Emerging Technology Fund

My Friend,

You might have heard about the Texas Emerging Technology Fund (ETF or TETF) or you might not have. This is an example of a state government program that attempts to do a good thing, but has deep flaws implicit in its very structure.

From the Texas Wide Open for Business Website:

TETF grants are awarded in the following three areas:

• Research Superiority Acquisition -- funds for Texas higher education institutions to recruit the best research talent in the world.
• Commercialization Awards -- funds to help companies take ideas from concept to development to ready for the marketplace.
• Matching Awards -- funds create public-private partnerships which leverage the unique strengths of universities, federal government grant programs, and industry.

All of these goals are good things. We want higher education to recruit the best talent, we want companies to develop new ideas and we want synthesis of universities, the federal government and industry.

The problem comes down to the Commercialization Awards.

See lets first talk about Venture Capitalism. Venture Capitalism is based on the concept of high risk and high rewards. Should a corporation want to gamble with a new technology or an individual want to bring a product to market, they will need some sort of financing. The trouble with start up technologies and business ideas is that most tend to fail and only a few are actually going to succeed. So the ideas that the Commercialization Award supports are going to risky my their very nature.

The second thing we need to talk about is how the awards are granted to these innovating companies. The requests for awards are passed through a “Regional Center of Innovation and Commercialization.” These Regional Centers operate as part of the process to review these ventures. In turn they provide the recommendations to the ETF Advisory Committee which makes the final judgment on the awards.

So individuals are determining how the state should finance venture capitalism. This presents 2 problems.
Either:

1. The individuals who are making these decisions don’t have enough experience or knowledge in this field to be making good judgments about the viability of these ideas.
2. The individuals who are making these decisions do know about the risk and rewards enough to put their own resources/someone else’s into these projects. They would stand to profit off these ventures.

The fear then is that the Commercialization Awards side of the Emerging Technology Fund provides a filter whereby the state finances the projects doomed to fail, and savvy individuals on the Committees snap up the viable projects.

There have been attempts to restructure the ETF.

The Emerging Technology Fund is an important idea. Important enough not to waste with this kind of problematic structure.

And… mind you… I haven’t even mentioned David Nance. You can look him up on your own time.