The immediate and near-term returns for gap funding most often focus on speeding up the commercialization process so technologies and services can contribute to enriching economies quicker. But, gap funding also has an overarching impact on both the financial and programmatic processes for research institutions and stakeholders, alike.
So, what can gap fund managers do to better demonstrate the impact of their programs? The Mind the Gap Report 2022 includes data collected from 176 gap funding programs affiliated with 97 research institutions. Many share that the following five measures help to best communicate impact and show how gap funding aligns with the university and public/private early-stage capital sources to achieve larger-scale innovation and commercialization.
Take Five
Boost innovation Transfer: This can be added to the agenda immediately. During this time, gap fund managers can work to increase the ability to properly evaluate, de-risk and support commercialization and corporate and investor partnership building. Jacob Johnson, founder of innovosource, says that, “for every 100 gap-funded projects, about 35 will be commercialized.”
Engage Innovation Community: This is another immediate measure and is when gap managers should be encouraging innovation and entrepreneurial culture through faculty, student, stakeholder, and partner engagement in the commercialization process. The results from a subsection of survey participants in the Mind the Gap Report 2022 indicated that all fund types are great resources, especially proof of concept funds, in encouraging interaction of the community in the gap funding process with reporting funds indicating that they had engaged:
- 1,214 members of the external innovation community involved in the gap
- funding program and events in past year
- 10,149 unique faculty and students submitting proposals for gap funding
- 4,407 community interaction events, which included faculty/student
- intrapreneurship and presentations to external stakeholders
- 1,032 peer-reviewed publications resulting from gap funded efforts
Create Businesses and Jobs: This phase typically takes place over a three-to-five-year span. During this period, gap fund managers can work to support development of strong, operational startups that job create, attract and retain talent, and strengthen the surrounding innovation ecosystem. The creation of startup companies and associated jobs is a big strength of gap funding programs, especially proof of concept, startup, and venture gap funds. “Reporting program spinouts created nearly 17,000 jobs at a median job of $53,000,” Johnson says.
Attract Outside Capital and Expertise: This also occurs during the three-to-five-year timeframe. Here, gap fund programs demonstrate a real impact in their ability to induce financial support and expertise from other partners in the commercialization process, including government support, corporate support, angel investment, and venture capital. “On average, every one dollar of gap funding attracted $22 in outside capital,” Johnson adds.
Financial Return on Investment: This is the last piece of the puzzle. Any significant return from gap funded projects and startups should be considered a longer-term proposition – often five-10+ years from the initial investment depending on market and technology development and regulatory pathway. This is where you’ll generate new revenue to sustain program and support priorities through license royalties, equity returns, and loans.
To learn more about reporting the impact of gap funding along with suggested metrics, download the summary or purchase the full Mind the Gap Report 2022.
