The National Science Foundation: Innovation Through Partnerships: The National Science Foundation sponsors several programs that focus on fostering university-industry partnerships.
The National Science Foundation's New Strategic Plan
The National Science Foundation (NSF) was established by Congress in 1950 with a clear mission: "to promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense; and for other purposes." (1) That mission has not changed. What has changed recently is the strategic plan for the foundation. A new strategic plan was approved by Congress and adopted in February 2018, and that plan includes a new vision statement: "A Nation that is the global leader in research and innovation." (2)
That's a significant statement; it's the first time NSF's vision statement has included the word innovation, and I think that's important. The plan also emphasizes partnerships as a way to leverage the resources of the NSF and to do more toward achieving the expanded vision. Partnerships are at the top of the agenda for the NSF: partnering with industry, partnering with universities, and partnering with other federal agencies to achieve our mission and our vision as an organization.
The NSF has a broad mandate to support all areas of science and engineering and an annual budget of about $7.5 billion. Almost all of that money--96 percent--goes out the door to grant recipients; unlike some other agencies in the federal government, we don't actually conduct the research we support--we fund others to conduct those activities. We receive more than 50,000 proposals every year, and we evaluate those using our merit review process, which is generally viewed as the gold standard for using both subject-matter experts and commercialization experts to provide reviews. From the 50,000-some proposals that we receive, we make about 12,000 awards, including awards to 2,000 NSF-funded institutions (including some small businesses). Those awards support more than 359,000 researchers--some 40,000 of them students. The rest are university faculty, postdocs, research assistants, and others. NSF funding reaches across the United States and across disciplinary boundaries. We've funded 220 people who went on to become Nobel Prize winners. We typically funded those people when they were first getting started; in many cases our funding enabled them to carry out the activities and achieve the accomplishments that ultimately led to their Nobel Prizes.
The new strategic plan lays out a number of guidelines for how we'll spend the NSF budget going forward. One relatively recent addition is what we call "The Big Ideas." These initiatives were announced about two years ago now, but the strategic plan highlights them. They address a range of big-picture scientific developments, issues, and technologies that will engage researchers across disciplines:
* Harnessing the Data Revolution is pursuing fundamental research in data science and engineering and is something industry is dealing with too.
* The Human-Technology Frontier includes automation and other activities, as well as how the future of work is going to be affected by those developments.
* Navigating the New Arctic deals with how climate change is opening up more of the Arctic for a variety of purposes and understanding those changes.
* Windows on the Universe deals with radio astronomy as well as optical astronomy; it leverages a number of facilities that we already support around the world. The Atacama facility in Chile is one example; we not only funded the underlying technology that enabled that facility but also partnered to get the facility built and continue to partner to support its operation.
* Quantum Leap is focused on next-generation technologies for sensing, computing, modeling, and communicating.
* Rules of Life is focused on understanding the set of rules that predict an organism's external characteristics.
There are other projects, as well. We're also emphasizing what we call "process ideas." There are four of these, but one is particularly relevant to this audience: Growing Convergent Research is aimed at fostering collaboration across disciplines. (3) We realize that multidisciplinary work is more necessary now than ever and that it's important to bring people from different disciplines together, not just to solve problems but also to define the problems. The questions you ask may differ based on the discipline you're coming from, and it's important to have all of those perspectives at the beginning, when the questions are posed.
Also of importance in the strategic plan is accelerating the path from basic research to impact. We believe that we need to bring together those who understand the fundamental scientific concepts and fundamental research with those who understand the applications. Here again, the questions you ask, the approaches you take, will often be different depending upon whether your viewpoint is basic science or application. We believe that those who understand the basics of the research can enable a bigger, broader understanding of how the science might be used, and those who understand the applications can enable a significantly different, and perhaps better, research approach by helping researchers understand what is needed to make those applications viable. One of our goals is to bring together the fundamental research folks and the applied folks and get them talking to one another. Partnerships are particularly important here; industry-university partnerships are one of the prime mechanisms for stimulating that conversation.
The NSF's Division of Industrial Innovation and Partnerships
The NSF covers all of the science and engineering disciplines. It does that through seven directorates and a couple of offices. The Division of Industrial Innovation and Partnerships is situated within the engineering directorate, but it funds activities across all of the disciplines that NSF serves. The division is not focused on any particular field or sector; it has a very broad mission.
The division's approach is characterized by two primary principles. First, we support science and engineering across all of the NSF. Second, we're focused on early-stage activities-- work that precedes the point at which the private sector would be willing to take on the technology risks associated with the endeavor. We are looking at mitigating technology risks through these programs and moving these ideas further along so that we can generate interest in the private sector, which will then invest in the ideas and move them forward. We want to get the ideas to the point that the private sector will have interest in picking them up, by investing in the new technology, by partnering with a startup, or by buying it directly-- allowing the project to generate customer revenue.
To accomplish these goals, we have a number of programs; I'll highlight the ones I think are particularly right for industry collaboration.
GOALI (Grant Opportunities for Academic Liaisons with Industry) was started in 1996. In this program, we fund universities to do research that industry has an interest in. We require an industrial partner, but we do not fund the company; we fund the university. Our goals are to get the university to collaborate with the company, to get students from that university immersed in an industrial environment, and to get folks from industry immersed in the university research environment. Last year, GOALI had a $20 million budget--- funds that go to support collaborative university-industry research.
INTERN focuses on nonacademic internships for graduate students. I'll use engineering as an example. Last year, 10,000 PhDs in engineering were granted; 74.4 percent of those new PhDs went to work in industry. Only about 14.5 percent went to work in an academic environment. I've spent a lot of time in an academic environment, and I would argue that most of those new graduates had been trained to be academicians. They're not trained to work in industry.
Our objective with this program is to get graduate students out of the university and into an environment where they can gain experience in an industrial setting and develop the teamwork and collaboration and other skills they need to succeed in industry, along with the deep technical knowledge they gain from the PhD program. We provide funding to support internships for up to six months; the student can apply for up to two internships. The funding goes to the university, in an effort, again, to encourage the company and the university faculty to work together.
We've been doing this program for a year, and we've funded approximately 100 internships. Our goal is to double that number this year and continue to grow that number so that students can access substantial experiences to better prepare them for the environment they're likely work in. We're looking for partnerships for this program. We realize that a lot of companies would be willing to pay for this, but companies tell me they struggle to get connected to students because faculty members don't want their students leaving the lab. We're trying to develop a win-win situation where the faculty member benefits, the student benefits, and the company benefits.
Industry-University Cooperative Research Centers
Industry-University Cooperative Research Centers are collaborations between industry, universities, and government. They are organized around specific challenges and address industry needs; the research is done at university research sites. Centers are defined by technology or challenge focus, and participants are selected through NSF's merit review process; one center will often include research sites at geographically dispersed universities and international sites may be included.
This program has been around for 40 years. We like to describe it as industry-inspired basic research that is university executed. Industry defines the research that needs to be done, chooses the projects to support, and provides, through member fees, the financial support for those projects. The industry sponsor then has a nonexclusive, royalty-free license to use the intellectual property that comes out of the research it sponsored. Sponsored projects are focused on precompetitive research that multiple companies support collectively.
There are 76 of these centers located throughout the United States and another 6 international sites. I'm convinced that we could expand the program if we promoted it more proactively. The centers support 211 research sites-universities that are engaged in the center--and have almost 900 unique corporate members, with many members belonging to more than one center. In total, the centers have almost 1,500 memberships. There are 35 to 40 centers that have graduated--meaning they no longer receive financial support from NSF. They now are self-sustaining entirely with member fees.
The bottom line is that at the centers we're using NSF funds to leverage other kinds of investment in research. For every dollar a member puts in, another $42 comes in from other sources--other members, the university, the NSF, and other federal agencies that are supporting that research. As my friends in the UK used to say, it's a tremendous gearing ratio, a tremendous leveraging of the dollars industry members put into precompetitive research.
Partnerships for Innovation
The Partnerships for Innovation program is intended to help universities move their research closer to commercialization. If you think in terms of Technology Readiness Levels (TRLs), it's very rare to see anything at a university that's beyond level 2 or 3. It's very difficult to move a technology through levels 4, 5, and 6, to the point where it could be launched as a commercial product. To help bridge that gap, the Partnerships for Innovation program is providing funding to the university to support the development of a prototype and a demonstration experiment. The goal is to demonstrate the commercial potential of an idea as it's coming out of the fundamental research phase. We encourage the university teams we fund to collaborate with industry in doing this.
The program has two components: Translating Technology and Research Partnership. In the Translating Technology phase, we provide up to $200,000 for up to 18 months for the university, which we hope is working with an industry partner in some way, to build a prototype or demonstrate the commercial potential, the scalability, and the manufacturability of the idea that's coming out of the lab. The Research Partnership phase, for which we require an industry partner, is a bigger program---we allocate more money and more time to it--but the objective is pretty much the same: We want to move the idea a little bit further along and get it to the point that it could be picked up by a company or spun out into a startup that can take it to the next level.
Innovation Corps, or I-Corps, is NSF's entrepreneurial training program. (4) Data show that most university startups fail because they build a product nobody cares about. Part of the purpose of I-Corps is to help teams interested in founding startups to connect to the market and determine whether or not their product ideas have any market relevance or fit. The vehicle for that is a seven-week training program that uses customer discovery as a mechanism to determine whether the value proposition associated with an idea has any relevance to the market. If it does, that's great. If it doesn't, participants have an opportunity to modify the value proposition and the idea to make it align with the market. This helps assure that researchers don't waste time and energy and money by creating a startup or a product that nobody cares about.
The program is aimed at teams, and teams go through the training together. A team includes the technical lead--someone, usually a professor, who understands the technology inside and out; an entrepreneurial lead--often a graduate student or a postdoc or someone who wants to form a startup company; and a mentor. The mentor is usually an experienced businessperson who has started a company before and knows what it takes. The mentor goes through the training with the team to provide guidance and give the benefit of his or her experience to help the team develop a value proposition that aligns the technology concept with something the market cares about. We've built a national network to deliver the training and keep the training up to date.
The results so far? We have had more than 100 universities involved with I-Corps. We have developed mentor networks that are working with industry to bring mentors to the table. We have to date funded more than 1,200 teams to go through the training, and about 450 of those have reached a "GO," which means they think that they have something somebody cares about: they have enough information to consider starting a company or licensing the technology. These are all startups, and those startups are beginning to get off the ground.
I-Corps is still in its early stages. We started building the network in 2011 and began funding teams in 2013. We're just beginning to see teams that emerged from this process get traction. We've had four acquisitions of I-Corps startups, even though these teams are still in the very early stages of development. We've also started to develop relationships with other government agencies that are beginning to fund teams from their own federally funded basic research to go through the program. We're excited about this, and about the great results we're starting to see from it.
Increasingly, we're seeing I-Corps graduates start companies and then come into our small business programs, the SBIR and STTR programs.
We're very proud of our Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) programs. Most people don't expect NSF to have a program like SBIR, but we started it in 1976. The SBIR program spread to all of the federal agencies that sponsor extramural research in the 1980s, and STTR spread to the other five agencies that have relevant programs in the 1990s. We've been in this business a long time.
However, NSF does operate its program differently than a lot of the other agencies do. A mission-driven agency, like the Department of Defense (DOD), for example, will frequently fund small businesses that have 200 to 300 people who make their living conducting research for the DOD. DOD needs to develop the technology that will be required in future defense systems, so it funds research to develop the solutions it needs. The NSF doesn't do that. Our program is focused on funding startups. We want to be the first money a company gets. We want to put our money into companies that are just starting, that have technology risk that needs to be mitigated but also have a very high potential for impact if they can solve the technology problems and move the idea to commercialization. These are companies that have two or three or five employees. They're very early-stage companies, but they have phenomenal ideas that have tremendous potential to have significant societal impact.
Our program operates in two phases. Phase I is feasibility; we fund companies in Phase I to determine whether the idea is feasible--whether it can solve the problem it was designed to address. Companies in Phase I are funded for up to $225,000 for up to 12 months of activity. The goal in most cases is to get to Phase II, which provides up to $750,000 for up to 24 months; at this stage, the company's goal is to actually solve the problem using the idea that the team proved would work in Phase I. Generally, the result is a prototype--a prototype that's much closer to commercialization.
Most agencies have a Phase III, which is funded not from SBIR/STTR money but with additional dollars that have been budgeted to support commercialization. NSF does not budget money for Phase III. We do, though, have a fairly unique program: Phase IIB. Phase IIB is a third-party investment stimulation program. Even at the end of Phase II, startups may be in the valley of death--the gap between the prototype and the point where private investors and others have interest in the idea. To incentivize those first third-party investments, we provide matching funds for part of that investment. Phase IIB is a competitive program--companies have to apply and be accepted into it--but those who are accepted can get up to $500,000 to match up to $1 million in external investment, or 50 cents on the dollar. Revenue can also be used as matching funds, as can strategic partner activities and relationships, and even cash investments from a strategic partner. Essentially, Phase IIB money reduces some of the risk for the investor and gives an incentive to that third party to come on board and collaborate with that company in a strategic partnership.
NSF's SBIR/STTR program is very competitive. We fund about 10 to 12 percent of the Phase I proposals we receive. About a third of the Phase I recipients will receive Phase II funding. (You must have won a Phase I grant to be eligible for a Phase II grant.) If you look at all of the initial proposals coming in the door at NSF, only about 3 to 5 percent of them will succeed in getting to Phase II. Those that do make it to Phase II funding tend to be successful. We've had some phenomenal success stories over the years. We funded QUALCOMM, for example, when it was a startup company. We funded Symantec when it was a startup company. In 2017, NSF-funded companies received more than $1 billion in investments from third parties and in addition had over $1 billion in merger and acquisition value.
This is even more impressive given that we start with true startups. Recently, 85 percent of the companies in that portfolio had fewer than five employees at the outset of funding; 72 percent were founded since 2014, and 91 percent had no prior Phase II awards from any agencies. Overall, 62 percent of the awards we've made under this program in recent years were to first-time applicants; 54 percent of the companies currently in the portfolio were first-time applicants. That success is a reflection of our mission focus. We're really targeting true first-time startups and getting them involved in the program and hopefully stimulating their success.
That's a bit of a whirlwind tour of the Division of Industrial Innovation and Partnerships and its mission and activities. But I encourage you to reach out to me. We'd welcome an opportunity to talk with you about how we can collaborate. We encourage you to read more about the Division of Industrial Innovation and Partnerships and learn how you might get involved. You might consider becoming a part of an Industry-University Cooperative Research Center, collaborating with a university through our GOALI program, hiring interns through our INTERN program, or learning more about the small businesses we fund through our SBIR/STTR programs.
Barry W. Johnson is the division director for the Division of Industrial Innovation and Partnerships (IIP) at the National Science Foundation (NSF). Prior to joining NSF, he was the senior associate dean in the School of Engineering and Applied Science at the University of Virginia. He continues to hold the L. A. Lacy Distinguished Professorship at the University of Virginia. In 1998, he cofounded Privaris, Inc., a biometrics security company; he served as Chairman, President, and CEO of Privaris from 2002 to 2006, while on leave from the University of Virginia. Prior to joining the University of Virginia, he worked as a research engineer for Harris Corporation in its Government Aerospace Systems Division. He is the author of two books, nine book chapters, and more than 150 journal and conference articles, and he is an inventor on 34 issued patents and more than 30 pending applications. He received BS, ME, and PhD degrees in electrical engineering from the University of Virginia in 1979, 1980, and 1983. He is a Fellow of both the IEEE and the National Academy of Inventors, firstname.lastname@example.org
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(1) From the National Science Foundation Act of 1950 (PL 81-507); quoted in "Building the Future--NSF Strategic Plan for Fiscal Years (FY) 2018-2022", p. 5. https://www.nsf.gov/pubs/2018/nsfl8045/nsfl8045.pdl
(2) "Building the Future," p. 8.
(3) The other three process ideas are INCLUDES, Mid-Scale Research Infrastructure, and NSF 2026. For more information about these, see https:// www.nsf.gov/news/special_reports/big_ideas/.
(4) "I-Corps" is a registered trademark of the National Science Foundation.