On Capital, Innovation, and Government

Abstract

Most people identify innovation by a financial outcome or event: either raising capital or generating it. This paper posits that while innovation is actually not defined by capital (consumption or generation), in order for an innovation to dominate market and mind share, capital is required. While the U.S. federal government has supported innovation across nearly every industry by underwriting many modern advances across the world, it cannot take its own innovations to market and requires the collaboration of the private sector for this. Achieving this collaboration is often challenging, as federal innovation is usually too early and immature to attract private investment, thus requiring further risk mitigation before the private sector can engage. Today, however, there are pressing reasons for the government and industry to collaborate, including economic and innovation drivers and challenges from foreign actors. This paper makes recommendations that federal innovation can employ to better position itself, including updating its lexicon and adopting novel engagement strategies and mindsets to attract venture capital and industry over the long term.