding relatively early stage applied R&D with considerable technical risk.

Figure 11. R&D Status

Effect of ATP Funding on R&D Progress

After just one-to-two years of ATP funding, project participants indicate that they are already significantly ahead in their R&D cycle as a result of ATP funding as compared with where they would be without their ATP award. As shown in Figure 12, 86 percent indicate that ATP funding has helped accelerate R&D efforts in the ATP-funded area. Of these, 39 percent believe they would not have pursued the R&D at all without the ATP award; 53 percent believe they are one to three years ahead as a result of ATP funding. Only one percent indicated they were behind. Those reporting they were behind are all members of joint ventures and may catch up as their projects progress and overcome initial organizational start-up delays. Overall, measurable progress appears to have been made towards meeting critical windows of opportunity for the ATP-funded technologies.

Figure 12. Acceleration of R&D

When Can Revenue Be Expected?

Although the ATP funds R&D that involves considerable technical uncertainties and difficulties, technical progress tends to come in stages. Early-to-intermediate stage accomplishments may have commercial value worth capturing by incorporating newly gained knowledge in a near-term generation of products and processes even though attainment of the ultimate goals required for the full spectrum of applications remains distant.

A significant amount of commercialization planning activity is expected over the course of the ATP project, and some projects are expected to experience the beginnings of revenue generation from spin-off activities. Across the projects, companies, and applications encompassed by this report, approximately one-third of the projects and one-third of the companies pursuing commercialization expect to see some revenues from at least one early application of the ATP-funded technology by the end of the ATP funding period. (See Figure 13.) For more than 50 percent of the applications, revenue isn't expected until a year or more after the end of ATP funding; for nine percent of applications and projects, revenues are not expected until four or more years after the end of ATP funding. Only two percent of organizations indicated they do not expect to earn revenues at any time. All these were universities, non-profits, or other joint venture members without a significant future commercialization role, although they might be performing testing and other services important to future commercialization by companies in their joint ventures.

Figure 13. When Can We Expect To See Revenues from ATP-funded Technologies?

Small, young companies, such as the large number of start-ups the ATP has funded, typically strive for early spin-off products to generate cash flow needed for financial survival. Taking advantage of early product opportunities may help them attract the private capital needed to pursue the breadth of technological development required to compete in cost-sensitive markets, and for a broad range of potential applications. From observation of ATP-funded companies involved in manufacturing of advanced products and from analysis of individual company reports, it appears that at any given time many of the companies are engaged in a mix of R&D and related commercialization activities involving a single core technology. These activities may feed into the development of several different generations of products, including some entirely new product lines, which will enter the marketplace at different times over the next five or more years. In the case of bio-technologies for human therapeutics, for example, early applications may involve research tools and test kits. Significant commercialization of the targeted human medical therapeutics may not be possible for five or more years after ATP funding ends because of the lengthy regulatory processes required.

The remainder of this report describes the effects of ATP funding, actual commercialization progress, and the beginnings of technology diffusion, within the context of the relatively early R&D stage of most of these projects. Substantial technical uncertainties remain, and full business and economic potential are very difficult to predict in the face of both technical and economic uncertainties still remaining at this time. These caveats notwithstanding, early effects of ATP funding can be identified and conditions necessary for significant future commercial success and national economic impact can be monitored. With the further passage of time, and additional data collection and analysis, we will learn much more about the evolution of these projects. At this time, the evidence points to the conclusion: "So far, so good."

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Date created: December 1997
Last updated: August 3, 2005